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Maine’s credit rating is a visible tool to attract business investment and jobs. It measures the financial health of our state government, state economy, and business climate.
Entrepreneurs seek the most promising locations in which to invest their savings to start and grow their companies, large and small. They’re attracted to states that control government spending and debt, keep taxes and fees low, support fair and predictable regulations, and have low energy and health insurance costs. This climate helps businesses grow and prosper. New jobs are created, more tax revenues are generated, and fewer citizens are dependent on expensive government services. A high credit rating is a positive sign of robust free enterprise.
The opposite is also true. Entrepreneurs avoid states where big government struggles to pay its bills and piles up public debt, regulations are complicated and punitive, and energy and health insurance premiums are expensive. The resulting high taxes and other costs make companies less competitive and less successful. Fewer jobs are created, less tax revenues are collected by state and local government, welfare rolls rise, and young workers leave for better opportunities elsewhere. A low credit rating signals an unhealthy economy. Take a look at Illinois (and Greece).
During the past month, the citizens of Maine received good news: Moody’s and Standard & Poor’s, the two most prominent national credit rating agencies, reaffirmed their solid investment grade AA/Aa2 levels for Maine. The most important point learned from this exhaustive annual assessment is that, while state government continues to have financial challenges, Maine is on the right path by continuing to put its fiscal house in order.
Among other observations, Moody’s and Standard & Poor’s noted our strong fiscal policies and practices, rapid repayment of outstanding debt, and elimination of $1.7 billion of our public pension debt last year. However, the rating companies also encouraged further cost control of our expensive Medicaid (Mainecare) program and replenishment of our financial reserves (so-called Rainy Day Fund).
Maintaining our solid credit rating helped State Treasury sell $49 million of bonds last week. It gave investors confidence in the safety and quality of our bonds. That, in turn, helped to secure a 1.37% weighted-average interest rate on the borrowing, keeping future interest payments low for Maine taxpayers.
(This $49 million of borrowing was approved by the Legislature and the voters before the LePage Administration arrived. It will be used for road and bridge construction and repair, and other projects. It is Treasury’s job to borrow money as inexpensively as possible for Maine taxpayers.)
The leadership in Augusta is committed to building a business-friendly environment in Maine in order to attract capital investment and private sector jobs. This goal of greater prosperity for Maine citizens is based on:
It’s all connected. Spending only what we take in; solid credit rating; low borrowing costs; more business investment and jobs; keeping our kids here. Stay the course. It’s working.
Maine State Treasurer
For related information and media, visit www.maine.gov/treasurer/outreach.