Pine Tree Zones are one way the state is trying to boost development.
AUGUSTA – During the recent campaign over the proposed resort casino in Sanford, Maine’s commissioner of economic and community development fumed every time he saw a television ad asking, “What’s the plan?” for developing Maine’s economy and increasing job opportunities.
“The implication was that there is no plan,” Jack Cashman said last week. “Well, there is a plan, a good one, and we are using it today.”
He said Maine has developed a two-stage approach to attracting new companies to the state and in convincing firms already doing business here to expand.
But House Republican Leader Joe Bruno, R-Raymond, said last week that he has never seen a comprehensive economic development plan from Cashman or Gov. John Baldacci.
“I agree with the casino people on a lot of what they were saying,” Bruno said. “We have lost a lot of jobs, and we really don’t have a plan to bring in new jobs.”
However, Cashman said Pine Tree Zones should start growing new jobs for the state next year. He acknowledged that the state’s tax structure is an impediment to economic development, but said the zones provide tax breaks to firms that locate within them.
Reduce taxes
“Pine Tree Zones are a start,” Bruno said, “but there are many other states that have similar zones and they do not have the tax burden we have. I was at national conference recently and I can tell you they laugh at our business climate.”
Bruno said the wealthy entrepreneurs that Maine needs are concerned about the high income tax rates. He said a person who has worked to develop a company does not want to pay one of the highest income tax rates in the nation.
“We have to lower taxes,” he said. “That is the best way to spur the economy and create jobs in this state.”
Cashman acknowledged the tax burden in Maine is an issue, but says it’s not the only one. He said the high cost of health care and electricity are also issues with developers. He said Dirigo Health and similar initiatives will help address the health costs issue, and legislation is being developed to reduce electricity costs in Pine Tree Zones.
“We are talking with several manufacturers now about opportunities in the Pine Tree Zones,” he said. “We have had several inquiries on our Web site and so have some of the regional (development) groups.”
As the nation goes
Economists say the real stimulus to make Maine’s economy grow will come from an improving national economy. University of Maine professor James Breece said Maine’s economy is so integrated with the regional and national economy that decisions made by Congress often have more impact than decisions by the Legislature.
Colby College professor Michael Donihue agrees state government has the lesser role in affecting Maine’s economy. But he said there are significant problems state policy makers could address.
“The tax burden in Maine may well be having a negative effect on bringing businesses to the state,” he said, “and if you can do some genuine tax reform, and make the overall business climate more favorable, that’s the area where the Legislature could change our fiscal policy.”
While Cashman and Bruno differ on whether the short-term policies will help grow the state’s economy, they agree on long-range goals of increasing the number of Mainers with college degrees and increasing the amount Maine invests in research and development.
“We have a long way to go to get to the goals of ’30 and a thousand,'” Cashman said. “But we are going to get there.”
The goals are to have 30 percent of the state’s workforce with college degrees and for the per capita investment in research and development to reach $1,000. The goals were set out in a study by the Maine Development Foundation a few years ago and have been strongly supported by lawmakers from both parties.
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