Can Maine fund a State House connector with Governmental Facilities Authority bonds without a statewide vote under the constitutional debt limit?

Plain-English summary

House Republican Floor Leader James Donnelly asked Attorney General Andrew Ketterer whether LD 2259, "An Act to Preserve the State House and to Renovate State Facilities," was constitutional under Maine's debt-limit clause. The bill would authorize the Maine Governmental Facilities Authority (MGFA) to issue securities in its own name to fund a connector between the State Office Building and the State Capitol, plus broader preservation and renovation work on the State House, the Tyson Building, and the Marquardt Building.

Maine's constitutional debt limit (Me. Const. art. IX, § 14) prohibits the Legislature from creating state debts or liabilities above a small cap unless two-thirds of each house and a majority of voters at a statewide election approve. If MGFA's bonds counted as state debt, LD 2259 would have needed a referendum. The AG concluded they did not.

The key is 4 M.R.S.A. § 1618, which provides in flat terms that MGFA-issued securities are not state debt, do not loan state credit, do not pledge state faith and credit, and do not obligate the state to levy taxes or appropriate money for payment. The face of each security must say so. The bonds are payable solely from MGFA's own revenues (lease payments, project income, etc.). The Authority can pledge its own full faith and credit, but cannot pledge the state's.

The AG noted that this revenue-bond/independent-authority model was already in widespread use through other Maine bodies, the Maine Turnpike Authority, the Maine State Housing Authority, the Maine Educational Loan Authority, and the Maine Municipal Bond Bank. LD 2259 fit the same template.

Currency note

This opinion was issued in 1998. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Why doesn't an Authority bond count as state debt?

Because the bond is paid from the Authority's own revenues, not state taxes, and the state has not promised to pay if those revenues fall short. The credit risk is on the Authority and ultimately on the bondholders, not on the state taxpayers. Me. Const. art. IX, § 14 only kicks in when the state's credit is actually pledged.

But the Legislature usually appropriates money to fund Authority lease payments. Isn't that the same thing?

In practice the Legislature often does appropriate lease payments year by year, which is sometimes called a "moral obligation" arrangement. But because each year's appropriation is voluntary (not constitutionally required), the bond is not constitutionally state debt. If the Legislature ever stopped appropriating, the bondholders would have to look to the Authority's other revenues or to the leased buildings themselves, not to the state.

What does "in its own name" mean for the securities?

The bond paper itself says "Maine Governmental Facilities Authority," not "State of Maine," and includes the § 1618 disclaimer that the state has not pledged credit or taxing power. That visual and contractual separation is what insulates the state.

Are similar arrangements used in other states?

Yes, broadly. Revenue-bond/conduit-authority financing is the standard mechanism for funding state office buildings, college dorms, prison expansions, and many infrastructure projects without triggering state debt limits or referendum requirements. The opinion's quick survey (Turnpike Authority, Housing Authority, Loan Authority, Municipal Bond Bank) is representative, not exhaustive.

Did LD 2259 pass?

The opinion only confirms constitutionality; it does not track legislative passage. Anyone wanting that history should check Maine legislative records.

Background and statutory framework

The Maine Governmental Facilities Authority is established in Title 4, chapter 33, of the Maine Revised Statutes. 4 M.R.S.A. § 1606(1) authorizes MGFA to issue securities to fund projects it approves. 4 M.R.S.A. § 1618 expressly disclaims state debt, state credit, and state taxing-power obligation for those securities. The combination, like similar authority statutes around the country, is designed to insulate state taxpayers from Authority debt while still allowing the state's executive and legislative branches to direct what the Authority funds.

Me. Const. art. IX, § 14 caps state-incurred debts and liabilities at $2 million absent statewide voter approval (with narrow exceptions for emergencies and temporary loans). The cap is what makes the question matter: any financing the state wants to do above the cap has to either go to the voters or be channeled through an off-balance-sheet entity like MGFA.

Citations

• Me. Const. art. IX, § 14 (state debt limit and statewide vote requirement)
• 4 M.R.S.A. § 1606(1) (MGFA authority to issue securities)
• 4 M.R.S.A. § 1618 (MGFA securities not state debt, no pledge of credit, no taxing-power obligation)
• LD 2259, "An Act to Preserve the State House and to Renovate State Facilities"

Source

• Landing page: https://www.maine.gov/legis/lawlib/lldl/agops/agops.htm
• Original PDF: https://lldc.mainelegislature.org/Open/AG/Opinions/1998/ag_19980324.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

98-1

STATE OF MAINE
DEPARTMENT OF THE ATTORNEY GENERAL
6 State House Station
Augusta, Maine 04333-0006

Andrew Ketterer
Attorney General

March 24, 1998

Representative James O. Donnelly
House Republican Floor Leader
2 State House Station
Augusta, ME 04333-0002

Dear Representative Donnelly:

I am writing to confirm the advice I rendered to you earlier concerning the constitutionality of Legislative Document 2259, "AN ACT to Preserve the State House and to Renovate State Facilities." If enacted, this Act would authorize the Maine Governmental Facilities Authority to issue securities in its own name "for the purposes of paying the cost of the construction of a connector between the State Office Building and the State Capitol Building; the preservation and renovation of the State Capitol Building; and the renovations of the State Office Building, the Tyson Building and the Marquardt Building." As I indicated, I do not see any constitutional difficulty with this proposed legislation under the provision of the Maine Constitution prohibiting the issuance of bonds which pledge the credit of the State without the approval of two-thirds of the electorate and a majority of the voters at a general or special election, Me. Const., Art. IX, § 14.

The liability of the State for any debt incurred by the Authority is addressed in 4 M.R.S.A. § 1618, which provides:

Securities issued under this Act do not constitute or create any debt or debts, liability or liabilities on behalf of the State or of any political subdivision of the State other than the authority or a loan of the credit of the State or a pledge of the faith and credit of the State or of any political subdivision other than the authority, but are payable solely from the funds provided for that payment. All such securities must contain on their face a statement to . . . the interest on the securities, except from revenues of the authority or the project, projects or part of any project for which they are issued and that neither the faith and credit nor the taxing power of the State or of any political subdivision of the State is pledged to the payment of the principal of or the interest on the securities. The issuance of securities under this Act does not directly, indirectly or contingently obligate the State or any political subdivision of the State to levy or to pledge any form of taxation whatever or to make any appropriation for their payment. Nothing contained in this section may prevent or be construed to prevent the authority from pledging its full faith and credit to the payment of securities authorized pursuant to this Act.

In my view, this provision makes it clear that any debt incurred by the Authority in the course of restoring or renovating the facilities identified in the Act would not be a debt of the State or create any liability on behalf of the State. The Authority is expressly authorized to issue securities for the purpose of paying for projects which it approves. 4 M.R.S.A. § 1606(1). The securities are issued in the name of the Authority and are payable solely from the funds of the Authority. 4 M.R.S.A. § 1618. Since the securities of the Authority do not pledge the State's credit, their issuance is not governed by Article IX, § 14.

I would note, too, that the Maine Turnpike Authority, the Maine State Housing Authority, the Maine Educational Loan Authority and the Maine Municipal Bond Bank all operate financing programs similar to the program set forth in Legislative Document 2259.

I hope the foregoing adequately responds to your request. Please feel free to contact me if further clarification is necessary.

Sincerely,

ANDREW KETTERER
Attorney General

AK:sw

cc: The Honorable Elizabeth Mitchell, Speaker of the House
The Honorable Mark Lawrence, President of the Senate
The Honorable Janet Waldron, Commissioner of DAFS
The Honorable Elizabeth R. Butler, Legal Counsel, Executive Dept.