Janet Mills may shift state borrowing plan amid influx of federal money

Apr. 20—AUGUSTA, Maine — State lawmakers will begin conversations around how much money to borrow in 2021 for critical infrastructure needs as Gov. Janet Mills signals an influx of federal money has led her to reconsider funding requests.

A series of public hearings on bond proposals ranging from school renovations to broadband is set to kick off Tuesday before the Legislature's budget committee. They are among the dozens of bond proposals lawmakers have introduced this year as Maine faces a projected $650 million revenue shortfall, which is expected to be revised by forecasters this spring.

Gov. Janet Mills made bonding the hallmark of her State of the State address in February when she promised a $111 million "Back to Work" proposal focused on heritage industries, broadband expansion, career training and more. The governor teased more in borrowing requests around transportation and energy will be made public this week, said budget department spokesperson Kelsey Goldsmith.

While the Democratic governor is examining the $1.9 trillion stimulus package Congress passed in March and to see if it can "replace" some of the bond spending, Goldsmith said, states are still waiting for guidance on how that money can be spent. Questions about how much money would go to Maine in President Joe Biden's proposed $2.3 trillion infrastructure package remain.

Transportation and broadband advocates said those uncertainties mean Maine should not take bonding off the table until there is clarity. Even if federal funding takes care of Maine's transportation and broadband needs, the Legislature should look at other areas where support may not be as robust, like land conservation and water safety, said Rep. Teresa Pierce, D-Falmouth, the co-chair of the Legislature's budget committee.

"We can only do a certain number of things at a time," Pierce said. "But I think we are in a place where we can make some choices and catapult some things forward."

Bonds became a thorny issue in the first year of Mills' administration in 2019 when Republicans blocked bonds proposed aside from transportation, which voters have approved six years in a row. Funding for those projects is a long-running challenge in Maine — a Mills-convened commission dedicated to studying the issue agreed on the need to fill a $230 million annual shortfall but hesitated on prescribing an exact method on how to do so.

Transportation Commissioner Bruce Van Note said he was "encouraged" by the conversations around federal funding in Washington, but noted it was unclear how those talks would ultimately play out. The state will still pursue a bond to meet basic needs, he said.

Even if the bill passes as is, Matt Marks, the CEO of the Associated General Contractors Maine, said Biden's proposal as it currently stands only invests 5 percent into roads and bridges. It is also unclear what projects would qualify for aid, or when Biden's proposal will be voted on.

"If you're talking about traditional roads and bridges projects, that might not be enough to meet Maine's need," he said.

Marks also noted that while Biden's package includes incentives for more efficient vehicles and charging stations, those advancess will likely affect gas tax revenues, Maine's other major source of funding for transportation projects, even if travel rebounds this summer. The state could also reduce the amount of bond money if federal aid takes care of its needs, he said.

Broadband is another area where Maine began seeking bonding as the infrastructure became increasingly more prominent in economic development discussions. Voters approved a $15 million bond last summer, and Sen. Rick Bennett, R-Oxford, has proposed a $100 million bond to improve the state's system.

The American Rescue Plan passed by Congress in March sets aside $10 billion in broadband for states. Bennett said he preferred using federal money over local spending, but was "agnostic" as to where the money should come from as long as it was used responsibly.

"I think we should put in whatever we can spend sensibly as soon as possible," he said. "As to the sourcing of that, I'm happy to talk with everybody."