Pine Tree Politics

Being Business Friendly In Maine

By Matthew Gagnon
August 3, 2009

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In my interview with Green Party candidate Lynne Williams last week, I brought up the long held belief by many Maine citizens (specifically Republicans, but also many others) that Maine is one of the highest taxed states in the union.

Her answer that it all “evened out” in the end, because neighboring states such as New Hampshire had high mill rates while Maine’s were comparatively low did have some merit, but was ultimately a faulty premise.  It doesn’t even out, and Maine’s overall tax are certainly higher than most states.

But when we are talking about economic plans for the future, we have a lot of things to consider, and taxes are only one part of the equasion.  I’ve always preferred to look at other indicators that take a look at the “bigger picture” – things like how “business friendly” a state is.

These types of rankings are usually very broad, good indicators of how open a state is to entrepeneurship, creativity, and capital investment – all of which are very healthy for a state’s tax base, budget, etc.

In short, if you are ranked low on the top states to do business in list, it tells you a lot more about a state’s economic health and planning than a simple ranking of taxes.  Indeed, Massachusetts has a very high cost of doing business (income, property and business taxes), yet still ranks highly because of other factors, such as technology and innovation, education, access to capital, etc.

So today I decided to revisit a ranking I saw a short time ago, of America’s top states for business in 2009 – put together by CNBC.

In this ranking, Maine comes in a lowly 40th in the union.  In other words, it has much bigger problems than just taxes, and any serious economic plan being proposed by our gubernatorial candidates has to address all of its shortcomings.

A brief look at how Maine fared:

• 39th in “Cost of Business“
• 45th in “Workforce“
• 8th in “Quality of Life“
• 26th in “Economy“
• 36th in “Transportation“
• 41st in “Technology and Innovation“
• 8th in “Education“
• 24th in “Business Friendliness“
• 29th in “Access to Capital“
• 38th in “Cost of Living“

Those categories sound quite cryptic and generic, so if you are curious about what any of those categories mean, simply click on the link and read the opening paragraph – it will explain how it is calculated.

Essentially though, the problems should be obvious.  Taxes are indeed too high, the workforce is small and not nearly as educated as other states, the economy itself is not very diverse, transportation is sub-par, the technical infrasturcure of Maine is severely lacking, regulation of business is at best “average”, venture capital isn’t exactly easy to come by and to top it all off, the cost of living isn’t nearly as great as many people in Maine seem to think it is.

Just to drive this point home a little more, as most readers are undoubtedly aware – I no longer live in Maine, but instead live now in Virginia.  Virginia just so happens to be ranked #1 in the country on this particular list.  I have seen – first hand – the differences between the two states.

Yes, Maine is not and never will be (nor should it) Virginia – you won’t find subways or built up metropolitan areas in Maine, and that is actually a good thing.  But most of what states are ranked on happens to be fair to compare across boundries – things like taxes, education of the workforce, economic health, technological penetration, regulation, venture capital, etc.  In these areas, places like Virginia beat the pants off places like Maine, and as a resident I can see why, and how.

Maine is a unique place – it will never have some of the built in advantages of other states (like neighboring Massachusetts), but on the flip side it has some advantages that other states would kill for.

The mission for the next Governor of Maine will be to pursue an economic plan that tackles all the factors that the state can control, and make it more hospitable for a vibrant, growing economy.  Maine’s population is getting older, and it’s economic base is disapearing.  People like me are flocking out of Maine in droves, because it simply can not support a large number of highly educated, driven people who take risks and aim to succeed while participating in the larger global economy.

Any platform that focuses on lowering the relative tax burden of the citizens, removing some of the more draconian regulatory pitfalls, putting a new emphasis on higher education, creating a more diversified economy, and the growth of Maine’s technology infrastructure will get my support.

But more than that, the candidates must stop paying lip service to these issues.  Maine voters should look for somebody they believe can actually accomplish the goals I listed above.  Luckily, I happen to think that there are more than a couple options right now which could in fact end the gridlock on these fronts, and get Maine truly positioned for a healthy, vibrant economy.

Tags: Lists, Rankings, Tax Reform