Republican radio address: No More Debt

For the weekend of April 3 & 4, 2010

Greetings, this is Josh Tardy, leader of the Republicans in the Maine House.

As we head into the bottom of the ninth inning of this legislative session, one major issue remains. We no sooner finished cutting $310 million to keep the budget in balance than the State House talk turned to bonds. There are still people in the other party who think what Maine needs right now is more debt. They could not be more wrong, and I doubt they even understand the kind of trouble we’re in.

I’m going to describe the state’s debt situation, but first let’s set the stage. Last spring, all sides agreed on a $150 million bond package for this two-year budget cycle. The money was targeted primarily to highways, economic development and higher education – things that pay dividends. At first, the governor and his legislative allies wanted to borrow $306 million. They fought hard for that and negotiations were testy. But Republicans stuck to our figure of $150 million. We knew we could not afford any more. Bonds need two-thirds approval of both the House and Senate, so we had the leverage to prevail. By holding the line, we saved Maine taxpayers about $200 million in avoided debt and interest. We thought we had a deal with the other side that there would be no more bonding for at least two years.

That bond package from last spring was divided into three sections spread over three elections. The voters approved the first batch of $71 million last November. The next installment of about $70 million goes to the voters in June. The rest will be on the ballot in November.

Even before those new bonds have been issued or given a chance to work, the Democrats are back demanding more. You remember the infamous stimulus program of about $800 billion. Imagine if Washington politicians had proposed another $400 billion stimulus a month later, before the first one had a chance to kick in. That’s what is happening in Augusta. The Speaker of the House and the President of the Senate want an additional $99 million. Governor Baldacci wants $79 million.

House Republicans believe the people of Maine cannot be buried deeper and deeper in debt. Much has been made about the budget shortfalls that have plagued the state for years, but Maine residents have heard very little about the state’s growing addiction to borrowing. Our debt now stands at a staggering $11.5 billion. You heard that right – billion. It will take years to dig out from this mess, and the taxpayers of Maine are on the hook for all of it.

How did we get into such deep trouble? First, we underfunded the pension and health insurance plans for retired teachers and state workers. They have a combined debt of $6.4 billion. The majority party promised generous benefits to help them win elections, and then didn’t pay for them, pushing off the costs to future taxpayers. That would be us.

We also owe $4.2 billion in what is called “moral obligation debt.” That is borrowing done without voter approval by such entities as the Maine State Housing Authority and the Finance Authority of Maine. Then you add in the hundreds of millions of debt in Government Facilities Authority bonds, TransCap bonds and GARVEE bonds. These GARVEE bonds, by the way, borrow against expected funding from the federal government, leaving us less future money for schools, health services and revenue sharing.

Bond proponents like to talk about federal matching funds. But let’s be honest – Washington itself is busted flat. The national debt will reach $20 trillion in just 10 years, with interest costs going to $800 billion annually. The Washington politicians borrow more than a trillion dollars a year, basically mortgaging the future of our children and grandchildren. This is beyond immoral; it is gross recklessness against future generations. But instead of slashing spending to avoid financial disaster, the Obama administration and the Democratic Congress are spending even more and even faster. Here in Maine, the Democrats want to do the same thing. But they are about to hit the wall.

In November, Maine voters will elect a new governor and a new legislature. As they take office, they will confront a brutal economic reality. The next state budget will need to be cut by $1.2 billion. That’s a reduction of more than 20 percent, big enough to generate widespread chaos. To stagger through the current budget, we took $900 million in stimulus money and spent it all. There’s no more where that came from. We also will need to put an additional $300 million into the Maine Public Employees Retirement System to cover investment losses. Add up the figures – more than $1.2 billion. And now the Democrats want to throw another big bond debt on the taxpayers. We cannot allow that to happen.

This is Josh Tardy. Thank you for listening, and Happy Easter on behalf of all Republicans in the Legislature.