|4/23/2014 5:02:00 PM|
Eye on Augusta: Legislature Approves $50 Million Bond Package
by Andy OBrienLast Thursday, April 17, the Maine Legislature gave strong support to $50 million in bonds for six separate initiatives including small business loan financing, research and development, and clean water infrastructure projects. The borrowing package received two-thirds support from the Legislature, but is now awaiting Gov. LePage's signature. The governor has 10 days to decide on whether to give it his endorsement. The bond measures are expected to appear on this November's ballot for voter approval.
Testifying in support of the bonds on March 27, former state economist Prof. Charlie Colgan said it was a good time to enter the bond market, but the window for the most favorable interest rates is already closing. He said that the Federal Reserve is pulling back on its quantitative-easing program, which is meant to reduce long-term interest rates, so now long-term interest rates are rising. He pointed out that 20-year municipal bond rates have risen by 1 percent over the past 15 months and are expected to be even higher by the time these bonds would be ready to be sold on the market.
"Higher interest rates will not mean the bonds are too costly, simply that they will be more expensive in interest costs," said Colgan.
While the majority of the midcoast legislative delegation supported the bond measures, Rep. Jethro Pease (R-Morrill), Rep. Deb Sanderson (R-Chelsea) and Sen. Mike Thibodeau (R-Waldo County) joined a small group of Republicans voting against more borrowing. However, Sen. Thibodeau, who said he didn't believe in using public money to support private-sector companies with loan financing and research and development, did support the $10 million clean water bond.
"I think that the clean water bond is one that will put Mainers back to work," said Thibodeau. "There's obviously some pent-up demand, it makes money available for some of our local utilities and we will have a federal match."
Of that $10 million, $4.2 million would go to a revolving loan fund that would leverage federal dollars for upgrades to drinking water systems and wastewater treatment facilities, $5.4 million to stream crossing and culvert upgrades to ensure the passage of fish species and other wildlife, and $400,000 for restoring wetlands. The proposal was supported by a diverse group of business and environmental groups including the Chamber of Commerce, the Associated General Contractors of Maine, the Nature Conservancy and the Maine Congress of Lake Associations (COLA).
The largest of the proposed bonds includes $12 million to recapitalize small-business loan programs, including $8 million for the Finance Authority of Maine's (FAME) Regional Economic Development Revolving Loan Program and $4 million for the Commercial Loan Insurance Programs. Testifying in support of the measure, Jayne Crosby Giles, a former Republican representative from Belfast and CEO of MaineStream Finance, told the Appropriations Committee that her organization has assisted 51 businesses with $700,000 in REDRLP loans, leveraging $1,470,000 in loans from other sources.
"FAME REDRLP funds are needed now more than ever. These funds are an economic stimulus to help Maine small and micro businesses expand and create new jobs," said Giles.
Another bond would invest $10 million for a biometric research facility at Jackson Laboratory in Bar Harbor, to be matched with $16 million in other funds to establish a center for biometric analysis in the field of medical analytics. A separate bond initiative would provide $3 million to invest in the Mount Desert Island Biological Laboratory to expand workforce training and to recruit biomedical research groups as well as to create a drug discovery and development facility. The money would be matched with $5.7 million in private and public funds.
The Legislature also approved an $8 million borrowing proposal for the creation of an animal and plant disease research facility to be administered by University of Maine Cooperative Extension. It was strongly supported by agricultural groups like the Maine Farm Bureau and the Maine Blueberry Commission, as the facility would research such threats to plants and livestock as the Spotted Wing Drosophila, West Nile Virus and Eastern Equine Encephalitis. Finally, another bond would invest $7 million for grants to support biotechnology, aquaculture and marine technology, composite materials technology, environmental technology, advanced technologies for forestry and agriculture, information technology and precision manufacturing technology through the state Office of Innovation.
Speaking in support of the R&D bonds, Maine Development Foundation Program Director Ryan Neale said that 80 percent of economic growth comes from innovation fueled by R&D. The Maine Economic Growth Council's 2014 Measures of Growth in Focus report found that Maine's R&D spending as a percent of GDP is 1 percent, compared to the rest of New England at 4.4 percent and the U.S. average of 2.9 percent.
"With tight budgets and limited revenues, state investment in R&D can bring a high return on investment by leveraging additional resources - federal, private, non-proﬁt and academia," said Neale.
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