By Ron Bancroft
Portland Press Herald:
June 12, 2007
What will it take to get the Maine economy on solid footing and
off what Charles Colgan, the economist from the Muskie
Institute, has called "thin ice"?
I have argued that the place to start is the Brookings Institution's report commissioned last year by GrowSmart Maine. The report suggests that Maine needs to build on its advantages as a wonderful place to live or visit, what Brookings terms the "Maine brand."
It was heartening last week to see a good example of building
on this advantage in L.L. Bean's announcement that it plans to
develop a four-season resort in the Freeport area.
This kind of investment will bring more out-of-state visitors and
provide a boost for an important tourism sector.
Brookings also endorsed investment in R&D to support cluster
business development.
This kind of investment was highlighted in a Maine Voices
column in the Press Herald 10 days ago, by Michael Burgmaier, a New England venture investor.
Burgmaier highlighted the importance of promoting
communities of companies in growth areas such as biotech and
specialty boat-building.
These two thrusts, investing in the "Maine Brand" and
encouraging development of cluster growth business, are the
heart of the Brookings report's recommendations on where the
state needs to invest.
FINDING THE FUNDING
However, there is a second part to this equation -- finding the
money to make these kinds of investments. With a weak
economy and fast-growing entitlement programs, we have to
come up with significant savings to be able to generate the
needed investment.
On a much larger scale, it is analogous to an architect who
wants to invest in an expensive piece of design software.
The software, he knows, will improve his productivity and thus
boost his earnings significantly.
However, he must come up with ways of trimming his current
budget so that he can save the money to make this investment.
The vacation at Disney World is replaced with a camping trip to
Baxter State Park.
He turns the thermostat down a few degrees in the winter. He
and his spouse limit any eating out. There are a hundreds of
things he may do, large and small, to save the money he needs.
It is much the same with the state, except the stakes are much
higher. If Maine can boost its economy in a significant way, we
will see more and higher-quality jobs.
We will start generating healthy surpluses in the state budget
rather than the chronic deficits that force contortionist
economics each year to plug the holes.
So to make the investment necessary to raise our economy
above such gimmicks, we must find significant savings. Our
record here can only be described as disappointing.
The state budget just passed increased spending more than 7
percent, well above the rate of growth of the economy.
Gov. Baldacci can claim that he is within the budget-growth
guidelines passed by the Legislature two years ago, but only by
excluding the substantial increase in K-12 school funding.
The budget does contain some modest efforts to curb the
growth of Maine's version of Medicaid, MaineCare. It also
provides for the Appropriations Committee to conduct a review
of state government costs.
The Brookings report fingered this type of review as one that
should yield substantial savings, but the task seems a stretch for the already overworked Appropriations group.
A MUCH SMALLER BIG IDEA
However, the governor's big idea in cost reduction was his
school consolidation plan. In its earliest version, the plan
promised considerably more than $200 million in annual
savings.
Six months and many heartaches later, the Legislature passed a
budget with a much- watered-down school consolidation plan
that may save $30 million or so a year.
Even that is in doubt, because local authorities can opt out of
the plan, which means that many of the anticipated districts may not materialize.
What is clear from all of the follow up to the Brookings report is
that the state has made only modest beginnings to a task which needs much more focus and drive.
The Brookings plan may be the last best hope for a state that is
teetering on the brink of economic decline.
We have the capability to do much better. We know what needs
to be done. Let's start making tough choices instead of settling
for modest beginnings.
