Bonding to Rebuild Infrastructure = Jobs
Some expenditures cannot wait. Loans and labor are very affordable now. Maine people need jobs, and Maine’s economy needs a boost. Let’s get bonding.
Maine needs a state bonding program equal to the needs that stare us in the face—roads, bridges, sewer and water systems, public school and university facilities—all in serious need of expansion and/or renovation. Unemployment realities also stare us in the face—at the national level we’re stuck around 9%; Maine’s unemployment has hovered around 7.7% for almost a year; Portland’s unemployment for this period has been around 6.1%.
At the national level, we talk about infrastructure building to reduce unemployment, but we don’t pass the necessary legislation. In Maine, the governor openly disdains “bonding” to build infrastructure in order to create jobs. Portland, almost alone within the state, has maintained a healthy bonding program during this recessionary period—the employment result speaks for itself. The benefits too are real—a new elementary school, an expanded airport, new marine terminal facilities, a renovated library, repaired sewer facilities, more energy-efficient public buildings—all built with bond revenues, employing Maine people.
Beyond getting jobs and facilities that we need, interest rate costs have seldom been lower. A Press Herald lead story (“Communities Refinance and Taxpayers Save” by Ed Murphy, August 8 ) indicated that almost a dozen Maine towns have taken advantage of these low rates and saved millions by refinancing past debt; other towns are looking to do the same. The state level of government, with its strong credit rating, needs to be as smart.
A further reality staring us in the face is that Maine contractors want the work now. Men and equipment are unemployed or underemployed. Building during a recessionary period is cost efficient. We get more for our tax dollars. Bid prices have not been as low as they are now in years. This benefits private, and certainly public, capital construction projects.
Portland’s new school, for example, came in $4 million under bid estimates; partial figures available on Portland Jetport projects show bid prices $6 million below bid estimates; and over the last three years, 19 separate sewer projects with estimated costs of $38.5 million were completed—actual costs were $11.5 million under bid estimates. These are real dollar savings.
Early in his administration, Governor LePage characterized his biennial budget as a “jobs bill.” In the name of job growth, the budget significantly reduced spending, cut taxes, fashioned welfare and regulatory reforms, but resisted new debt—despite pleas from Maine business leaders to invest in our state’s crumbling infrastructure. The governor has often called on government to operate more like the private sector—so do it. Corporations often bond to build the capital facilities they need, and CEOs know that the best time to make these investments is when interest rates and bid prices are low.
As for job prospects arising out of welfare and regulatory reform—experience suggests that, at best, few jobs will be created, and these arise only over time. At worst, net job benefits are purchased on the backs of the poor and the most needy in our society, and/or they give rise to health and safety risks far more dangerous and costly than the benefits created. Few would argue that life in Maine was better before Medicaid, before special needs students were given access to public education, before Head Start, before our environmental laws were put in place, before we began to regulate our fisheries, agriculture, and forestry industries.
Our national (and state) experience with austerity budgets is more recent. But the handwriting on the wall seems clear—sharply cutting budgets (particularly in a period of recession or weak recovery) leads to further job losses. That clearly has been the experience in Europe and now England, where economies have stalled. Our own country is flirting with a double-dip recession. It’s absurd to believe Maine’s budget cutting will produce different results.
What jobs strategy remains, then, to pull us out of the present recession? Answer—the same one stated in the title to this piece; the same one Portland has used to good effect. Its employment numbers, the social and dollar benefits of building infrastructure, speak loudly. In short, the strategy that Governor LePage has avoided and criticized, building needed infrastructure using bond revenues, creates jobs. Doing more of what has not worked is clearly not the answer.
Bottom line—if the governor would rescue his “jobs bill,” he must move in a new direction. Building Maine’s infrastructure is a worthy goal; so is putting Maine people back to work. A robust bonding program will do both. The timing could not be better. The benefits, the employment gains, would be immediate and real.
Orlando E. Delogu is an emeritus professor of law at the University of Maine School of Law.
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