Local stimulus | R&D bonds may be Maine's key to coming out of this recession with better jobs, richer prospects
“Charting the Course” is written by GrowSmart Maine, a Yarmouth nonprofit that promotes and encourages new ways of thinking about Maine’s future. This issue’s column is written by Christian McNeil, GrowSmart’s communications director.
Most economists now agree that with sluggish credit markets limiting the effectiveness of the Federal Reserve Bank, a national infrastructure construction effort is the best way for the federal government to respond to this historic downturn. For each billion dollars of this type of investment, 40,000 jobs could be created. The ripple effects of larger payrolls and capital investments will generate trillions of dollars of new economic activity.
Better still, many of the investments under discussion — like new high-speed rail lines, electricity grid upgrades and efficiency retrofits for public buildings — are exactly the kinds of projects that will help bring our economy into the 21st century.
So, what can Maine do to maximize the benefits of this federal spending? And how might we give a boost to the new businesses, industries and ideas that will lead our state out of this recession and into a new, more prosperous economy?
Two years ago, when GrowSmart Maine and the Brookings Institution published the “Charting Maine’s Future” report, the Brookings Institution’s researchers encouraged Maine to make big and sustained investments in research and development in order to create new jobs and grow our emerging “innovation economy.” They also advised us to invest in our quality places — not only our wild forests and scenic coastlines, but also in the downtown areas and Main Streets where people live and work and where the majority of tourist dollars are spent.
To pay for these investments, the Brookings Institution recommended large bond packages, funded by a long-term program to reduce government spending in other state programs.
The economic circumstances have changed tremendously since we published that report, but the report’s fundamental recommendations are clearly as timely as they ever were.
Borrowing for the future
Like most other states, Maine faces a huge budget shortfall this winter and, by necessity, questions of how to trim spending will outweigh questions of how to invest for the future.
But Maine’s leaders do have one helpful tool to stimulate the state’s economy this winter. Bond packages allow the state to borrow large amounts of money now and pay it back in future years when we can reasonably expect the state’s economy to be in better shape. Maine’s current public debt burden is lower than most states’, and most analysts agree that Maine can handle some additional public debt. In the past, bond packages that have focused on economic development have more than paid for themselves by generating new economic activity, jobs and income.
GrowSmart Maine’s central work in the State House this winter will therefore be focused on passing a Maine-based economic recovery package, focused on the core investment recommendations of the Brookings report: research and development spending to support emerging industries and businesses, and quality of place investments focused on the built environment and vitality in Maine’s village centers, downtowns and Main Streets.
Advocating in Augusta
GrowSmart is working closely with partners in the private sector and with members of the Maine Innovation Economy Advisory Board to place a research and development bond on next fall’s ballot. In accordance with the Brookings Institution’s recommendations, this bond will include at least $50 million in research and development funds annually, plus an additional $10 million to recapitalize the Small Enterprise Growth Fund, which has an excellent track record creating jobs through targeted investments in promising Maine businesses. We are working to convene supporters in the private sector from various clusters to present a united front on these common goals during the session, and we’d like to hear from you if your business would support this effort.
At the same time, we will also focus to combine existing community investment programs into a single “Communities for Maine’s Future” fund (modeled on the popular Land for Maine’s Future program and the recent Riverfront Community Bond program) to make strategic investments in the built environment of Maine’s towns and cities. (For more on this idea, read “Charting the Course” in the Dec. 1 issue.) Beyond enhancing the valuable Maine brand of small-town village centers and vibrant downtowns, these investments also would deliver an immediate shot in the arm to the small businesses in our downtowns.
This year’s dire budget situation shouldn’t prevent the Maine Legislature from thinking about our state’s long-term economic health. By approving a stimulus package focused on creating and growing Maine’s next economy, the Legislature can launch us out of a recession and into a more prosperous future.
Christian McNeil can be reached at christian@growsmartmaine.org.
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