Republican legislative leaders said there likely will not be a bond package this year. This is a mistake.
Borrowing has gotten a bad name in some quarters lately. But without state bonds, funding for road and bridge work, research and development and water and sewer upgrades will be in short supply at some point. Setting the state up for such a shortfall makes no sense at a time when the focus is supposed to be economic development.
Those opposed to borrowing argue that the state has authority for bonds that it has yet to issue, so more bonds aren’t necessary. While this may be true in the short term, if additional bonds aren’t approved, that funding stream will dry up at some point in the future.
This is especially true in the transportation realm. The budget approved by the Appropriations Committee, which the full Legislature is currently considering, deleted $20 million in transportation funding. The committee did add a provision to dedicate a small portion of the money expected from a 2014 renegotiation of the state’s liquor contract to transportation. Earlier in the session, lawmakers capped gas tax collections by ending the practice of adjusting the tax with inflation. Putting off bonds — for at least a year — is a triple whammy, leaving the Department of Transportation short of funds needed to repair and improve roads, rail lines and port facilities.
Research and development has shown good return for the state’s investment. According to the 2010 Science and Technology Action Plan by the Department of Economic and Community Development’s Office of Innovation, R&D has returned 12 times the public investment in this sector. Salaries in this area are significantly above the state as whole as well.
“However, Maine must do more,” the report says. “The scale of our research is increasing,
but its potential impact on Maine’s economy is well below other states.”
In other words, through more targeted investments, especially those focused on commercialization and building on Maine’s traditional strengths, the state can do more with its R&D funding. Research and development at the University of Maine to expand the use of wood composites and to develop new biofuels are examples of this type of work.
Without state support, which traditionally has come from bonds, not the state budget, this work will stall. This isn’t a recipe for economic prosperity.
Interest rates are low as is Maine’s debt level. Borrowing to make investments in the state’s future — just as families must borrow to buy a home — is timely and makes sense.
Putting off bonding for a year won’t save Maine money and will likely hurt our economy. That is not something leaders in Augusta should want.