Rebuilding Maine’s Economy through Green Housing Investments

image: 

What Maine needs is a smart and focused approach to stimulating our economy and LD 774 does exactly that. LD 774 (An Act to Create Jobs and Improve Energy Efficiency Through the Transformation of Maine’s Housing Stock) addresses three of Maine’s most compelling problems with a long term strategy and short term results. The bill targets job creation and energy efficiency through the development, replacement, and repair of Maine’s aged housing stock. By issuing $200 million in revenue bonds over the next ten years including $30 million over the next two, LD 774 would pay for the construction of new units of affordable housing, renovation of existing housing, weatherization of existing housing stock, and replacement of pre-1976 mobile homes.

Housing affordability in Maine has long been ignored. With one of the oldest housing stocks in the country, 80 percent of our homes heated by oil, and a cold climate, Mainers are subject to volatile and burdensome heating costs. According to a study released this week by the MIT Center for Real Estate, more than 200,000 Maine households pay more than 30% of their income for housing costs (including utilities and commuting costs) and 86,000 households are severely burdened (low-income and paying more than half of their incomes toward housing). Almost 12,000 Maine households are on a waiting list for Section 8 housing vouchers, at least 7,500 are living in unsafe and uninsulated mobile homes manufactured before 1976, and still thousands more live on our streets or in emergency shelters.

Erratic energy costs make these affordability problems even more acute. We need a comprehensive plan to ensure that energy costs don’t leave anyone behind. To do this we will need to increase our supply of energy efficient homes as well as replace what cannot be fixed, so that everyone has a safe affordable home within reach. This can be a win-win from the standpoint of increasing affordability and reducing our collective energy dependence.

Equally compelling is the potential impact of this plan on jobs. Unemployment rates hit 7.8% in Maine in January surpassing the national rate. Job losses mean less spending, less lending by the banks, and less production. Housing construction is one of the best job creators because of the number of multipliers. New construction alone is said to create 750 jobs for every 500 new units. If you include the retrofitting and weatherization components of LD 774, Maine could see more than 5,000 jobs created or saved per year. Creating and retaining jobs means more revenue to the state in the form of income and sales tax. It means the banks are able to lend, contractors go back to work, the state captures more revenues, and Maine people gain access to quality, safe, affordable housing.

State revenues are shrinking, the need for critical services are growing and Mainers are worried about whether they will have another paycheck not to mention whether that check will meet their needs. The legislature will have to make important decisions about how to deal with a plummeting economy at a time when our state budget has a monumental shortfall. We cannot simply cut our way out of this situation nor can we ignore the realities of an $840 million shortfall. While some cuts are unavoidable, too many cuts will hurt our ability to gain ground in the near future and will undermine federal efforts to stimulate the economy.

The only way to get money flowing again in a recession is to increase demand. The federal government can do this by cutting interest rates and pumping more money into the economy. States, however, can’t just print more money, so they can only borrow. By selling bonds, states can generate money to be used to increase demand in areas that create new jobs and stimulate production where it’s most needed. When the State has recovered, we’re in a better position to pay off the debt. However, because it’s important not to take on more debt than we can support, there should be a clear standard for job creation and retention as well as investments that make us stronger going forward. LD 774 is targeted, timely and just what Maine needs to begin rebuilding.

Nicole Witherbee, PhD, is the Federal Budget Analyst at the Maine Center for Economic Policy.