Maine's Budget Recovery Yields a $1 Billion Cash PileBy
Maine contributing all its required pension contributions
Investors trade AA-rated G.O. bonds more like AAA-rated debt
In the financial markets, Maine is known for more than just lobster and Stephen King -- with a conservative fiscal stance, its AA-rated general-obligation bonds are trading as if they were rated AAA.
Despite being a politically divided state, with a Republican governor and Democratic legislature, Maine "has been able to come together and enact a timely, responsible budget over the last few biennial cycles," said Julius Vizner, an analyst for Moody’s Investors Service, which rates the state Aa2, the third-highest grade.
Maine has not run a budget deficit since the 2014 fiscal year, according to data compiled by Bloomberg. Since August the state’s "cash pool," which contains the general fund and rainy day fund, has had a record high average daily balance of $1 billion.
Governor Paul LePage’s $6.8 billion budget proposed for the 2018 and 2019 fiscal years calls for reducing the individual and corporate income taxes while eliminating 500 state employee jobs.
While Maine has a population that skewers older and has lost residents over the past two years, it’s been making its entire annual contribution to the government workers retirement system -- and state law requires it to amortize substantially all of its liability by 2028, according to Moody’s.
-- Written with the assistance of Bloomberg’s Municipal Global Data team