Over the past decade, Maine’s unemployment rate has more than doubled.

Since 2008, the start of the current economic downturn, the state has lost 30,000 jobs.

Health care specialists, manufacturers, office workers, retail salespeople, call center employees and others have been laid off — multiple jobs across multiple sectors. Pretty much everyone in Maine knows someone who has been out of work.

But unemployment is just part of the problem facing the state’s economy, says John Mahon, dean of the University of Maine’s College of Business, Public Policy and Health.

Maine is not seen as a serious player in the national competition to attract and keep businesses, Mahon says, making job growth an even bigger challenge.

“The major problem in the state is our lack of economic diversity — many of the leading industries in the state of Maine were the leading industries 100 years ago,” said Mahon. “We desperately need a serious, long-term economic development program to bring 21st century jobs to the state of Maine, improve employment opportunities and raise our wages.”

The 12 gubernatorial candidates who will appear on the June 8 primary ballot are trying to do exactly that.

They each have their own views on the Maine economy and what it will take to create jobs, but generally, the candidates agree Maine needs to be more business-friendly.

Some are looking at the state’s regulatory structure to make permitting for a new business or development more streamlined and predictable. All of the Republican candidates — Steve Abbott, Bill Beardsley, Matt Jacobson, Paul LePage, Peter Mills, Les Otten and Bruce Poliquin — have raised that theme, as has Democrat John Richardson.

Many candidates talk about aligning Maine’s work force more closely with industry needs. This could be anything from retraining laid-off workers for jobs that are in demand, to making sure Maine colleges are graduating students in promising sectors.

Democratic candidates Patrick McGowan, Elizabeth Mitchell, Steven Rowe and Rosa Scarcelli emphasize work force-industry alignment, as do Republicans Otten, Jacobson and Beardsley.

Everybody mentions, at one time or another, reducing the cost of energy and health care.

What about specific plans?

All have their own visions — some specific, some less so — that they hope will resonate with voters. Here’s a snapshot of their ideas.

In a recent campaign release, Abbott noted the expansion of a paper mill in the Shenandoah Valley of Virginia. Mercury Paper’s $21.2 million investment in a bigger facility is expected to create 150 jobs. Abbott said that’s an example of what Maine needs to do to shore up and expand sectors like paper.

Mercury decided to expand because it was supported by state government, Abbott said. The state provided $250,000 in aid, he said, but that wasn’t the deciding factor.

“The number one thing cited in the press release was the welcoming environment from state government,” Abbott said. “It was not the money, it was the attitude.”

Virginia’s governor and other state officials set that welcoming tone, Abbott said.

To attract quality, long-term jobs, Maine needs more people with two- and four-year college degrees, as well as advanced degrees, Abbott said. He noted that in the early 1970s, 18 percent of the state’s general fund was spent on higher education, compared with 9 percent now. Higher education is a priority under his plan, Abbott said.

He said he supports bonding, but only for long-term infrastructure improvements, not to stabilize operating expenditures or programs.

He also suggested the possibility of more private roads in Maine, such as the Maine Turnpike, to help fund infrastructure investments.
 

Beardsley said Maine needs to talk to business leaders with assets in the state and ask what would convince them to expand operations here. As governor, he said, he would talk with the principal shareholder of Domtar to see what it would take to locate a paper mill next to the company’s Woodland pulp mill.

Beardsley said he would reverse trends like the reduction of the business equipment tax rebate, which reimburses companies for some taxes paid. He’d work to reduce the corporate income tax and estate tax as well. And, he said, he’d veto any “nibbling away” of programs that support business.

“I don’t think you have to go out with a grand plan so much as you send very strong signals,” Beardsley said.

He said he supports ways to lower energy rates in Maine, including a utility corridor down Interstate 95, a new nuclear power plant and a liquefied natural gas terminal.

He said he would structure the governor’s office to chiefly handle economic development in Maine. And, just as there are fiscal notes on legislation that detail costs, Beardsley would support similar notes to detail how bills would enhance jobs, gross state product and the economy.
 

Jacobson said his focus as governor would be to reduce taxes on people who create opportunity.

There are only three ways to increase jobs in Maine, he said: Recruit companies from elsewhere, get Maine businesses to expand, or convince new companies to start here.

To get companies to expand or relocate in Maine, he would support reducing the state’s personal income tax to 3 or 4 percent, he said.

To encourage Maine businesses to expand, he would increase the availability of tax credits for business investment and support a business cost-matching tax credit to keep other states from recruiting companies away from Maine. And, he said, he would eliminate the state’s estate tax and income tax on military retiree pensions.

Rather than focusing on attracting specific sectors, he said, the state should improve the overall business climate.

“I get nervous when government tries to pick winners and losers,” Jacobson said. “Why wouldn’t we make an environment so investment happens, and people get to chase their dreams?”

To get early-stage companies to start in Maine, Jacobson said he would prioritize programs like the state’s business incubators.

And he would try to attract more attention from the investment community for Maine startups by pushing a 100 percent seed tax credit and reducing capital gains taxes.
 

