May 30, 2012

Maine Voices: Maine should adopt a real economic development strategy

Cutting taxes and vetoing an R& D bond will not give Maine the kind of growth we need.

By John Richardson, a former economic and community development commissioner

BRUNSWICK — There is more to economic development than putting up a sign in Kittery that says, "Open for Business." While this makes for great press, it does little for the thousands of businesses already here in Maine, or the entrepreneurs in the state hoping to bring their ideas to market.

ABOUT THE AUTHOR

John Richardson of Brunswick is the former commissioner of Economic and Community Development.

In the last two years, the governor has made some symbolic efforts at economic development, but he has failed to articulate a real plan to bring Maine out of the basement with regard to its business climate and prospects for the future. In December 2011, Forbes ranked Maine 50th as a place to do business for the second year in a row – both years, arguably, under Gov. LePage's watch.

So far, the governor's plan has been to cut taxes until the roads and schools improve and eliminate regulations, mostly at the Department of Environmental Protection, and let the rest of the economy take care of itself. While I applaud the effort to make state government easier to work with, it's clear that these approaches are not sufficient to get Maine's economy humming. Our languishing unemployment rate illustrates this point.

And now the governor has vetoed the $20 million research and development bond, to be allocated by the Maine Technology Asset Fund, an award-winning initiative ably managed by the Maine Technology Institute. Here's a program with a demonstrated 10-to-one return on the Maine taxpayer's investment, but even this doesn't meet with the governor's approval.

Timothy Bartik, an economist with the Upjohn Institute who studies economic policy, noted in a speech last November that state policies that cut business taxes in order to increase job creation and per capita income are simply not effective. He says that general business tax cuts exclusively go to businesses, including those that won't or can't grow or whose growth is dependent upon consumer demand – not sound tax policy. He also stated that our political system has great difficulty targeting tax incentives on only those high-wage businesses that are most likely to create new jobs.

Instead of the cut and deregulate strategy, I offer the governor the following three-part strategy for economic development that I first articulated two years ago in "Start-Up Maine: An Innovative Economic Development Plan for Maine's Future."

First, build the innovation economy here in Maine. My vision is that businesses, old and new, large and small, use ingenuity, creativity and new technology to be globally competitive, grow great jobs and careers for our citizens.

To do this, we need to invest in innovation, in restarting our manufacturers and in reigniting growth. We need to have not just one R&D bond, but an annual fund to make regular and significant investments in the infrastructure that will grow Maine.

It's no coincidence that the companies in Maine that are emerging from this recession in good shape are those that are harnessing new ideas and new ways of doing business, even in older, established companies.

The second part of the plan is to seize the opportunity to make Maine green. We have always had a green brand in our state. People all over the country equate Maine with the great outdoors, with making the most of our resources, with not being wasteful.

Now that this is the way of the future, we need to use this perception to market our products in the U.S. and around the world and lower our costs through energy efficiency. We need to act quickly to maintain our position in renewable energy development, a lead that is being squandered because we lack a vision for our future.

The third part of the plan is to make it easier to do business in Maine. Here, I applaud the governor's instincts, but he hasn't gone far enough.

The large number of economic development organizations should be organized into a single department of commerce, freeing up resources to support new investments. Businesses should have just one office to deal with, not multiple offices in multiple agencies.

Finally, I call on the governor to be the chief marketing officer for Maine, the leading advocate for our businesses and our citizens to the rest of the world.

This is in stark contrast to Gov. LePage, who has instead become known for his confrontational style. These remarks make headlines, but they also concern the business community, who prefer predictability and stability from our governmental officials.

Maine's economic future is too important to be lost in such a debate. We need to have a plan and, even more importantly, we need everyone to understand the plan so that it is implemented in a smart and effective manner.

 

– Special to the Press Herald

 

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