SURPLUS RHETORIC

A Republican lawmaker expressed shock – outrage even – that his great idea of using the state budget surplus to pay for projects included in the Legislature’s bond package was not possible because the money was already allocated. While Rep. Kevin Glynn was right to point out that the $75 million surplus was somewhat of a misnomer because most of the money was already committed to paying down old debts and building reserves, his idea of using the excess revenue to bond projects further confused and politicized the situation.

In a press release last week, Rep. Glynn, a South Portland Republican, boasted of his “elegant” solution that would “save us from putting our children even deeper in debt.” His solution was to use the $75.2 million in surplus to pay for most of the $83 million in projects lawmakers agreed to include in a bond package.

Then Rep. Glynn got quite a surprise, according to his press release. Most of the surplus – $68 million – was already committed. Although Rep. Glynn pins the blame for this on the governor, the money was already committed by statute, meaning that lawmakers had agreed to this use of the money.

Under a statute passed in 2003, 32 percent of a surplus most go toward paying down the unfunded liability of the state retirement system and an equal amount must go into the budget stabilization fund. Another 16 percent would go into an operating capital reserve fund within the General Fund and 20 percent would go to programs that were initially cut but that lawmakers thought deserved funding if more revenues turned up.

This formula was part of the supplemental budget passed in June 2003 by a vote of 122-24 in the House. Rep. Glynn was among the 50 Republicans who voted for the budget. Since then, no lawmaker – Republican or Democrat – has suggested that the budget stabilization plan be revamped or revoked.

Still, Republicans played the same charade last year, proposing that surplus revenues be used to shrink the bond package. They came to the same realization that it wasn’t possible.

Devoting excess revenues to paying down the state’s retirement debt and setting aside funds for hard times makes sense. In fact, Maine was put on notice by several bonding agencies that its reserves were too low. Since then, the state’s bond ratings have been lowered by several rating agencies and, as a result, Maine must pay more in interest on the bonds it sells. One reason for the downgrades was the state’s skimpy reserves, which weakened its ability to repay bonds.

With Maine’s reserves depleted in 2003, lawmakers were wise to agree on a formula to use excess revenue to replenish them and to pay down the retirement debt. That such a formula is in place and working should surprise no one, especially lawmakers who supported it.