Spend it now, Schaefer tells agencies Capital projects get speed-up orders to jolt state economy.

November 01, 1991|By William Thompson | William Thompson,Evening Sun Staff Reporters Jon Morgan and Marina Sarris contributed to this story.

Gov. William Donald Schaefer says the slogan "stop crying and start sweating" explains his plan to put some life back into Maryland's wobbly economy.

But the slogan just as well could be "stop crying and start spending."

In an effort to rebuild confidence in the state's economy and keep construction firms busy, Schaefer said yesterday he is ordering department heads to identify state building projects that can be moved ahead of schedule.

At the same time, he urged local governments and private industry to follow his example -- spend now what you were going to spend later.

The announcement surprised almost everyone, including the officials who are expected to carry out the order.

"We're going to do our part to stimulate the economy and move forward as fast as we can," Schaefer said yesterday in Annapolis.

Schaefer dubbed the plan "Maryland Goes to Work" and said it would affect an as-yet-undetermined number of projects in the state's $330 million capital budget as well as numerous highway construction projects.

He said contracts for such capital projects will be speeded up partly to help construction companies, which have been hard hit by the recession.

"Part of it will be psychological," Schaefer said of the economic plan. "A lot of them are right on the brink of no work."

Schaefer gave credit to Paul Schurick, his new chief of staff, for coming up with the idea.

Schurick said the idea is to eliminate some of the delay between the time projects are authorized and contracts are awarded.

"What the governor is suggesting is that we get these projects under way, get the money on the streets . . . , get the people hired sooner than later," he said.

The normal contract process "can take anywhere from three months to nine months to 12 months in some cases," Schurick said. "Maybe we can take it from 12 months to six months, from nine months to three months." He said projects will be selected and moved ahead "without sacrificing quality or safety."

"Sooner instead of later, that's what it's all about," said Schurick.

Schurick said Schaefer hopes state spending encourages private industry and local governments to speed up the schedule of their capital projects.

"We're not asking anyone to make new investment decisions," he said. "The state just wants money that will be spent anyway to be spent sooner."

Schaefer said the projects require no new taxes and have been authorized in the state's existing capital budget. The projects are financed by the sale of general obligation bonds.

Schaefer's announcement at a news conference in Annapolis caught Cabinet officials and key staff members by surprise. By late afternoon, word of the governor's edict had swept through the state bureaucracy and officials were insisting that the plan can succeed.

"I think this is a can-do kind of process," said Richard Pecora, deputy secretary of the state Department of General Services, which manages most of the state's contracts.

Pecora said it was too early to announce which projects will be put on the fast track. But he said DGS will immediately begin sifting through projects looking for those requiring large work crews.

"The emphasis will be on those projects that are labor-intensive as opposed to equipment-intensive," said Pecora.

Despite scant details, the plan got a warm reception in various legislative and commercial circles.

"It's a good idea," said Del. Charles J. Ryan, D-Price George's, chairman of the House Appropriations Committee. "If we can pump some extra money out there, you get a few extra jobs."

"Certainly any more work that comes out can't be too soon or enough," said Robert E. Latham, executive director of the Maryland Highway Contractors Association and the Marylanders for Efficient and Safe Highways (MESH).

"I also think the governor recognizes what we -- and economists -- have been saying all along: The construction industry is an engine that can help put some people back to work and help pull us out of the recession," Latham said.

Highway interests formed MESH last spring to lobby for higher gasoline taxes and motor vehicle fees. They wanted those tax dollars used for highway construction, which has slowed for lack money.

The legislature raised only the fees in June, providing money to begin more than 100 state transportation projects.

Latham said Maryland's highway contractors desperate for work are submitting bids 20 to 25 percent below the state's cost estimates, a fact not lost on Schurick.

"The state itself benefits from this," Schurick said. "We'll save some money."

Elsewhere, one economist said he was intrigued with Schaefer's plan.

"In theory it sounds like a good idea," said Charles W. McMillion, president of MBG Consulting in Washington and an expert on Maryland's economy. "We need something to counter all the bad news and we need to build up some purchasing power before Christmas."

"We are in a downward spiral with bad news following bad news," he added. "I doubt that $300 million in a state like Maryland can do it. But it can't hurt."

A potential problem, he said, is that many construction projects may not be feasible in the winter. And there is a finite supply of managers, suppliers and others to carry out the work.

"Typically, there's a reason why you don't do everything at once," he said. "It's like Poland; you've got to have a place to spend the money and not just drop it out an airplane."

At the same news conference yesterday, Schaefer acknowledged that a sixth round of budget cuts totaling about $150 million is likely to begin in November, bringing to more than $1 billion the sum lawmakers have had to lop from the state's $11.6 billion general fund budget.

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