LePage said it’s important to have a governor who will be a partner with business.

Businesses see Maine as having an unstable tax structure, LePage said, because government often tries to develop new taxes on business to generate revenue to support operations.

Maine divisions of large corporations with worldwide operations have to compete with divisions in other locations for corporate investment, LePage said. When he worked for Scott Paper, that instability factored into decisions on whether to invest in the Maine mill — the return on investment was never high enough to justify putting a lot of money into Maine, LePage said. One time, the mill asked for $70 million for infrastructure and got a $17 million “Band-Aid” instead, he said.

If he were governor, LePage said, he would work to cut state government so the tax structure could be stabilized.

He’d support dropping the personal income tax to 5 percent, beginning at gross family income of $30,000. And he’d reduce corporate income taxes to 5 percent on pre-tax profit of $30,000 to $500,000 and 4 percent on profits above that.

LePage said he’d work to reduce other costs for business, supporting energy sources such as nuclear, liquefied natural gas and forest biomass. He’d also aim to reduce health care mandates, which he said put Maine companies at a competitive disadvantage.

“We need to partner with business, rather than be anti-business,” he said. “I’d go to Kittery with a chain saw and cut down the sign that says ‘Vacationland, the Way Life Should Be,’ and put one up that says ‘Maine: Open for Business.’ ” 

 

McGowan proposes a focused economic development plan that centers largely on the Great Forest Initiative he spearheaded as the state’s conservation commissioner. The initiative is a proposal to work with the federal government to conserve vast tracts of forestland that could be harvested sustainably.

There are 11.2 million acres of industrial forestland in Maine, the so-called unorganized territory. Seven million acres are third-party certified, meaning they are harvested and managed sustainably. McGowan said he would support getting all the forestlands certified, making paper products from those lands attractive to green-conscious catalogers and publishing companies.

The second part of that plan, McGowan said, would be to develop renewable energy in Maine, particularly biomass plants that produce electricity from the waste left over in the forests. Three million tons of wood is left on the forest floor every year in the form of treetops and limbs, McGowan said. This material could be transformed into low-grade chips and pellets for biomass, he said.

McGowan would support long-term energy contracts, fiber contracts with the forest owners and tax credits as well, to lead landowners to work with industry on the plan.

“The old industrial mill jobs in Maine become the new green jobs because we offer the world products that come from renewable energy and certified fiber,” he said. “The best days in all of the history of Maine were when energy and natural resources worked together.”

To help fund biomass production facilities, McGowan suggested bonding and increasing the amount of money the Finance Authority of Maine could lend to $25 million. 

 

Mills pointed to three things he supports that he said would help the business climate in Maine.

The first would be to lower the 8.5 percent capital gains tax to 6 percent or 6.5 percent. The tax restructuring bill that is currently the target of a people’s veto does that, he said, which is why he supported it.

Mills also pointed to a “fund of funds” bill that he sponsored and Gov. John Baldacci recently signed into law.

It lets the Maine Public Employees Retirement System invest in seed money to businesses in the technology sector. The Finance Authority of Maine is authorized to approve refundable tax credits of up to 80 percent of investments. Essentially, it’s a $30 million investment package that is designed to attract venture capital fund investment in Maine businesses, Mills said.

“The amount of money in that bill will be sufficient to attract interest from 10 to 12 (venture capital) funds. We’ll try to appeal to funds that specialize in investment areas of particular interest to the state of Maine — blood research, vet testing, white mice,” Mills said. “Those are our little clusters. We need to do what we can to act as a magnet to attract venture capital.”

Mills said he’d see whether the plan works, and then, if elected governor, would seek to expand the authority of the bill to attract more venture capital funds.

Mills said he would veto any legislation with ambiguous rules that would complicate regulation. Along the same lines, he would appoint department heads who would revamp and reissue rules and regulations that are poorly defined. 

 

As an example of work force alignment between industry and higher education, Mitchell said, the Maine Community College System has “set the gold standard.” Kennebec Valley Community College, for example, has members of the local business community on its board who know what kinds of jobs are available and what sort of graduates are needed to fill them.

As governor, Mitchell said, she would insist that the education systems align themselves more with the job needs in the state.

The state needs 40,000 more post-secondary school graduates to grow the economy, she said. She would support that as governor by increasing scholarships and financial aid to students, and by fully funding programs that help students pay off school debt if they stay and work in Maine.

Mitchell said she would continue to support investment in research and development in the state. She noted that such investments have attracted matches from federal agencies and the private sector. While the state does a good job funding early-stage startups, Mitchell said, as governor she would look to aid companies at the next stage, when they’re working to get products to market.

Mitchell said she also would work to expand the seed capital tax credit throughout the state, and would continue to support bonds that fund infrastructure improvements and provide construction jobs.

“These are investments in real things that will create real jobs this summer,” she said. 

 

Otten recently noted Jackson Laboratory’s interest in opening a facility in Florida and suggested Maine didn’t do enough to support an expansion here.

