Just stop borrowing.
I don’t mean you with the unpaid credit-card balance or the burden of student debt or the soul-crushing cost of living in Portland (assuming people who live in Portland have souls). No, you can continue to recklessly spend money you don’t have on stuff you don’t need until you’re relieved of your burden by bankruptcy, Bernie Sanders or doctor-assisted suicide.
I want to halt the state of Maine’s love affair with red ink.
Much controversy erupted last month at the close of the legislative session when lawmakers failed to pass a bond package to pay for road and bridge repair, land conservation, hazardous-waste cleanup and “workforce development,” which I assume means growing new employees in test tubes.
There are powerful constituencies advocating for this borrowing, which could total as much as $239 million, so the Legislature will likely return in the next few weeks to compromise on how much debt to incur, after which the bonds will be sent to the voters for their approval.
But what if that didn’t happen? What if either legislators or the public decided debt is a bad idea that burdens our state budget with excessive costs? What if we decided to only pay for stuff with money we already have?
Is that possible? Probably not, at least in the short term. But if we decided to shut off the bond tap gradually over the next decade, it’s not only doable, it makes all kinds of financial sense.
According to the state treasurer’s website, Maine currently has outstanding bonded indebtedness of just over $376 million, with another $190 million in bonds that have been authorized, but not yet issued. In fiscal year 2019, that cost us nearly $93 million in principal and interest. That’s $93 million we could have spent on something like better roads and bridges if we didn’t owe it to loan sharks.
By reducing borrowing to 50 percent of the amount of debt we’re retiring each year, we could meet our essential obligations (infrastructure maintenance), while forgoing luxuries (“workforce development”). By 2023, this austerity plan would free up an estimated $45 million each year (estimate provided by economic guesswork that could be off by a zillion bucks either way, although you should keep in mind that these are the same methods used by state officials to predict tax revenues). By somewhere around 2033, we’d have paid off all our bonds and be debt-free.
That means we’d have freed up all that cash that’s currently being siphoned off for debt service to use instead for better highways, land conservation and – what the hell, let’s throw the bureaucrats a bone – “workforce development.” It’s not as if we’re going to suddenly stop wasting tax dollars. It’s just that we wouldn’t be paying interest on the millions we squander.
Pro-borrowing forces will argue that Maine currently has a relatively low debt burden compared to lots of other states. But those states include Connecticut, New Jersey and Illinois, all of which are as financially healthy as Venezuela.
The great thing about stopping all borrowing is that it doesn’t depend on politicians. Even if the returning Legislature approves a huge bond package, that new debt can be blocked by the voters.
Of course, those are the same voters with ridiculous credit card bills, astronomical college debt and monthly mortgage payments that would cover my bar tab for a decade.
We’re doomed.
Loan me your opinions by emailing aldiamon@herniahill.net.
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