In the days before voters headed to the polls, Gov. Paul LePage warned that if voters approved a hike in the minimum wage and a new tax surcharge for wealthy Mainers, the state’s economy could get clobbered.
With new federal overtime rules also kicking in, he insisted, “We’re going to get absolutely destroyed. It’s a perfect tsunami.”
Adrienne Bennett, LePage’s spokeswoman, said Tuesday the governor still thinks there’s trouble ahead.
Despite his worry, voters nonetheless backed the ballot measures — and now it turns out the state’s economists aren’t too sure about the governor’s prediction, either.
Meeting after the Nov. 8 election, the state’s Consensus Economic Forecasting Commission declined to take an alarmist stance, in part because Donald Trump’s victory introduced yet another factor into the equation.
“Given the number of moving pieces at this point in time, particularly with impacts moving in opposing directions, the Commission came to the conclusion that more time is needed” before shifting projections about what the economy will do in 2017, the commission’s chairman wrote in a Nov. 14 memo to LePage.
“There will undoubtedly be economic impacts from the election and referendum questions, but it is not clear at this time what the net effects will be given uncertainty around the federal and legislative responses and the lack of detailed agency data,” Chairman James Clair told the governor.
The five-member commission plans to review the data again in late March when “there will be more information available about the potential economic impacts of the many issues in play and more clarity around federal and legislative actions.”
The commission’s forecasts are used by lawmakers and the governor in preparing an annual budget and other key state decisions.
Maine State Economist Amanda Rector said there will also be more discussion of the topic at Monday’s Revenue Forecasting Committee session. “Much is still up in the air,” she said.
The forecasting commission determined in its Nov. 1 report that both personal income and wage growth would likely be slightly lower than it had anticipated six months earlier.
In its report, the commission said it remains concerned about Maine’s demographics, which include the dubious distinction of possessing the oldest median age in the country. “An aging population and little to no population growth” is the panel’s chief worry.
The report said Maine’s economy has been growing but continues to lag behind the national rate in some areas.
On the bright side, wages and salaries rose almost 5 percent between early 2015 and early 2016, single-family home sales went up 6 percent between September 2015 and September 2016 and housing permits are up 33 percent from a year ago.
The unemployment rate is at 4 percent, about as low as economists think is possible given the constant churn in the labor force.
“Reductions in unemployment have been driving job growth the last six years, a period when the labor force has not grown,” according to the state Department of Labor’s analysis. It said there is little room left for more job growth through unemployment reduction.
Possibly an even darker omen, though, is that Maine’s rate of delinquent mortgage payments has been higher than the national average for 17 straight quarters, according to the Office of Policy and Management. Its foreclosure rate has also outpaced the national norm for 15 of the past 16 quarters.
Taking it all into account, though, the forecasting commission saw no reason to project any dire changes in its estimate of what’s likely to happen to Maine’s economy in the coming years.
That contrasts sharply with what LePage said just before Election Day.
He said that if voters backed the ballot initiatives to increase the minimum wage and tack on an income-tax surcharge for those reporting more than $200,000 in annual earnings, unemployment could rise to the same levels Maine faced at the height of the recession that began in 2007.
Combined with new overtime rules set to take effect Dec. 1, the governor said, “Maine is not going to be a pretty state next year” because of the economic hit the measures would deliver.
But the commission said it still expects wages to rise 4 percent in 2017 and job growth to continue at a slow pace until it levels off in 2019 just a tad shy of the pre-recession high in 2007.
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