“It’s a huge public-private partnership. They’re getting money from the state, money from the county,” Otten said. “We’re not even in the game.”

Florida has offered a $260 million incentive package to entice Jackson to open a lab there. Jackson would maintain its home base on Mount Desert Island.

Otten suggested that Maine could be in the game if it used its bonding capacity to support such programs. It would be something he would like to see put before the voters as an option, he said.

The idea has some precedent in Maine. In 2003, for example, voters approved a $60 million bond for biomedical research — $6 million went to Jackson for a new $21.7 million functional genomics facility.

“We borrow money to pay for things that we should be paying out of the general fund. I think that’s wrong,” Otten said. “If we’re going to bond, it should be to create a new economy, new jobs.”

Otten said he supports the concept of an “entrepreneurial bank” in Maine that would be used as a venture capital fund, aimed at people graduating from Maine colleges or those who want to move here to create jobs. He suggested using the money from the next contract sale of Maine’s liquor business to fund the bank.

He proposed a set of points that include restructuring the tax system, lowering health costs, reforming welfare, reducing energy costs, improving the education system and reforming regulations so they’re friendlier to business. 

 

Poliquin’s economic development plan starts with cutting state government and managing it more efficiently.

“I’m not proposing anything sexy, it’s very simply getting back to basics,” Poliquin said. “What I’m proposing is what our families and small businesses have been forced to do for generations — only spend what we take in.”

That will allow the state to reduce taxes, decreasing the cost of doing business in Maine, he said. Beyond that, Poliquin wants to simplify Maine’s business regulations.

That will lead to a healthy private sector, he suggested.

Poliquin said that if he were governor, he would institute ways to measure the performance of government programs, and would hire professional managers to run departments, “folks who are comfortable with spending, audits and accountability.” 

 

Richardson said if he were elected governor, he would set a goal of creating 750 companies in the state.

Richardson said he would create a Department of Commerce, merging existing economic development offices into one entity focused on business retention, attraction and support.

If elected, he said, he would increase annual research and development funding from $20 million to $45 million, and would support $25 million annually in research and development bonds.

He would also support the Communities for Maine’s Future program with an annual $25 million bond. He also would look at expanding a pilot mentoring program that pairs older and younger students.

Richardson said he’d invest $5 million annually in marketing Maine and would also integrate Maine & Co., a business-attraction organization, with other economic development efforts, investing $1 million annually in that program. He said he would also triple funding for tourism marketing.

In addition, he would expand the Efficiency Maine Trust to help businesses reduce waste and cut energy costs and make investments to improve productivity. He would put $10 million into the program and pair it with the Maine Manufacturing Extension Partnership.

To pay for all of this, he said, he would find savings in state government through a “lean management initiative” modeled on an Iowa program that found $1.7 billion in savings in five years.

“I want to include the participation of state workers,” Richardson said. “I want to empower them to help me build a better system of government that will increase the quality of services, focus on citizens’ needs and secure a vibrant social safety net.” 

 

Rowe said he sees a need to lower cost barriers to allow businesses to grow in Maine.

The first is high health care costs. If elected governor, he said, he would work to have the state focus the health care delivery system on preventive medicine, keeping people healthy through community-based primary care rather than providing curative care in hospitals.

“Major hospitals are moving in that direction,” Rowe said. “It’s where substantial savings will be — focusing on health outcomes, not ordering tests or procedures.”

If the cost of health care in Maine is reduced, insurance rates will go down and competition in the market will increase, he said.

The other major cost barrier is energy, Rowe said. As governor, he would continue to look for opportunities with Hydro-Quebec and explore liquefied natural gas options for Maine.

At the same time, Rowe said he’d “focus like a laser” on shifting the state to renewable energy, including wind, solar, tidal and biomass. He would also emphasize conservation and weatherization.

Rowe noted that two-thirds of the jobs created in Maine in the next 10 years will require some form of post-secondary education. He said he would work to increase high school graduation rates and make higher education affordable and accessible to Maine students to provide the needed work force.

 

Scarcelli said she sees her economic plan for Maine as a three-legged stool: jobs, efficiency in state government, and investment in education and innovation.

State government must become more efficient to allow investment in education and innovation, which will bring jobs, she said.

She said she would bring all of the state’s economic development efforts under one roof, a business development office. She would set up performance measurements and get rid of the programs that don’t work.

A top priority would be to increase research and development spending in Maine, Scarcelli said. She noted that Maine spends one-fifth of what other New England states spend in that area.

She said she would work to make Maine’s tax structure competitive with other states as well.

Scarcelli said she would also focus on the state’s core competencies. For instance, she said, Maine has 150,000 acres of fallow farmland. The state should invest in regrowing the agriculture industry, with a ready market of Mainers, she said.

“The economic crisis we face is a huge opportunity to do things differently,” Scarcelli said. “Sometimes you need that kind of crisis to really get people thinking in a different way.”

 

Staff Writer Matt Wickenheiser can be contacted at 791-6316 or at:

[email protected]