PORTLAND, Maine — The government sector will be among the hardest hit during the recession with nearly 1,000 job losses, according to an economic forecast.
Maine’s retail sector will lose the most jobs for the period from 2008 to 2010, while construction will lose the third most, according to the forecast of economist Charles Colgan of the Muskie School of Public Policy. That’s no surprise given the state of retail sales and the sharp downturn in the real estate market.
But the second-leading job loss category is expected to be government, which Colgan said should lose about 940 jobs, or 0.9 percent of the total, from 2008 to 2010, Colgan said.
“Government will be severely affected,” Colgan said
Government is one of Maine’s biggest employers, accounting for 104,400 jobs out of an estimated 613,900 jobs in the state. The state’s overall job count is expected to continue falling to about 600,000 in the third quarter of 2010 before rebounding.
Government jobs are particularly vulnerable because of Maine’s revenue structure, Colgan said.
About 40 percent of sales tax revenue comes from purchases of automobiles and building supplies. Capital gains accounted for nearly all the growth in income tax revenue the past four years, Colgan said.
But with fewer people building homes, buying cars or selling securities at a profit, state revenues — and the amount of money the state has to share with municipal governments — drops.
Many of the government job cuts have taken place already or are in the works.
At the state level, 94 jobs would be eliminated under a supplemental budget for the current fiscal year and another 219 positions would be eliminated under Gov. John Baldacci’s proposed two-year budget that starts July 1.
On the municipal level, Portland has eliminated 93 positions through layoffs and attrition because of budget woes. Other towns, cities and school departments also have experienced job cuts or are considering them.
Job cuts will vary community by community, said Michael Starn of the Maine Municipal Association. Communities that offer a lot of services may struggle more when state aid is reduced and typically don’t have as large a cushion in their reserve accounts as smaller communities do, he said.
“But it’s like anybody,” he said. “If you’re in a family situation and you’ve got some money in the bank, you’re going to last a little longer in an economic downturn than someone who doesn’t.”
While there’s concern about job losses in the public sector, there’s also talk about job creation with the economic stimulus plan that is coming out of Washington.
“That could reverse some of the erosion on the public side, at least temporarily,” said John Dorrer, director of the Labor Department’s Center for Workforce Research and Information.
But some suggest that government cuts can be a good thing for the economy by reducing the cost of government.
The performance of state government programs needs to be evaluated, and the state needs to use its resources where they have the greatest impact, said Tony Payne, executive director of the Alliance for Maine’s Future, which represents Maine businesses.
“If the private sector isn’t thriving, can you continue to ask the taxpayer to dig a little deeper?” Payne asked.