Moody's says Maine budget is a 'credit negative'
The national debt-rating agency Moody's says Maine's cut to revenue sharing with local governments will negatively affect the credit rating for those municipalities.
The ratings service said its Credit Outlook, released Monday, does not indicate a change in the state's credit rating, but rather the impact the budget will have on a municipality's overall credit quality, which is made up of many factors.
Moody's says the drop in revenue sharing will increase a city or town's dependence on property taxes, which it says stands to put pressure on the economy more broadly.
"Maine's local governments are already challenged to attract commercial taxpayers to diversify their primarily residential tax bases; rising property tax rates will only increase this struggle," the analysts wrote.
The analysis shows revenue sharing with municipalities dropping off sharply since 2009, when the state began diverging from its statutory revenue sharing requirements. The analysis found state government has distributed an average of $110 million annually to municipalities over the past 10 years, peaking in 2008 at $133 million. In 2013, revenue sharing stood at $95 million and it is set to decrease to $60 million by fiscal year 2015.
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