AUGUSTA, Maine - The LePage administration is proposing A $7 million bailout of the Maine Military Authority. The proposal would help the authority satisfy the terms of a $19 million contract with the Massachusetts Bay Transit Authority to refurbish nearly two dozen commuter buses.
The administration says the taxpayer bailout will help the MMA complete the contract, but its future beyond that is still unclear.
The MMA proposal is an item in the governor's supplemental budget package, which includes additional funding requests for the fiscal year that ends in June. According to state officials, most of the $7 million goes to losses associated with the Massachusetts Bay Transit Authority contract. The bailout would allow the MMA to rehire workers and complete the contract work by tapping the state’s year-end surplus and creating a special Maine Military Authority Reserve Fund.
In September Gov. Paul LePage announced that he was halting the bus refurbishment work, saying the contract was underbid and MMA was losing money.
By October the MMA announced that it was laying off 35 of its 65 workers.
But questions remained about the future of the contract, about half of which was incomplete when LePage announced the work stoppage. On Wednesday Department of Defense, Veterans and Emergency Management Commissioner Douglas Farnham told the Legislature's budget writing committee that the state had been in talks with the Massachusetts Bay Transit Authority, or MBTA.
"Our goal has been to renegotiate with MBTA to limit the downside of the current contract, while positioning the talented workforce and top notch facility for future economic opportunities," Farnham said.
Farnham said talks with the MBTA are still ongoing, so the outstanding issues are in question. Farnham also said the MMA has partnered with a private company to reduce the risk of future contracts, although it's not clear if the unnamed company will receive a slice of the proposed bailout.
What is clear is that the MMA needs to settle debts associated with a contract. Farnham said the MBTA deal was signed amid pressure to save an agency that once employed more than 500 people. He described a desperate agency outmaneuvered by the more sophisticated negotiators of the MBTA.
"They had what they thought was a good deal. They got in there and got in a more competitive bidding process - again not like doing a government contract - and they were talked down to be competitive. They wanted the business and they were talked down on a couple different levels," he said.
The MMA is located at the former Loring Air Force Base in Limestone. It was once nationally known for its ability to retrofit and repair Humvee vehicles for the National Guard. But when the Humvee business dried up, the agency looked for other contracts to keep its remaining workers employed. It has refurbished over 16,000 vehicles and generated $600 million in revenue, according to the statistics compiled by the agency.
It landed a deal with the MBTA to refurbish articulated buses. But MMA apparently did not anticipate costs to repair buses made by a German company that went out of business before the deal was signed. With no company to furnish replacement parts, costs for the bus repairs increased. In some instances, Farnham said, the agency was fabricating new ones.
Hugh Corbett is the MMA's executive director. In a separate hearing before the Veterans and Legal Affairs Committee, Corbette made his case for the bailout to lawmakers, reminding them that the MMA helped fill budget gaps during it's heyday.
"It's important to remember that when Maine Military Authority does well, it does well by the state also," Corbette said.
Officials from the LePage administration said about half of the bailout package will go toward settling cash deficits from the contract, while another $2.2 million will go to vendors associated work on the MBTA's articulated buses.
Farnham said he hopes the MMA will continue after the contract is completed. But Republican Rep. Jeff Timberlake told Farnham that it might be time to privatize the agency.
"I don't want to see us being in another $7 million," Timberlake said. "You know, when private sector is involved it's coming out of somebody else's pocket, not mine."
Farnham didn't disagree, but he said the focus right now is to get out from under the MBTA contract.
"We were in a situation where we had to halt, we were losing money like crazy. But at the same time we signed a contract," Farnham said.
There were 35 layoffs associated with the troubled MBTA contract. The budget writing committee will continue to review the proposal before it goes to the Legislature for votes.
