Should the state of Massachusetts issue up to $2 billion in tax-exempt bonds to help Harvard build a new building for its economics department, renovate dormitories, and modernize the medical school dean’s office?

That is the question the board of the Massachusetts Development Finance Agency will consider in a teleconference scheduled for 1:30 p.m. on March 12, according to a hearing notice issued Monday.

That it’s even under consideration shows the pressure Harvard is under. When the university was in stronger shape, it relied on private donors to fund new buildings, or renovate old ones, voluntarily.

Now, with several large donors reportedly having cut ties to Harvard or “paused” giving because of concerns about Harvard’s maladroit response to the October 7, 2023, Hamas terrorist attack, the university is increasingly turning to the lender of last resort, the government.

The notice makes it sound like Harvard is seeking to borrow money for at least some projects that are already well under way, a reversal of the standard sequence for financing construction. It mentions “renovation of the Adams House undergraduate housing project.” Yet the university announced in September 2023 “the completion of the second phase of Adams House renewal,” declaring that “the third and final phase…is currently underway.”

It also mentions “renovation of Gordon Hall, a Harvard Medical School administration building.” Yet the 2023 medical school dean’s report said, “construction has begun on transforming the Gordon Hall of Medicine, our signature campus building, into a flexible co-working space. This design will create a positive work community for our administrative units.”

Usually government subsidies are justified on the basis that they jumpstart activity that wouldn’t have happened without the subsidy. Here, the bonds appear to be retroactively paying for work.

Why are Massachusetts tax-free bonds suddenly in increased demand? In November 2022, in a ballot initiative heavily backed by teachers unions, the state’s voters narrowly approved a new “millionaire’s tax” that raised the formerly flat 5 percent income tax rate to a new top marginal income tax rate of 9 percent.

For high-income taxpayers who haven’t yet decamped to New Hampshire and Florida, bond income that is tax-free in Massachusetts is suddenly relatively more valuable than it used to be.

The teachers unions sold the tax to voters on the basis of overly optimistic revenue projections that didn’t contemplate either an exodus from the state or dynamic adjustment into tax-free investments. With $2 billion in tax-free bonds, revenue lost to the teachers unions will be instead captured by construction trades benefiting from Harvard’s on-campus unionized construction boom.

It’ll be something for Harvard economists to teach about someday in their new building — how a teacher-union overreach leads to an unexpected windfall for construction worker unions. Talk about tradeoffs.

The state emphasizes that it’s Harvard, not Massachusetts taxpayers, on the hook to pay back the $2 billion. State law requires the board, before lending any money, to determine that “the user is a responsible party.”

That requirement may bring a smile to anyone who has watched Harvard struggle with its recent challenges — discrimination lawsuits brought by Jews and Asian-Americans, a congressional investigation into antisemitism, plagiarism complaints, executive branch investigations.

One thing that would sure make Harvard look responsible, or at least clever, is managing, quickly, to get its hands on a government-backed $2 billion before these various lawsuits and investigations take their toll, with corresponding additional damage to the university’s already diminished prestige. How responsible that will make the Massachusetts Development Finance Agency board look will be for them to decide on March 12.

It could be they decide the responsible move is for them to wait a few months more and see whether Harvard’s crisis stabilizes or worsens. In the meantime, the board and Harvard’s could contemplate the finance agency’s enabling legislation, which includes lending for projects that have a purpose “to prevent or arrest and reverse the decay of the area covered by the plan.”