The Maine Economic Growth Council, which Democratic leaders praise as a fair and unbiased source, red flagged the state’s continued number one ranking in state and local tax burden and rising health care costs in its annual report card.
In all, the state got four red flags and three gold stars on economic performance indicators put together by the council, which is made up of legislators, business people, educators and advocates. The report was released last week in Augusta.
“It’s a long-term planning tool,” said Laurie Lachance, head of the Maine Development Foundation, which administers the council. “It should not be considered an assessment of policies just passed.”
One of those policies was tax reform legislation passed in 2005 that increased aid to education and capped spending at the state and local level. While the Baldacci administration has praised its effectiveness at reducing the growth of property taxes, it didn’t yet hit the radar screen in the council’s report.
Lachance, who for more than a decade was Maine’s state economist, said that doesn’t mean the tax reform bill – known as LD1 – isn’t working to reduce the local tax burden.
“It’s one of those items that will change it gradually through time,” Lachance said.
The four areas flagged for concern in the report were:
• Local and state tax burden: Maine for several years has ranked first in the nation for state and local tax burden and kept that ranking in 2005. Maine’s state and local taxes were 13 percent of income last year as compared to a U.S. tax burden of around 10 percent.
• Multiple job holding: In 2004, 7.7 percent of all Maine workers held two or more jobs, compared to the national rate of 5.4 percent. While some workers may choose second jobs to earn money for non-essentials, the report says it is believed many work multiple jobs to pay for basic needs.
• Cost of health care: In 2005, personal health care costs for Maine’s people and businesses amounted to an estimated 18.5 percent of Maine’s gross state product as compared to 13.4 percent of gross domestic product for the country as a whole.
• Affordable housing: In Maine, as in the Northeast and U.S. as a whole, housing has become less affordable as it relates to median income since the year 2000.
The three areas receiving high praise were:
• Research and Development expenditures: In 2002, total R&D performance in Maine was 1.1 percent of gross state product – a percentage only achieved one other time in the state’s history back in 1995. The goal is to hit 3 percent by 2010.
• Health insurance coverage: In 2004, 10 percent of people in Maine were not covered by health insurance compared to 15.7 in the U.S. The rate of employer-sponsored health insurance has declined both nationally and in the state, but Maine has used its Medicaid program to help fill the gap.
• On-the-job injuries and illnesses: In 2004, there were 6.9 reported injuries and illnesses for every 100 full-time Maine industrial workers, a decrease of 10.4 percent from 2003. During the same period, the number of incidents in the U.S. dropped by 4 percent to 4.8 injuries per 100 workers.
House Speaker John Richardson of Brunswick said, “some people like to talk about what’s wrong with Maine. I like to talk about what’s right.”
He said LD1 and the Dirigo Health program are addressing tax burdens and rising health care costs. The state identified close to $44 million in health care savings under Dirigo for 2005, he said. That is the amount the agency is going to collect back through a savings offset payment to keep Dirigo going in 2006.
Richardson said one of the highlights in the report was the gold star it gave for research and development.
“That is the future for our children and our grandchildren,” he said.
Senate President Beth Edmonds of Freeport praised the report for its fairness and objectivity, calling it the “single best tool” for measuring the “diversity of policies we must address.”
“It does not make any sense to think there is one simple solution,” to continued improvement of the state’s economy, Edmonds said.
Send questions/comments to the editors.
