Wall Street Vetoes Maine Highway Bond

Via the Portland Press Herald:

The state of Maine could not float a $50 million transportation bond this week because traders told officials there was "no market" at all for large financial transactions such as this one.

The state hopes the national financial crisis will stabilize by next week, when it again tries to access capital, probably getting a higher interest rate than had been expected...

The $50 million TransCap bond is meant to pay for 10 highway reconstruction projects involving more than 20 miles of road in eight counties.

While the state expects to get its loan eventually, it will probably be at a higher-than-expected rate, which will significantly diminish the state's ability to pay for other highway projects. Furthermore, the state expects to pay back the loan with gas taxes, increased vehicle registration fees, and increased allocations from the state's general fund. All of these sources of revenue are expected to decline in the coming years.

The fact that the general fund, in particular, is now paying for highway projects is particularly troubling. The state is cutting budgets for social service agencies and education, and yet we're still pissing our tax money on road construction even as statewide traffic is on a sharp decline.

If Wall Street is refusing to lend money to MDOT's spendthrift highway builders, maybe there's some sense in the financial markets after all.