With total obligations hovering around $3.96 billion, Maine found itself in the bottom 20% of states with bonded debt obligations on the books in a recently released study.
The American Legislative Exchange Council, or ALEC, ranked Maine No. 10 overall in its annual report of states’ bonded obligations. Wyoming, in the No. 1 spot, has $38.9 million in bonded debt, while California, in the No. 50 spot, has total obligations of $209.2 billion.
Total bonded debt was one of seven metrics ALEC researchers put under the microscope in the latest analysis. Maine fared differently in the six other state-by-state comparisons, but was above the median in all metrics.
When looking at Maine’s per-capita debt obligations, the state notched a No. 22 ranking, equating to $2,952 per person. Top-performer Wyoming, by comparison, has per-capita debt of $67, while No. 50 Connecticut has per-capita debt of $12,055.
Elsewhere, Maine achieved a No. 18 ranking for the amount of general obligation bonds on the books, totaling $773.4 million. Based on their structure, states cannot default on GO bond debt. Eleven states, by comparison, have no GO bonds at the moment, while No. California has $123.2 billion.
This spring, credit ratings agencies continued to give an upbeat prognosis of Maine’s ability to pay off its general obligation debt. Moody’s assigned the state a Aa2 rating, while S&P Global Ratings prescribed a AA rating.
In statements, Gov. Janet Mills and State Treasurer Henry Beck said they were pleased with the latest findings from the independent agencies.
Mills attributed several factors to the state’s stable outlook, including “prudent fiscal management during the pandemic,” as well as federal financial assistance and such policy programs as revenue sharing, tax fairness credits and financial relief to residents most impacted by COVID-19.
“These stable ratings demonstrate that Maine is in a solid financial position, our economy is recovering and our state is a worthy investment,” Mills said.
Beck said his agency was able to weather the most challenging fiscal circumstances of the pandemic with a strong cash pool.
“Our finances are healthy because of decisions by Gov. Mills and the legislature, bold federal investment and the hard work and innovation of Maine people and businesses that make Maine’s economy run,” Beck said.
The ALEC study did reveal correlations between states’ bonded debts and population sizes, but officials within the Virginia-based organization that advocates for fiscal reform said there are some outlying examples.
Jonathan Williams, ALEC chief economist and executive vice president of policy, pointed to states such as Indiana and Nebraska – which placed No. 2 and No. 3, respectively – in the per-capita ranking for having laws in place that limit debt borrowing. Indiana’s per-person debt burden currently stands at $200, while Nebraska’s is $667 per person.
“Fortunately, states like Indiana and Nebraska have constitutional amendments to keep debt limits relatively low and provide valuable lessons for policymakers in states suffering from significant debt burdens,” Williams said in a statement.
According to ALEC, all 50 states have collective bonded debt burdens in excess of $1.25 trillion, equating to an annual average obligation of $3,800 per person.
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