June 5, 2012

Even if the people of Maine vote for needed bonds will their governor approve them for sale?

“Why is the governor turning away opportunity? Blocking targeted investments in research and development (R&D) will keep Maine at the bottom,” said Senator Justin Alfond, the assistant Senate Democratic leader.

Gov. LePage vetoed An Act to Authorize a General Fund Bond Issue in the Amount of $20,000,000 to Fund Research and Development. On May 31st Maine’s 125th Legislature was successful in overriding his veto with a two-thirds majority in the House and Senate.

“To encourage prosperity and ingenuity we have to prepare our state, our economy, and our people for the demands of the future. We should be doing all we can to encourage innovation, create job opportunities, and create the success stories of tomorrow. With this veto, the governor, yet again, turned his back on what’s best for the people of Maine,” said Alfond.

LePage took an unusual step and suggested that the state find the money for R&D out of the operating costs of state government. That is like saying, “Just buy the house; we don’t need to bother with a low-interest mortgage.” The money to purchase a house doesn’t appear overnight, just as funds to invest in R&D aren’t easily available. That’s why bonding is the normal course of action to invest in the R&D that drives innovation and job creation.

“If the Legislature truly believes we should spend $20 million on R&D, then we should reduce spending elsewhere in the budget and pay for it out of the General Fund,” said LePage in a release.

Maine has lost more than 1,000 jobs since 2011 and was recently rated 50th for personal income growth according to the U.S. Bureau of Economic Analysis. Forbes ranked Maine as the worst state to do business for the second year in a row — under LePage’s watch.

“This veto was shortsighted and bad for business,” said Rep. Emily Cain, the House Democratic leader. “Investments in R&D have paid off. They boost business, create jobs, and help our fishermen, farmers, and boat builders.”

The Maine Technology Asset Fund (MTAF) would allocate the bond funds. MTAF has won national awards for its innovative approach of granting bonds to projects that demonstrate a strong public, private, and educational project. Karen Mills, who now is in President Obama’s cabinet, helped to start MTAF with the Baldacci administration. MTAF has demonstrated 12 to 1 return on bond investments. Every $1 from R&D bonds leverages another $1.70 in matching funds from Maine companies and supporting organizations.

Jackson Labs has been a regular beneficiary of state investment, including MTAF awards, and it has developed into one of the world’s premier biomedical research facilities. Targeted bond investments in boat building and marine research and development have established the state as an international leader in those industries as well.

The vetoed bond issue for R&D is a vital component for innovation and long-term economic growth. Maine R&D funds have spurred inventions that have created companies in the state. The bridge-in-a-backpack invented at the UMaine’s composite center is a prime example of how R&D funding helped develop innovation. Now a company is selling the bridges across America with prospects in Russia. The modest $20,000,000 bond would go a long way to giving scientists and companies funding to develop new inventions.

The people of Maine will have four other bond proposals to consider when they go to the polls in November. The low-interest borrowing would be for $75 million for transportation, water, higher education, and land conservation investments.

These bond proposals would go to voters without LePage’s signature:

• $51 million to fund highway and bridge repairs;
• $11.3 million in higher education funds mainly for the state’s community colleges;
• $8 million in water and sewer projects;
• $5 million for the Land for Maine’s Future program — to purchase land for conservation, forestry, and recreational use.

However, the governor stated that even if the people vote for the bonds, he would not issue them possibly for several years, even though they would create needed construction jobs immediately.

“I cannot personally support any of these bonds and will not vote for them at the polls in November,” said LePage. “Even with the voters’ authorization to borrow this money, my administration will not spend it until we’ve lowered our debt significantly. That could be several years.”

The state treasurer’s office ultimately puts Maine’s bonds on the market for sale, but the governor can keep that process from happening. The treasurer and governor need to sign a financial order before bonds can be issued and sold, so either officer can withhold his signature.

LePage a year ago stated that he had no objection to bonds if the people of Maine voted for them.

So ultimately it is up to the people to vote for what they understand bonding to be. This is about jobs, education, quality of life, and long-term economic growth. If the governor withholds putting the bonds out to market, construction jobs will not be created, our quality of life not improved, higher education stymied, and innovation put on hold.

“Now it’s really a question of the governor making the right choices or sticking to his rhetoric and unwillingness to actually invest in Maine, in people and opportunity here. That means roads and bridges, R&D, conservation, and education. Right now we are at a place where we are poised to take it to a new level of investment, to attract federal dollars for research and transportation that will improve our economic growth prospects and create jobs. If the bonds aren’t acted upon, then Maine people should be mad at who stood in the way,” said Rep. Cain.

If voters approve any of the bond issues, the state has five years to go to market with them.