“Maine has had no shortage of thoughtful leaders and bold ideas on economic development over the years. However, the state has frequently failed to stick to and sustain its ideas, with the predictable result that it has undercut the effectiveness of numerous intelligent but under- or un-funded initiatives that might have otherwise made a larger difference.”
-“Charting Maine’s Future: An Action Plan for Promoting Sustainable Prosperity and Quality Places”
Those words from a report by the Brookings Institution should weigh heavily over the governor and legislators as they work to make some of the recommendations in the report a reality.
On Monday, Gov. John Baldacci announced plans to create a Council on Jobs, Innovation and the Economy, which will create an “action plan” based on the Brookings recommendation to invest millions in research and development.
The report recommended the state borrow $200 million for investment in research and development. It recommends paying that tab by cutting state government to the tune of $60 million to $100 million and increasing the lodging tax from 7 to 10 percent.
Both of those steps are bound to meet fierce resistance from the people and businesses that would be affected by them. Advocates for the state’s tourism industry, which has plenty of influence in Augusta, have already started to push back.
“Ten cents of every dollar going to tax – that’s a turnoff to everyone,” said Vaughn Stinson, the head of the Maine Tourism Association. “Especially for large meetings. This is a deal-breaker.”
The governor and legislators who believe this is the direction the state should head will have their work cut out for them as they try to convince other members of the Legislature and the public that these moves are in the best interest of the state. However, they will have the support of the Brookings Institution report, which has laid out a strong case in support of these steps.
As the report describes Maine’s economy, it paints a picture of a state that is not in dire straits, as some have believed, after many of its manufacturing and forest jobs disappeared. The report says, in fact, the state outperformed much of the nation in job creation during the last economic cycle. The problem is, consumer service jobs have replaced higher paying jobs in the manufacturing and forest industries.
That’s where the investment in research and development comes in. The money could create high paying jobs for people who could research products that could aid some of the industries that continue to thrive in this state – agriculture, aquaculture, outdoor recreation and tourism, information technology, biotechnology and toxicology.
Of that $200 million, $20 million would be spent on developing clusters of businesses with common products and services. When similar businesses cluster together, they tend to attract more jobs and businesses that can often partner with the existing businesses on things like job training and marketing.
It’s vitally important leaders in Augusta make room for this borrowing in the state’s budget. Maine can’t afford to simply add this to the cost of living here.
The report also pointed to Maine’s high taxes – the second highest property tax burden in the nation and the low threshhold for the state’s highest income tax bracket – as a barrier that could be deterring workers, entrepreneurs and retirees from coming here or staying here. The state has to find ways to spend less on administrating state services and educating students in kindergarten through 12th grade. (See The Current, Nov. 30, page 8, “Case for school consolidation a strong one”)
The Maine Government Efficiency Commission – the group charged with finding ways to save money delivering government services – has its work cut out for it. What will probably be more difficult, however, is getting a majority of the Legislature and the governor to agree on whatever the commission recommends in the face of protest by whomever would be affected.
That’s when political fortitude and vision will become absolutely necessary. Otherwise, this might just become another idea the state has failed to “stick to” and “sustain.”
-Brendan Moran, editor
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