The Associated Press April 8, 2010, 8:21AM ET

Maine bond issue rejected in Senate

A borrowing package that includes money to preserve a railroad that's seen as a lifeline to industry in struggling northern Maine was denied final approval by the state Senate late Wednesday.

As lawmakers worked toward the 2010 session's end, senators debated the $85 million bond package at length before voting 19-16 along party lines for it. But Democrats failed to muster the two-thirds majority they needed to send the bonds to voters. The House earlier gave its final approval by a 100-48 vote.

Nearly $80 million would go on the June 8 ballot. The remaining $5 million would be voted on in November.

"This is jobs," said Sen. Bill Diamond, D-Windham. "This is our opportunity. This is our time."

The bill remained alive as lawmakers decided whether to try to negotiate a compromise on Thursday.

The first part of the bond package includes funds for highways, ports, wind power and water purification. But most prominent in Wednesday's debate was $27 million for railroads, $17 million of which would buy and preserve 233 miles of railroad track that's being abandoned in Aroostook County.

The Montreal, Maine & Atlantic Railway has said it plans to abandon its line in the northern third of the state because of fallen revenues from shipments of lumber, plywood, logs and wood chips. Gov. John Baldacci and Democratic lawmakers support the plan to buy the tracks as well as the rest of the proposed bond-finance projects, which they say will create 2,000 jobs in the state.

Some Aroostook Country Republicans, including Rep. Bernard Ayotte of Caswell, also supported the rail proposal.

During the debate, Ayotte compared shutting down the area's rail line to "taking a major artery out of a body ... it would take years to repair the damage."

Other bond supporters said now is a good time for the state to borrow because interest rates are low and contractors would submit lower bids than they would during better economic times.

"This is the time when the money will get the best leverage," said Rep. David Van Wie, D-New Gloucester.

But opponents pointed out that the state faces a $1 billion shortfall for the budget beginning in mid-2011 and warned against borrowing while state finances are shaky.

"We cannot afford this," said Sen. Richard Risen, R-Bucksport. "There is a time for reckless abandon and there is a time for limits. This is a time for limits."

Rep. Kathleen Chase, R-Wells, said her constituents who have watched as the Legislature patched a more than $300 million budget shortfall this session have been asking her how the state can afford another bond issue.

"I say to them we can't afford to borrow more money," Chase said.

Republicans also said they agreed with Democrats last year to approve $150 million in bonds to be sent to voters in separate packages. The first $71 million was approved in November. The rest goes before voters this June and November.

Democrats said no deal was made to avoid a bond issue this year.

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