Citing issues related to Medicaid spending and a dearth of reserves, Moody's Investors Services lowered its outlook of Maine's $498 million in general obligation bonds from stable to negative.
The company gave the debt, as well as $55.8 million in general obligation bonds Maine plans to issue, the rating of Aa2, the third highest, according to Bloomberg. In a press release, Moody's said the state has manageable debt levels, improving revenue performance and has recently resolved budget shortfall issues. However, it called out the state's spending in its Department of Health and Human Services and "chronically negative...combined available reserves, a large portion of which is related to Medicaid reimbursements due to hospitals." Those factors, plus a weak general fund liquidity due to a lack of reserves, led to the negative outlook.
The state plans to issue the $55.8 million on May 31 for capital projects. The state's $188 million lease rental bonds were given an Aa3 rating.
Lawmakers earlier this week approved $95 million in additional bonds with a two-thirds majority. It's unknown if Gov. Paul LePage will veto any of the bonds, since he has previously voiced his opposition to additional bonding. Voters will have to approve the bonds in November.