$100 million dollars. Catchphrase of an Austin Powers villain or spending on the Nov. 3 ballot?
If you guessed the latter, you are correct. Dr. Evil was all over the place when quoting numbers. Unfortunately, so is Maine when it comes to debt. Ladies and gentlemen, we have a bonding problem.
Not with the actual sale, since Bruce Poliquin brought competition to the process and left out the steak dinners; Terry Hayes has continued that reform. And I am not referencing the ongoing Land for Maine’s Future saga. That is a dispute about policies on acquiring and utilizing state-owned property. I am talking about our love affair with a whack-a-mole borrowing strategy. This year, we have $100 million in debt on the ballot. Last year? $42 million. 2013? $150 million. 2011? Zero dollars.
In 2015, Mainers paid nearly $100 million in debt service. Nearly $15 million of that was interest. What did all that interest buy us? The right to use money sooner. Over the past five years, we have averaged $107 million annually in payments, $17 million in interest. Since we are continually spending and re-borrowing that amount, the interest cost is wasteful. And waste is anathema to frugal yankees.
There must be a better way to use this $100 million annual cost. Unfortunately, incentives around debt are misaligned and Augusta — both parties — has failed. Voters generally do not dive into the minutiae of government finances, nor should they need to. We hire legislators and officials to manage the public treasury, we expect them to do it well. When their arguments make intuitive sense, we take them at their word.
In support of new public debt, analogies to families are often drawn. After all, most families have to borrow to make big purchases like cars or homes. And bridges count as a big purchase, right? The reality is, although we may fight like one, Maine is not a family when it comes to finances. The $100 million on the ballot represents about 2.5 percent of the state’s 2014 tax revenue.
With that perspective, let’s reframe the analogy. If I told you a family making $50,000 wanted to borrow $1,250 for 10 years, you would tell me they are nuts. Especially if they are already spending $1,250 a year to pay for earlier borrowing.
So why does Augusta continually place these bond questions on the ballot? Because it is a way for politicians to dole out money while pushing the cost onto future taxpayers. If they can give a favored cause $15 million dollars, they build up political capital and can cut commercials for the next election crowing about the causes they championed.
In short, it is an easy way out. Paying these costs out of the normal budget would require either reducing spending elsewhere or raising taxes. It would require hard decisions and the fortitude to stand by them. Certainly that is the ideal to which we hold all elected officials, an ideal that often disappoints.
It is no different than Washington, except they need not ask our permission to borrow more money. Yet back in Maine, by nearly always voting yes on new debt, we alleviate the pressure on Augusta. That is why I will vote “no” on Questions 2 and 3. Not because bridges, ports, and housing are not important, but because Augusta needs a push toward a longer view.
With some forethought and consideration, it would be relatively easy to fashion a constitutional amendment dedicating a percentage — maybe 2.5 percent? — of state revenues to a secured capital investment fund, with protections from would-be raiders. Phasing it in and phasing down the bond ballot questions would allow a “soft landing” while putting Maine on a stronger financial footing.
Instead of spending $10 million, $15 million, or $20 million a year in interest, we can put those dollars directly to work. Imagine spending a nice, consistent $100 million on our infrastructure each year. We could then save general debt for those very rare circumstances where it makes sense.
Is this all a pipe dream? Perhaps. One of the challenges with term limits is the need for elected officials to pack all their objectives into eight short years. They run out of time and money before they run out of good ideas. Another challenge is, even with a soft landing, someone needs to be the bad guy — hard to do when elections are based, in part, on popularity. But the biggest challenge is the sheer need. With 15 percent of our bridges structurally deficient today, how do you take the long view?
So I’ll vote no with along with 40-something percent of voters, and we will lose. But maybe, just maybe, Maine voters will start to ask if there is a better way. Hopefully, as a state, we can find one.