Schaefer unveils bid to jump-start stalled economy Projects speeded up

state's consumers, retailers urged on

November 15, 1991|By John W. Frece

Maryland's governor tried to inject a dose of consumer confidence into the state's stagnant economy yesterday, ordering millions of dollars in state construction projects speeded up, begging retailers to cut prices and urging people to reopen their pocketbooks this Christmas season.

Standing under the ornamental palm trees of the sunlit Owings Mills Mall, Gov. William Donald Schaefer said personal income was down, unemployment was up, state revenues were off and there was no help from the federal government or anyone else on the horizon.

"We can sit on our hands and do nothing . . . [or] we can take the initiative ourselves," he told a lunchtime audience largely composed of his own Cabinet secretaries, top staff and selected business executives.

Mr. Schaefer unveiled a list of 142 state construction projects -- prisons, sewage treatment plants, school and college buildings, hospital renovations and one major new highway -- that he said would be moved into the bidding and construction phase anywhere from one week to six months earlier than planned.

Chosen were projects that could be put out for bid the fastest and that have the potential to create the greatest number of jobs, the governor said. Together, the contracts could pump $271 million into the economy directly, with an economic spinoff anticipated as well.

By far, the biggest project is a $57 million addition in Anne Arundel and Howard counties to Route 100 between the Baltimore-Washington Parkway and Interstate 95. Its contract award date was moved from December 1992 to January 1992. The bidding process will get under way today, according to Transportation Secretary O. James Lighthizer.

He said the Route 100 plan was put ahead of other road projects because it was ready and was likely to create the most jobs: about 750.

"This is not costing taxpayers one additional cent," the governor said. Noting that the funds for Route 100 and the other expedited projects have already been appropriated by the legislature, he said, "The money is there. Only the process is slow."

Most state construction funds are derived from the sale of bonds, and the money cannot be diverted to cover the large deficits in the operating budget. Some funding also comes in the form of matching grants.

Charles McMillion, a Washington economist who has done several studies in Maryland, said the governor's proposal "has to have some effect. In an economy as large as ours, the effect will be very marginal. But it is certainly an important symbolic act, and it indicates the governor is trying to do all he can possibly do."

He said his only "cautionary note" was a concern that projects could be moved forward so fast they could not be properly managed.

Mr. Schaefer acknowledged his "do it now" style has been criticized for "doing it wrong," but he challenged critics to come up with a better idea.

Mr. Schaefer also asked Donald P. Hutchinson, president of Maryland Chamber and Economic Growth Associates, to stir up the private sector by persuading retailers to offer more promotions and sales and by urging consumers to buy Maryland-made products from Maryland stores.

The state is heavily dependent on sales tax revenue traditionally generated during the gift-buying season.

Thomas S. Sequella, president of the 550-firm Maryland Retail Merchants Association, conceded that many stores -- including many in the mall where Mr. Schaefer spoke -- were already offering big sales and deep discounts. But "there are a lot of nervous retailers out there," he said, and the industry may be persuaded to do more.

Offering an example of what one private company is already doing, Mr. Hutchinson introduced Michael M. and Frank J. Beccio, brothers who run an Owings Mills home-building company. To lure customers, Beccio Homes Inc. is offering buyers an insurance policy that would cover their mortgage payments for up to a year if they lost their jobs.

Not everyone thought the governor's plan would work. Even before the details were announced yesterday, banker H. Furlong Baldwin, chairman of Mercantile Bankshares Corp., told a legislative panel Wednesday that he was skeptical that this or any other state plan could "kick-start" the economy.

"The confidence of consumers is a national problem. You can't do anything locally to restore confidence," he said. "There are no quick fixes."

Mr. McMillion, however, said Mr. Schaefer's plan was worth a try.

"I'm not the least bit reluctant to criticize the governor when he's doing the wrong thing," the economist said. "But he's doing all he can do. This is a very serious economic downturn we're in the middle of, and I don't think we're at the bottom yet. These next six months are going to be very difficult."

Projects

A sampling of the 142 state construction projects Gov. William Donald Schaefer wants pushed ahead:

* Replace plumbing at Western Maryland Center, a hospital for chronically ill in Hagerstown. The $1.23 million project was moved up 16 weeks, from February 1993 to September 1992.

* A new 420-bed minimum-security annex at Eastern Correctional Institution in Somerset County, originally to be built primarily with inmate labor, is speeded up 16 weeks as $6.6 million contract is awarded to private-sector builders.

* Accelerate by 12 weeks, to April 1992, construction of $20 million addition to Albert Kuhn Library at University of Maryland at Baltimore County.

* A $2.6 million addition and renovation of Riverview Middle School in Caroline County, expedited 20 weeks to January 1992.

* A $5.7 million coastal research facility for the Center for Environmental and Estuarine Studies at Solomons, Calvert County, moved forward 16 weeks, from July to March 1992.

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