Yesterday’s news that Moody’s Investors Service has downgraded the state’s bond rating should serve as a sign that state needs to take a hard look at the budget legislators passed recently.

As we report in a front-page story this week, Gov. John Baldacci has started looking for a way to compromise with Republicans on a $447 million borrowing plan in his budget. Upset over the budget passed by Democrats this year, which included borrowing to pay part of the operating budget, Republicans have been collecting signatures to hold a statewide referendum on the budget – a so-called “people’s veto.” Now Baldacci is talking to legislative leaders about potential ways to reduce the borrowing in his budget.

Republicans and Democrats need to find a compromise on this.

Common sense would tell anyone it’s a bad idea to borrow money to pay for operating expenses. It would be akin to putting groceries, gas for the car and utility bills on a credit card. The credit card bill would be due about the same time as next month’s bills arrive in the mail and the car runs out of gas. Borrowing, in general, is best for one-time expenses.

In other words, the borrowing plan is a way of putting off the inevitably difficult decisions required to balance the budget and an irresponsible way to manage the state’s finances.

That’s partly why Moody’s Investors Service announced it was downgrading the state’s bond rating from Aa2 to Aa3. Similar to a black mark on a credit report, that means the state could pay more in interest on the borrowing it does in the future.

However, we don’t believe the best solution to this problem is taking the borrowing plan to a statewide vote. Although we understand Republicans decided to pursue a people’s veto only after they felt as though they were cut out of the budget process this year, taking the budget to a statewide vote would be a bad precedent to set.

Citizens elect legislators and the governor to make these decisions, and that’s why we strongly urge Democrats and Republicans to find a solution to this problem.

Legislators have proposed a lot of different solutions. Some of the cost-cutting solutions include eliminating some of the 500 vacant positions in state government, putting Medicaid expansions on hold, using some of the start-up money for Dirigo Health, consolidating government departments, and using money from the Fund for a Healthy Maine. On the revenue side, some of the potential solutions include raising the cigarette tax, hiking the sales tax by 1 percent, and reducing the Business Equipment Tax Rebate program.

Whether legislators will be able to compromise on any combination of these proposals is still unclear. Veteran legislator Sen. John Martin, D-Aroostook, was skeptical this week that Democrats would accept budget cuts and Republicans would accept tax increases.

“I don’t know if there’s a willingness to compromise,” he told a reporter for the American Journal’s Statehouse news service.

For the state’s sake, we hope he’s wrong.

Brendan Moran, editor