Maine news, sports, weather from Waterville Morning Sentinel

JUNE 8 VOTE

Plan would fund transportation projects

Question 3

By Tux Turkel tturkel@mainetoday.com
Staff Writer

The cruise ship season has begun in Portland, the start of what's expected to be a record year, with 70 vessels carrying a total of 75,000 passengers. But the harbor could handle more cruise ships, city officials say, if a 1,000-foot, deepwater berth is constructed at the new Ocean Gateway terminal.

"We just can't accommodate the demand," said Nicole Clegg, a spokeswoman for the city.

Portland would get $6.5 million to build the new pier if voters approve Question 3 on the June 8 ballot. The money is part of a $47.8 million transportation bond that would pave and rebuild highways, purchase and improve rail lines and make harbor improvements. Supporters estimate these projects would create and support 750 jobs.

Transportation bonds tend to win support among Maine voters, especially packages that promise to fix worn-out roads and bring on a wave of construction employment. This year's offering designates roughly half the money for 10 highway projects.

But the package also includes $16 million for railroads, $7 million of which would be used to buy a freight system that's set to be abandoned in Aroostook County. The wisdom of that investment is being questioned by some politicians and candidates for governor. In addition, the total bond package is under fire from fiscal conservatives who are opposed to the state taking on any new debt.

The largest chunk of the bond would go for highways -- 10 miles of reconstruction and 31 miles of repaving. The projects are considered part of the highway capital improvement program carried out by the Maine Department of Transportation.

A total of 12.3 miles of roadway would be rebuilt, including stretches of Route 201 in Farmingdale, Route 1 in Pembroke and Whiting, and Route 156 in Chesterville, Farmington, Wilton and Jay. Repaving would take place in six locations, including an 11-mile length of Route 27 in Boothbay Harbor and a section of Interstate 95 in Kittery.

"Anyone who spends time in their cars knows there are a lot of roads that need improvement," said Maria Fuentes, executive director of the Maine Better Transportation Association, a trade group.

Three railroad projects are included in the package. They reflect state goals of preserving and expanding rail service, and providing transportation alternatives.

The state would use $4 million to fix the publicly-owned portion of the Mountain Division in western Maine, in the hope of eventually restoring freight service. Passengers could some day again travel to Lewiston-Auburn by rail, if the state spends $5 million to buy the St. Lawrence & Atlantic line between Yarmouth and Auburn, as well as realign the Twin Cities rail system.

The state also would have the option to purchase 233 miles of track in Aroostook County now owned by Maine, Montreal and Atlantic Railway. The company has announced plans to abandon the line, saying it's unprofitable. But 22 businesses that ship on the line, generally forest products firms, say losing the train would increase their operating costs and threaten 1,000 or so jobs.

The prospect of lost jobs has put the state in a difficult position. Some critics in the Legislature, as well as some Republican candidates for governor, say the state will be throwing good money after bad to try to save a money-losing rail line in northern Maine. One of the candidates, Matt Jacobson, knows something about running a freight railroad -- he's a former president of the St. Lawrence and Atlantic.

The proposed railroad purchase, as well as other bond spending for transportation, also is being criticized by the Maine Heritage Policy Center. The group says Maine already has too much unfunded debt and shouldn't borrow more money.

But Dana Connors, a former state transportation commissioner who's leading a rail advisory task force appointed by Gov. John Baldacci, said Maine can't afford not to try to save the line. As energy prices rise, rail will play a critical role in Maine's economy, he said. He also expects shippers to help pay the cost of operating the line, if the state takes it over.

"Once you lose a rail line, it's gone forever," Connors said.

The northern Maine railroad has a better chance of turning a profit if the economy recovers and the forest products industry rebounds, according to Chop Hardenbergh, editor of Atlantic Northeast Rails & Ports, a trade publication. A return to $4-a-gallon gasoline also would help -- freight railroads got a big boost when trucking costs shot up in 2008.

But the region continues to suffer from an ongoing population loss and economic decline, Hardenbergh said, which makes the prospects for saving the northern Maine line unclear.

"Whether this will save the industry is a question, but I think we've got to give it our best shot," he said.

In Portland, building the so-called mega-berth wouldn't guarantee more ships, but Clegg, the city spokeswoman, said cruise lines maintain that a modern facility is something they expect in Portland. The city has been making do with the obsolete and undersized Maine State Pier.

Portland had initially sought $8 million for the Ocean Gateway berth, but Clegg said the city won't know the exact cost until the project is put out to bid. The job is permitted and ready for construction, with plans to have it operating by next year, she said.

The work would create at least 96 construction jobs and an estimated 188 new jobs after operation. Outside of the cruise ship season, the pier could be used to attract commercial vessels for repairs or inspections, Clegg said, or perhaps as a work platform to handle wind and ocean energy materials.

AS IT APPLIES to ballot questions, a bond issue comes about when the state puts a question before voters to ask about additional spending, typically to raise capital for specific projects or improvements.

THE BOND is a loan to the state from private investors.

BONDS ARE sold through the municipal securities market, where buyers include both institutional investors and individuals. Maine holds an annual bond sale, usually in May or June. Maine bonds are sold in yearly maturities, out to 10 years.

THE STATE PAYS principal and interest on the loan over a fixed period of time from the money it collects through taxes. The loan is known as a general obligation bond, meaning it's secured by the full faith and credit of the state. These bonds must be retired within 10 years, to open up future borrowing capacity and maintain a favorable credit strength.

IN MAINE, general obligation bonds must be approved by a two-thirds vote of the Legislature and the majority of voters. There are no constitutional limits to general obligation bond debt capacity, and there are no statutory limits, except for a formula related to the highway fund.

CONTRARY TO popular opinion, there are no formal rules for how much debt capacity the state can carry. Ratios involving debt to revenue have evolved over time and vary by state.

ASSUMING ALL bond proposals are approved by voters on June 8 and Nov. 2, Maine will need to set aside 5.28 percent of its general fund and highway fund revenues from taxes to service its bond debt for fiscal 2011.

GENERAL FUND debt service as a percentage of general fund revenues would be roughly 3.35 percent in fiscal 2011. Highway fund debt service would be 6.89 percent for the same period.

Source: Maine State Treasurer's Office and The Portland Press Herald