50th on Forbes? We can do better
By Rep. Michael Willette
Like many, I was disappointed, though not surprised, to see Maine rank 50th again on the Forbes list of The Best States to Do Business. As tempting as it is to blame Forbes for a general bias against blue states like Maine, I think the survey was fairly objective.
When Maine ranked 50th on Forbes list last year, it motivated us in the legislature to make some great strides in fostering a more business friendly environment in Maine. With all we did last year, it still wasn’t enough and we came in 50th place again. Our poor ranking can be seen as proof positive of just how bad of shape our state was in before we made the changes we did during the first half of the 125th Legislature. I like to think of the State of Maine as a huge oil tanker cruising through the ocean and it needs to be turned around. Oil tankers don’t turn on a dime; it takes 1.2 miles to make that turn. During the first half of the 125th Legislature we only started to cut the rudder and we are just entering that turn, it takes time.
The recent changes made by the governor and the Republican legislature got the ball rolling , but we need to work harder to improve the climate for job creation and business promotion in Maine. The metric used by Forbes that garnered us the 50th place ranking is important to understand. They include business costs (Maine ranks 44), labor supply (28), regulatory environment (45), economic climate (42), growth prospects (50), and quality of life (17). Let’s leave labor supply and quality of life aside for the moment and consider what we can do to improve the rest.
The business cost ranking is determined by labor, energy, and taxation costs. An important bill to reduce the cost of workers’ compensation insurance will come before the legislature in the next session starting on January 4th. This will go a long way toward reducing labor costs. The cost of energy is one of Gov. LePage’s biggest priorities these days. He is working hard to obtain cheaper energy from Canada and, with the help of the legislature, reduce oil dependence in Maine. We are working hard here in the County to ease our dependence on foreign oil. The work presently being done to get natural gas piped into the county for power generation and eventually residential use, and the conversion to wood pellet boilers for our municipal and university buildings are just a couple initiatives’ being pursued . The legislature also included many measures in the budget to reduce the tax burden on businesses, including breaks for those that invest in new equipment and technology. Maine jumped threeplaces over last year in the business costs category.
The regulatory environment in Maine was greatly improved by the passage of LD 1, the regulatory reform bill that eliminates many burdensome and unnecessary impediments to economic growth. Experience proves that deregulation works. Ten years ago, Maine had the highest electricity costs in New England. Since deregulating at about the same time, we now have the lowest. I commended the Maine Public Utilities Commission (MPUC) for its approval last week of the standard offer price reductions that will result in lower electricity prices for residential and small commercial customers in Maine. This will result in a statewide savings totaling nearly $50 million next year. Many more bills to reduce regulations and commercial liability, a key factor in the Forbes regulatory ranking, are up for consideration in the next session.
Maine jumped three places over last year in the regulatory environment category but a lot more needs to be done. One area that we really need to address is the over burdensome demands that MUBEC (Maine Uniform Building and Energy Codes) places on new construction and retrofit work. MUBEC has been responsible for adding countless thousands of dollars to building projects and business expansions. It has tied the hands of contractors and home builders and entrepreneurs all across the state.
One such recent incident occurred with a Presque Isle business having to add over $20,000 to the renovation and retrofit cost for moving their existing business to a new building. The extra money they were forced to pay went to redundant engineering costs and needless inspection fees. I had submitted an amendment to a bill last session to address some of these issues, but the will was lacking in the Legislature to work on these problems. With this new data, I feel that the sense of urgency needed will be felt in the second half of the 125th Legislature. I will re-submit the necessary amendments to try and solve this problem.
It was the growth prospects for our state where we fell flat. Next to getting our energy costs down, this is one of the most important areas we need to work on. Last year, we lowered taxes, trimmed regulations, and improved the state’s long-term fiscal outlook. Next session, we are taking up bills to examine regulations further, reduce energy costs, and align our education system with what employers are looking for.
In closing I want to reiterate that changing the culture and economic climate in our state will take time. It took 20 to 30 years of over burdensome legislation and unrealistic regulation to get us to the place we are in now. It is going to take years for us to turn our tanker around, and without the will to make the necessary changes, we will always have our special spot at the bottom of the Forbes list.
State Representative Michael Willette (R-Presque Isle) is serving his second term in the state legislature. He serves on the Veterans and Legal Affairs Committee.
