Maine Trails, Feb - Mar '12
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Preaching revolution

Economist Charles Colgan talks about the three Rs – recession, recovery and revolution

For the past several years, Dr. Charles Colgan has stopped by the MBTA’s annual Cumberland County meeting to deliver a forecast for the economy – specifically Maine’s transportation economy. At this year’s meeting on March 8 in South Portland, the economist could proclaim with certainty that the recession is over and the recovery is underway and what should be next on the agenda is a revolution.
“This is an important time in transportation,” said Colgan in his address to more than 100 MBTA members and friends, exhorting those in the audience to look beyond the daily business of budgets and bonds to formulate a vision for the future that addresses Maine’s shifting demographics, climate change, increasing fuel economy and declining fuel tax revenues.
Recovery road
Colgan offered a quarter-by-quarter glimpse of the bumpy road to recovery over the past 12 months – a promising first quarter followed by lackluster performance during the second and third quarters, and a fourth quarter gain of 2.5 – 3 percent, that appears to bode well for 2012.
“The consumer is starting to come back, and we had fairly robust performance and GDP growth – if we don’t screw it up,” said Colgan. As for the first months of 2012, he added, “It hasn’t gotten worse, but it definitely hasn’t started to get better yet.”
He said that it would likely be 2015 before Maine returned to pre-2008 employment levels, a timeline that will be better than some areas of the country, but worse than others. And he predicted that construction recovery would continue to be slow, but steady as the glut of housing built during the boom was absorbed by the market. Colgan also noted that others have been more sanguine about the prospects of an accelerating recovery – including Moody’s. “We’ve been more pessimistic about the New England recovery than Moody’s, and frankly, we’ve been right,” said Colgan.
Colgan discussed the effect of increasing gas gasoline prices, noting that consumers are unlikely to let prices dampen their enthusiasm for a recovery. That may change if prices hit $5.30 per gallon or oil rises to $300 per barrel.
He also noted the recovery has offered some surprises. While economic activity has been strongest along the I-95 corridor in York, Kennebec, Penobscot and Cumberland counties, Waldo County growth has surpassed other areas in the midcoast. He also said federal spending is at lower levels than many may suspect. Government spending during the Reagan years far outpaced spending by the current administration in inflation-adjusted dollars.
Prelude to change
All that tepid if upward trending economic news was merely a prelude to the heart of Colgan’s message for the evening: now is the time for a revolution in how we plan, power and deliver transportation in the future.
The first revolution is a demographic one, he said, and will happen as the population ages and begins to shift away from outer ring communities toward urban centers. That will put pressure on already stressed urban transportation systems (both highway and transit) and demands a change in how we keep people mobile and connected.
Power to the revolution
The second revolution, he said, will result from climate change and the effect a warmer, wetter atmosphere will have on transportation systems in areas near rivers and coastal lands like Portland’s Back Cove. He said that the temperature shift will impact Maine’s roads and bridges and cause “potential damages in the hundreds of millions of dollars.”
The third wave will come as Maine and the nation develop new ways to power transportation. Colgan spoke of the early days of the automobile when steam, electric and diesel engines were first developed and the gas-powered internal combustion engine rose to prominence. He said a similar race in technological innovation is on, now that new Corporate Average Fuel Economy (CAFE) standards are slated to go into effect in 2025 raising the fuel efficiency on automobiles to 55 mph.
“This obviously has some major implications,” said Colgan, noting that we will need new infrastructure – such as electric charging stations – and new funding sources to offset the resulting 34 percent decline in fuel tax revenues.
“Ready or not, here it comes,” said Colgan, adding that this shift will bring even greater changes that we need to prepare for by “rethinking our entire transportation system.”
Getting down to business
Of course, there was MBTA business to dispatch, as well, and MBTA Vice President Doug Hermann served as the evening’s emcee. He welcomed members and guests to the meeting, one of five regional forums hosted by the MBTA every year. He introduced several notable attendees and guests, including legislators Senator Tom Martin (R-Kennebec and Somerset), a former MBTA president; Representative Jane Knapp (R-Gorham); and Representative Paulette Beaudoin (D-Biddeford).
Hermann also talked of MBTA’s advocacy efforts at both the state and national level to address “a crushing need for transportation investment,” noting that discussions in Augusta have included the possibility of sending an infrastructure bond out to voters. He said “now is a good time to borrow” because Maine’s debt levels are low and the need is high.
The program concluded with the 50/50 drawing. Grant Maxwell’s ticket was pulled from the entries, and he won half of the raffle’s proceeds ($196), while an equal share went to support the MBTA Educational Foundation’s Scholarship Fund.
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