Report: Maine personal income growth lacking

Posted Feb. 26, 2009, at 8:49 p.m.

AUGUSTA, Maine — Maine is making good progress investing in research and reducing the ranks of the uninsured, but is severely lagging in the areas of personal income, energy and health care costs, plus access to high-speed Internet, according to a new report.

In its 15th annual “Measures of Growth” report, the Maine Economic Growth Council highlighted six areas of “great concern” where the state has a low national standing, has not made enough progress or is trending in the wrong direction.

The state scored well in four of the 24 benchmarks examined by the council, which was formed by the governor and Legislature in 1993 in order to help guide the state’s long-term economic growth. But the six “red flags” are in areas critical to improving the economic health of the state, council members said Thursday.

“We need to use this report as a road map for what we want to do this session,” House Speaker Hannah Pingree, D-North Haven, said at a press conference.

One of the biggest areas of concern highlighted by the report was the relative lack of personal income growth. Maine ranked 35th nationally in per capita personal income in 2007 at $33,962. That was down one spot from 2006, according to the U.S. Department of Commerce.

The national average was $38,564, while the New England average was $47,256.

Senate President Elizabeth Mitchell, D-Vassalboro, said she was pleased to see that Maine has made progress in recent years in some areas, such as on-the-job injuries and health insurance coverage. But unless Maine can begin growing personal income, real progress on the other important economic benchmarks will never happen, she said.

“That, to me, is a red flag that has been there for so long that it just makes me ill,” Mitchell said.

Several speakers said higher education — and, specifically, encouraging more young people to study science, math and engineering — was the best way to grow the per capita income. That means investing more in higher education, they said.

“Not cutting is not enough,” Theodora Kalikow, president of the University of Maine at Farmington, said in reference to recent efforts to lessen budget reductions to higher education. “What we need to have now is actual increases.”

Not surprisingly, Maine also scored poorly on some of the other benchmarks that directly affect personal income, such as energy costs, state and local tax burden and the costs of health care.

Maine ranked fourth highest in the total tax burden in 2006 in a U.S. Census Bureau analysis and was seventh highest in a Tax Foundation report.

“Neither one of these are good,” said Tim Hussey, president and CEO of Hussey Seating Co. and co-chairman of the council. “There really isn’t any difference in impact between those two measures.”

The price of electricity in Maine is 32 percent higher than the national average, and Maine homeowners’ dependence on heating oil has only made the problem worse, the report said.

The other red-flagged areas were the number of high-speed Internet subscribers and manufacturing productivity. While subscriptions to high-speed Internet service grew by 29 percent in Maine between 2006 and 2007, the national average was 46 percent growth.

The council report awarded the state “gold stars” during the past year for increasing investment in research and development, decreasing on-the-job injuries, lowering the rates of chronic disease and health insurance coverage.

But the authors acknowledged that Maine’s golden performance on health insurance carries a hefty price tag that, in turn, affects the tax burden and other red-flagged areas.

More than 90 percent of Mainers reported having health insurance in 2007, but 19 percent of those were covered by MaineCare, the state’s Medicaid program, according to the Kaiser Foundation and Urban Institute. Nationally, 13 percent of the population is covered by Medicaid.

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