CONTRIBUTORS

Legislature lays groundwork for stronger economy

Posted June 30, 2011, at 8:44 p.m.

Last November, voters made it clear that jobs and the economy topped their list of concerns. Looking for a fresh approach, they elected Republican majorities in the House and Senate and put a Republican in the governor’s office. The last time the Maine GOP had such extensive control, stamps cost five cents and American troops were pouring into Vietnam.

In this legislative session, Republicans moved quickly to lay the groundwork for a stronger economy. Without a robust business sector providing jobs and opportunity, we will continue to stagnate. Moreover, funding “safety net” programs will grow increasingly difficult. According to University of Southern Maine economist Charles Colgan, Maine added only 56 net new jobs between 2000 and 2010, while MaineCare, or Medicaid, enrollment surged more than 80,000 over the same period.

Government cannot create jobs, but it can establish a more positive business climate. The following initiatives will move Maine toward a better future.

Our health insurance rates are among the highest in the country. Employers, employees and individuals are stretched to the limit. LD 1333, the sweeping overhaul that is now law, will put us back in the American mainstream with more competition, more choices and a more rational rating structure. The goal is to drive down costs and make insurance more affordable for everyone.

For individuals with expensive or chronic conditions, a guaranteed access plan will assure they can get insurance at reasonable rates, thanks to a new subsidy program. Businesses can band together to obtain better rates and Mainers will be able to shop for insurance across state lines. These features will be phased in gradually to ensure an orderly transition.

The new budget includes changes to the public pension system that will save Maine taxpayers $3.155 billion over the next 17 years while enhancing the system’s long-term stability. The budget freezes state employees’ pay for the next two years, thus impacting pension benefits, which are based on earnings. It also caps cost-of-living increases at 3 percent annually instead of the current 4 percent. The retirement age has been raised to 65 for new hires and employees not yet vested. However, retiree benefits do not go down and employees’ costs do not go up.

These structural changes will reduce the unfunded liability from $4.1 billion to $2.4 billion.

The budget for 2012-13 includes the largest tax cut in Maine’s history — $150.7 million. This reduction offers middle-income Maine families real financial relief and provides economic stimulus by keeping cash in the pockets of the people. The package also eliminates the Alternative Minimum Tax and the 7 percent tax on meals served at retirement facilities. It allows for a refund on sales tax on fuel for commercial fishing boats and fully restores the Business Equipment Tax Reimbursement program, which will encourage businesses to invest in capital equipment.

The estate tax exclusion has been increased from $1 million to $2 million effective July 1. Fewer family farms and businesses will have to be broken up and sold off to cover “death taxes.” Due to tax bracket changes, some 70,000 low-income filers will pay no state income tax.

Maine’s aggressive regulatory bureaucracy has been one of the most serious impediments to the success and survival of businesses. In December, new legislative leaders took up the cause of regulatory reform with LD 1, An Act To Ensure Regulatory Fairness and Reform.

That marked the beginning of a new attitude in Augusta. In meetings throughout the state, a bipartisan committee of legislators met with business owners, workers, farmers, fishermen and entrepreneurs who put their fortunes on the line to make a better life. Their overall message from the business community was clear — collaborate with us instead of standing in our way. Understand that laws passed in Augusta can devastate our companies and our employees. And don’t harm the environment.

The resulting legislation, now in statute, eliminates numerous bureaucratic obstructions to doing business in Maine, striking a balance between reasonable safeguards and allowing free enterprise to flourish. Changes include commonsense reforms to the Department of Environmental Protection and new business liaisons to help job creators navigate the maze of permitting agencies.

All told, this was a high-impact legislative session that will make a difference to Maine’s economic future.

Stacey Guerin, R-Glenburn, represents District 22 in the Maine House of Representatives and serves on the Inland Fisheries and Wildlife Committee.

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