Mainers are struggling to find
jobs, and trying to lower their own outstanding debt, and increase savings. So why is the state trying to increase the public debt by 63 percent this year?

 

Increasing public debt at a time
when the economy is in recession, some argue near depression levels, with
unemployment approaching nine percent, is very unwise. Funds from numerous private and
public sources are available and willing to do their talked-about projects.

 

 Already, the combined public liabilities for state and local governments is approaching $13 billion, which equals a $22,000 obligation for every working family in Maine. If taken as a 15-year mortgage at an attractive 4.5 percent rate, this is a payment of $160. (Before factoring in mortgages, car payments, student loans, credit cards, etc.)

 

It’s enough already. This means any further borrowing on the state level (especially given the spending spree emanating from Washington) should only be done for exceptionally good reasons.

 

I’m still waiting for some.

 

For example, should Mainers borrow $27 million to make depressed downtowns and historic buildings are made to look and feel better? Local Maine-based banks
do stand ready to loan to viable private projects “to improve depressed downtowns and fix
up historic buildings” in our communities. 

“Affordable housing” is going
empty for want of tenants now – adding $200 million worth, as proposed by Senate President Libby Mitchell, D-Vassalboro, will glut the
market. Should we borrow $200 million to build cheaper housing, so to further depress the prices of our homes and businesses?

How about adding more buildings
to the University of Maine? Adding buildings to the campus of
the University of Maine will not improve the state’s ability to keep graduates
here, or bring needed private sector jobs to Maine.

New buildings may look pretty,
and make professors and students feel good, but they rarely make for better
educational outcomes.

Moreover, less than 50 percent of the
graduates leave the University of Maine system with private sector jobs, and even
fewer with jobs in-state. (This is even after a 50 percent drop out rate.) More buildings for this return is not a good investment.  Improve the outcomes first.

Let us take up the $80 million
“Land for Maine’s Future” proposal. Should Mainers borrow so the
environmentalists and tourists can have a better view? Or should those who want it, pay
for it?  Gov. Percival Baxter built the entire
200,000-acre park that now bears his name with private money.

 

What is wrong with that model now?

Most people do not know that
almost four million acres of Maine’s twenty-two million acres are already saved,
almost 20 percent.  This investment costs Maine a significant amount of tax revenues: an estimated
$220 million in revenues annually, if these lands were held by private hands.

Further diminishing the state’s
ability to collect revenue by taking more land out of taxpaying circulation is not a good
idea. Adding to the state’s debt burden to
do so is particularly silly, given private donations and federal money are
available.

If an environmentalist or a tourist wants a better view, let them pay for it, as
plenty are willing to.  Why should we be
asked, and then forced to pay for it, for them? Floating another $80 million to
buy more land beyond the four million acres already protected in Maine
will not ‘save’ the state ‘for Maine’s
future’. 

 

Less public debt, however, will.

Public borrowing is backed  by the economy’s and the people’s ability to pay.  It is dependent on economic growth
and future real earnings of the taxpayers making funds available to the
public treasury to pay for current government operations and service the debt.

So let’s ask: What is
the level of public and private debt and what is the current ability of the
people to live up to its promises?

 

Public debt or bonding is like credit card debt, backed only by the state of Maine’s economic ability
to pay.  If the state defaults, the
bondholder cannot request the State House, the Blaine House or Baxter State Park as collateral.

With over 90,000 families receiving food stamps and near 9 percent unemployment, Maine’s ability to pay
its debts should become increasingly in doubt.

In total, there is an estimated amount of almost $4 billion of future liabilities owed by the people of Maine just to the state, including the unfunded portion of the state employees’ pension
system, both for past borrowing to balance budgets and expected future health care costs.

Adding the estimated $6 billion borrowed by county, municipal and local authorities – not just the state runs a tab for the taxpayers to pay – brings that total liability to an estimated
$10 billion. All of the state agencies
add another $3 billion. This brings the
total to $13 billion, or that $22,000 per working household.

Isn’t this enough?


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