A Bond Package that Invests in Maine’s Future—Critical for Long-Term Growth

Governor Baldacci signing the bond proposal.

The $295 million bond package includes:

—   $98.5 mill to research and development, and higher education

—   $60.5 mill for conservation, the environment, and quality places

—  $136 mill for transportation infrastructure

by Ramona du Houx

The Appropriations Committee created a bond package that nearly mirrored Governor Baldacci’s bond proposal. The bond package, worth $295 million, would invest in innovation, job creation, education, the environment, and transportation.

"We all know that Maine is on the edge of a great transformation. The old ways are no longer sufficient for a 21st-century, global economy. We must all work smarter, faster, and better. This is about creating jobs and opportunities," said Baldacci about his proposal. "My plan is aggressive, but it is also affordable. It takes careful measure of what we can do, and what we need to do."

Earlier in March, the governor and members of the Legislature met with representatives from Fitch Rating Service, Moody’s Investors Service, and Standard & Poor’s to discuss the state’s ability to invest in bonds.

 

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Governor Baldacci announced his bond proposal in March during a press conference full of supporters of his bold measure for Maine’s future economy.

Across the board the agencies were positive towards Maine’s current economic outlook, debt handling, and capacity to increase the state’s general obligation bonding load. They further concluded that Maine’s low debt load and conservative debt retirement schedule has increased the state’s bond capacity significantly.

"They recognized that we have rebuilt our reserves, reduced our borrowing, all the while tackling $800 million in new education spending," said Governor Baldacci. "Compared to other states, Maine has been conservative in its bonding and has ample ability to invest in our infrastructure and economy."

"Transportation, jobs, and innovation are all elements of a solid foundation for growth," said House Majority Leader Hannah Pingree. "The agencies made it clear that not only is Maine fully capable of making these investments, but we also have a responsibility to make them. Moody’s pointed out that not making investments in both the economy and our infrastructure could actually hurt our financial standing down the road."

"We heard a lot of good news about our capacity to invest in our state," said Speaker of the House Glenn Cummings. "By making these investments we can create jobs and build prosperity in Maine. I was also glad to hear such broad commitment from all legislative leaders to move forward with bonds this session."

Maine repays bonds in just 10 years, compared to 20 years in most states, enabling the people of Mane to pay less in interest. The state has not invested in bonds for two years, leaving a gap in areas that need funding, like transportation, research and development, jobs, and innovation. During the last session, Republicans stopped bond investment in transportation mainly because it was an election year.

"For the past two years, politics has stood in the way of progress," said Baldacci when he announced his bond proposal. "Moving Maine forward shouldn’t be about Democratic ideas or Republican ideas. Partisanship has no place in this debate. What we decide in Augusta must be sent to the voters for ratification. For two years, voters have been denied their say. That’s long enough."

This session there were a number of bond proposals put forward by Democratic legislators that reflected the Brooking Institution Report which stated that Maine is falling short in investments for conservation, innovation, transportation, jobs, and research and development. These legislators proposed bonds for more funds in all the areas the governor targeted for bond investments.

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Commissioner of Conservation Pat McGowan discusses bonds with Martha Freeman, director of the State Planning Office.

The $295 million bond package includes:

—   $98.5 mill to research and development, and higher education

—   $60.5 mill for conservation, the environment, and quality places

—  $136 mill for transportation infrastructure

"I’m very pleased," said Commissioner of Transportation Dave Cole. "We asked that $100 million be considered; we’re extremely grateful that the governor and Legislature have seen the great need for our improvements in our transportation infrastructure."

"It’s great," said Sen. Denis Damon, Chair of the transportation committee. "But we mustn’t lose sight that our roads and bridges are in need of constant maintenance. The funding has to continue into the future."

"I’m pleased that the governor and the Legislature have recognized that research and development is key to our economic future," said Habib Dagher, director of UMaine’s Advanced Engineered Wood Composites Center.

Sound financial practices during the Baldacci administration have laid the foundation for the state to invest in a sizable bond package. On average, the state pays down $70 million of debt each year. Maine ranks 33rd among states in debt per capita and 34th in debt as a percentage of personal income.

"We have closed a $1.2 billion structural gap, eliminated short-term borrowing, and rebuilt our reserve accounts to the tune of $150 million. That hard work has put us on a firmer financial footing, and has given us the opportunity to invest today," said Baldacci.

In order to bring about a bipartisan agreement long hours were spent in negotiations. With the Brookings Report and the recommendations made by the governor’s Council of Jobs and Innovation, Republicans were able to better understand that the state needs to invest today for more jobs in the global innovation economy. From the research and development funding, $50 million will go to a competitive R&D fund administered by the Maine Technology Institute. Although it falls short of the governor’s recommendation, it still is a breakthrough for the future of Mane’s innovation economy.

"I think about where the Legislature was when this discussion started," said governor Baldacci. "There was a great distance between Democrats and Republicans. Now there is a common understanding that we must invest not only in asphalt and gravel, but also in the underpinnings of the economy of tomorrow. The health of our economy depends on a long-term commitment to innovation and economic development."

"Too often our focus is placed on immediate needs and not the long term," said Cummings. "Maine’s economy is changing drastically, and we have to transition with it in order to ensure that it is not relying on old ways and old technologies. The governor’s bond package laid out a strategy that invests in the entire infrastructure that drives this modern economy. He gave the Legislature a tremendous plan to move Maine forward. Now voters will have a chance to make investments in areas that will encourage the long-term growth of our state."

"I think the entire bond package is exciting and necessary. Maine people are demanding an opportunity to vote on their future," said John Richardson, commissioner of the Department of Economic and Community Development. "Now they can."

The bond package will go out to voters in three phases: June 2007, November 2007, and June 2008.

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