Republican leaders: bond package unlikely this year

Posted June 12, 2011, at 8:02 p.m.

AUGUSTA, Maine — One issue has been notably absent from all of the budget talk in Augusta in recent weeks: bonds.

For the first time in years, the Legislature will likely adjourn without approving a state borrowing package for road construction, bridge repair, sewer projects and all of the other infrastructure needs typically financed with voter-approved bonds.

Republican leaders say the lack of a bond package fulfills their pledge to focus on shrinking the state’s debt level as the economy continues to struggle. But others warn that even a one-year hiatus could have impacts on road repair and other infrastructure projects.

“It is just a dangerous situation to be in because we are doing far fewer miles of [road] surface reconstruction than we should be,” said Maria Fuentes with the Maine Better Transportation Association, an advocacy and lobbying group largely made up of construction contractors. “Once again, transportation really wasn’t a priority.”

Lawmakers typically wait until the end of the legislative session — after budget negotiations are complete — to decide on what size bond package to send to voters for approval.

Democrats and Republicans have sparred in recent years over whether to propose any additional general obligation bonds before reaching a compromise, often in the final hours of the legislative session.

During the 2010 legislative session, for instance, Democrats failed to pick up a single Republican vote for their original $85 million bond package. The two sides eventually settled on a $57.8 million package able to garner the two-thirds majority votes needed to send the issue to voters statewide.

But Republicans are in control of both chambers of the Legislature as well as the Blaine House this year. And although a number of bond proposals were introduced — including several by Republican lawmakers — they never even made it to the public hearing stage.

“I think it is likely that they will be carried over and dealt with during the second session,” said House Speaker Robert Nutting, R-Oakland, referring to the second year of the legislative session. Nutting said he was not aware of any pressing need to issue new bonds, adding “I’m not worried about holding it over until next year.”

In fact, Maine often has a backlog of bonds that were approved by voters but have yet to be issued or sold on the market.

Case in point: On June 2, Treasurer Bruce Poliquin’s office sold $108 million in general obligation bonds that had been approved by voters during several elections. The bonds will be used for various capital projects, including road construction and rail improvements, as well as research and development.

But general obligation bonds are also used for the popular Land for Maine’s Future program, which provides matching grants to preserve valuable forestlands, farms and working waterfronts. And Democrats point out that Maine enjoys strong marks from the credit rating agencies in large part because the state maintains a fairly low debt burden.

Rep. David Webster, a Freeport Democrat who serves on the budget-writing Appropriations and Financial Affairs Committee, said he and others on his side of the aisle are strongly in support of a bond package this year.

Bonds are important tool for the economy because they help support good-paying jobs in the construction sector while helping improve the condition of Maine’s roads, sewers, water supply systems and other infrastructure.

“It’s a lost opportunity for the people of Maine,” Webster said of the lack of a bond package.

In the area of transportation, Gov. Paul LePage included $20 million in General Fund support for transportation projects in his budget. But only $3 million of that made it through the budget negotiations.

Rep. Pat Flood, a Winthrop Republican who co-chairs the Appropriations Committee, put forward a proposal that could funnel more money toward both highway and water quality initiatives but not through the typical bonding route.

Under Flood’s proposal, which was incorporated into the budget compromise pending with lawmakers, the state would rebid or renegotiate Maine’s valuable wholesale liquor contract.

Flood’s proposal calls for dividing up those revenues — conservatively estimated at $20 million initially — among the General Fund, Maine’s Rainy Day fund, the state’s highway fund and drinking water programs. But that money would not kick in until 2014, leaving at least a one-year gap in bonds.

For his part, Flood said he is comfortable with the decision to forgo a bond package this year.

“If we can go one year without doing it, that would be good,” Flood said. “But that one year is going to be difficult for some people.”

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