February 28, 2011

The Maine Health and Higher Educational Facilities Authority (MHHEFA) is Maine’s agency that educational and health-care nonprofit groups must go through under federal law to sell tax-exempt bonds, borrowing money for capital expenditures at low interest rates.

Maine Housing, the Maine Educational Loan Administration, Inland, York and Franklin Memorial Hospitals, Husson University, Fryeburg Academy, Colby College, had sought to issue bonds through the authority, borrowing $31 million for a variety of projects, but ran into an unexpected road block — the LePage administration. Bonds of this nature must first get the approval of the Governor’s office before the bonding process can start, but when presented with the bond package he rejected them all. He staunchly refuses to consider any bonds that are not approved by voters.

College loans, low-income housing, hospital and school expansions are now at risk. Maine residents do not vote on such bonds for good reason. Many of the projects involved need quick decisions and can’t wait for election cycles to be approved. And some specific construction for a nonprofit hospital, for example in York County, may not seem necessary for a resident of Bangor.

Institutions must repay the money obtained through the bonds. There is no risk here for the state. There is no state liability here — no cost to the taxpayer. If these types of bonds have to be taken to referendums, the people of Maine will have to pay for that process.

The Maine State Housing Authority uses this type of bonding as a line of credit to fund low-income housing projects and first-time homeowner mortgage programs. Until now Maine Housing has been able to move quickly in the market to take advantage of good rates.

York Hospital, a nonprofit, wanted to replace a 35-year-old X-ray machine.

In the bond package that the governor didn’t sign there was about $20 million in construction funding — jobs that won’t happen because of LePage. It’s estimated that these construction jobs would have added $40 million to the state’s gross state product.

So why stop this bonding practice that creates jobs, brings revenues into the state, houses people, and improves educational institutions? Some ask: Is the governor putting politics before the people of Maine?

Meanwhile the new state treasurer, Bruce Poliquin, submitted a bill that would give Treasury more powers in the bonding plans for all agencies and also would give him a seat on the Maine Turnpike Authority.