By Bruce Poliquin
Maine State Treasurer
Have you ever wondered what it really means to approve a “Bond Issue” at the voting booth?
On November 6, Maine voters will be asked to approve, or not, four such items that will be listed on the ballot. As State Treasurer, it’s my job to prepare the Treasurer’s Statement, which explains the financial impact to Maine taxpayers if they approve the bond issues. The Treasurer’s Statement is to be visibly posted in the polling stations throughout Maine on election day.
Voters can also view it online at the websites of the Secretary of State and myOffice of the State Treasurer.
Here’s the summary of what it means to Maine taxpayers to approve the four bond issues on November 6:
First, “bonding” is “borrowing.” The beginning language on the ballot for referendum Question 2, for example, reads “Do you favor an $11,300,000 bond issue to provide funds for…” That means, if approved, my office may be instructed to borrow $11.3 million for the stated purpose by selling Maine general obligation bonds to investors.
These bonds are loans to the state. The annual interest and principal (“debt service”) payments to the bondholders will be funded by taxes paid by Maine citizens, businesses and visitors.
Second, if approved by the voters, the $75.7 million of total borrowing is projected to grow with interest payments to approximately $94.5 million during the 10-year life of the bonds. Again, if approved, this money will be loaned to the state by selling bonds to investors, and it must be repaid.
Third, the Treasurer’s Statement lists the annual interest and principal payments for the next 10 years needed to pay off state general obligation bonds which have already been sold and must be repaid by Maine taxpayers. For example, during the current fiscal year July 1, 2012 to June 30, 2013, Maine taxpayers owe $120.4 million of debt service payments to bondholders.
Fourth, the Treasurer’s Statement also states that, in addition to the above, there remains another $40.8 million of authorized borrowing by past Legislatures and approved by voters, which has not yet been borrowed (by selling bonds to investors).
I hope this takes some of the mystery out of the borrowing process. It’s important for the hard-working Maine taxpayers to know how their tax dollars are being used.
I could wish that Mr. Poloquin would also tell the taxpayers which, if any, previous bonds are about to be paid off within the next fiscal year or two. Just like at home it makes a difference what obligations are about to go away.