AUGUSTA, Maine - Maine voters will decide this November whether the state should borrow $50 million to pay for various projects through bonding. Supporters of those bonds see them as a good investment in the future. But fiscal conservatives see this kind of borrowing as an unnecessary addition to the state's troublesome debt. Mal Leary has more on this clash of fiscal philosophies.
Jody Harris is one of those people who believe that borrowing can be a good thing. Harris is a former town administrator and is a policy analyst for the progressive-leaning Maine Center for Economic Policy.
"Just like a person buying a house or a car, you don’t want to buy that and pay cash up front. You want to spread the costs out over time," Harris says. "You want to make sure that future users of that infrastructure are paying for it in the future as well."
But Matt Gagnon, executive director of the Maine Heritage Policy Center, a conservative group, says the house or car purchase analogy doesn't really fit here, because most families wouldn't take on more debt than their income can support. Gagnon says the state does exactly that.
"We are now piling debt upon top of debt, and that’s in excess, of course, of the budget that we have every year in the state of Maine," Gagnon says. "So that makes it more difficult to fund projects as they come in the future because we are too busy paying back debt and interest on that debt."
Gagnon says bonds should be reserved only for projects that have a long life - such as road repair and bridge construction. Other investments, he says, should be part of the annual state budget.
But MECEP's Jody Harris says that approach ignores the opportunities that come with lower interest rates. And Harris says bonding allows the state to spread debt payments over time instead of having to confront widely varying capital costs from year to year.
"You wouldn’t want to spend $50 million up front on anything when you can spread those costs over time," she says. "And now is the time to do that, when interest rates are low."
But Matt Gagnon, continuing with the household budget analogy, says most families would never borrow more than they need, just because interest rates are low.
"At some point, you have to deal with the fact that you are making a certain amount of money. And you pay a certain amount of money," he says. "And while a certain level of debt is acceptable, you know, just because it is cheaper than usual does not mean you go pile on more debt, because, at the end of the day, you are going to have to pay that back."
The philosophical split expressed by these two groups extends to the state lawmakers who brokered this fall’s $50 million bond package. Gov. Paul LePage says even though he was involved in the overall negotiations, he will not campaign for any of the bonds and is not sure if he will vote for any of them. "They are out there and I think it is up to the people. I am not a big believer in trying to persuade them to vote them or not vote."
House Speaker Mark Eves, on the other hand, a Democrat from North Berwick, openly advocates for passage of the bonds. "I would encourage Maine people to do their homework and research and support these bonds," he says. "They are what is needed for the Maine economy, to make sure we are investing in our small businesses, in our innovative ideas that are going to improve our economy and put people back to work."
Voters decide the six questions that total $50 million on the November ballot. They range from $3 million for biomedical research to $12 million for loans to small businesses.
