By Len Lazarick
The governor and legislative leaders want to boost jobs in the hard-hit construction industry, but are struggling to find the money to do it.
Fiscal analysts briefed lawmakers Thursday on how they could finance the spending, although the number of jobs and the kind of projects they would fund is uncertain.
The state could accelerate its bond offerings – essentially maxing out its credit card and reducing what the state could spend in future years. The legislature could also pass “revenue enhancement” – tax hikes and almost any would do. The state could find more public-private partnerships to finance projects, and the government could stop using bond debt to replace special funds for open space, highways and bay restoration.
House Speaker Michael Busch said the question was, “What’s the best way we can create jobs and what’s the fastest way to do it?”
If there are going to be “revenue enhancements” (tax hikes), Busch said they need to be tied to projects that citizens can see – a road, a bridge, a school.
“They want to know that there’s a direct result” from paying more, Busch said.
The prime suspects for a tax increase are the gas tax and transportation fees. A commission has recommended $870 million in higher transportation taxes and fees.
“I think that’s going to be discussed pretty thoroughly” in the upcoming session, Busch said. Gov. Martin O’Malley has begun pushing for such an increase.
Despite the desire to spend more on needed projects, the Maryland budget still has a lingering structural deficit of about $1 billion – promised spending that exceeds expected revenues.
Busch pressed Warren Deschenaux, the state’s fiscal chief, for how many jobs additional spending might create.
“We don’t know,” Deschenaux said. It depends on the type of construction, since much of the money is spent on material and not labor.
“There’s a lot of fanciful conversations that take place around this,” Deschenaux said. “I won’t vouch for any number.”
Busch fell back on a figure that $1 billion in construction spending would generate 15,000 jobs and if that were matched by local government spending on schools and roads, it could amount to 30,000 jobs.
It is also unclear “how quickly the state will be able to wind capital spending up,” analysts said, since agencies had been told two years ago to expect less bond debt would be floated to finance projects.
Some of the projects most likely to be “shovel ready” are school construction. Local school systems have $395 million in projects they want funded, above the $250 million the state plans to spend every year.
There are also $100 million in deferred maintenance projects on state office buildings and a $1.6 billion backlog in maintenance in the university system. Analysts said there are small- to mid-sized transportation projects that could be implemented quickly.
“There are lots of things that need doing and have lasting benefits,” Deschenaux said.