Maine remains in the pits on job creation despite LePage’s prolonged focus

Sonya Eldridge, owner of Bagel Central in Bangor, washes the windows of her business on a Tuesday afternoon in February.
Sonya Eldridge, owner of Bagel Central in Bangor, washes the windows of her business on a Tuesday afternoon in February. Buy Photo
Posted July 06, 2013, at 6 a.m.
Last modified July 07, 2013, at 5:21 p.m.
Gov. Paul LePage
Gov. Paul LePage

AUGUSTA, Maine — Gov. Paul LePage has long said that virtually everything he does as the chief executive is connected to improving Maine’s business climate and creating jobs.

Within two months of taking office, LePage posted an “Open for Business” sign on Interstate 95 in Kittery — a point maybe people pass entering Maine.

Between when LePage took office in January 2011 and May of this year, the state has seen an increase in the ranks of the employed workers of about 13,750, according to seasonally adjusted figures from the Maine Department of Labor. During that same period, the unemployment rate has dropped from 8 percent to 6.8 percent, the lowest rate since November 2008. There’s little question that those figures represent progress, but not nearly as much as LePage and others had hoped.

Maine continues to rank near the bottom in various measures of states’ business climates.

Maine was one of only three states (along with Wisconsin and Wyoming) to lose private-sector jobs between April 2012 and April 2013, according to data released June 14 by the Pew Charitable Trusts. Maine’s second-from-last ranking was caused by the loss of 1,500 jobs for a drop of about 0.3 percent, according to the trust, which analyzed data from the U.S. Bureau of Labor Statistics. Wyoming lost the same number of jobs, but its smaller population ranked it dead last. By comparison, the trust said New Hampshire gained 6,100 jobs for a 1 percent increase; Massachusetts, 46,200 jobs for a 1.4 percent increase; Connecticut, 10,800 jobs for a 0.7 percent increase; and Rhode Island, 21,800 jobs for a 0.6 percent increase.

LePage himself received a poor ranking for job creation last week. The Business Journals, a network of 40 regional business publications, ranked 45 governors on the growth rate of private-sector jobs in their states since they took office (five governors who took office in 2013 were not ranked).

LePage tied for second-from-worst among the 45 governors ranked. Citing figures from the U.S. Bureau of Labor Statistics, the publication found that about 10,500 private-sector jobs had been created since LePage took office in January 2011, which works out to an annual growth rate of 0.91 percent, about half the national average of 1.98 percent.

These are just the latest among numerous national organizations and media outlets that have given Maine dismal economic development rankings, including Forbes Magazine, which in December ranked Maine dead last for its business climate for the third year in a row.

Some economic development officials have been quick to criticize national groups that try to rank progress on economic development issues because they try to force a common formula across states that have uncommon socioeconomics — Maine, for example, is unique because it has one of the oldest citizenries in the country — but it’s obvious that LePage is paying attention.

When he was railing against the Legislature earlier this month for approving a biennial budget that relies on increases to the sales, meals and lodging taxes, LePage brought up the Forbes report.

“Taxation right now is not appropriate,” said LePage to reporters. “It is simply not what we need when we’re the 50th worst place in the nation to do business.”

LePage, who declined a request for an interview with the Bangor Daily News, blames the Legislature for blocking initiatives that he said would create jobs. George Gervais, LePage’s economic development commissioner, told the Bangor Daily News on Tuesday that the state’s tax rate is one of the chief impediments to bringing more businesses to Maine. It was a repetition of one of LePage’s mantras.

“It looks terrible for us to be tagged with a high tax environment, yet here we are sending the message again that we’re increasing taxes again,” said Gervais, referring to the biennial budget that took effect last Monday. “Tax rate matters. It matters for employers when they’re calculating the cost of doing business itself. We’re sending a message that we’re in a downward spiral and if we want to improve the situation, taxes would be a great place to start.”

In order to fund a range of initiatives and avoid a two-year suspension of municipal revenue sharing, the Legislature raised the sales tax from 5 to 5.5 percent and the meals and lodging taxes from 7 to 8 percent. But Gervais said the more important tax to cut would be the income tax, which was already cut in 2011. Gervais said it should be zeroed out, which LePage has said he would attempt to do by the end of his second term if he’s re-elected.

There are other measures championed by LePage that were squashed by the Legislature. When asked by the Bangor Daily News last week what his biggest failure as governor has been, LePage said it was his failed efforts to make Maine a “right to work” state, which means people who work for unionized companies wouldn’t be forced to join the union.

Gervais said that along with taxes, right to work is an issue repeatedly raised by businesses that are considering moving to Maine, including aircraft manufacturing giant Airbus, which has since chosen another state.

“It was a barrier for them,” said Gervais. “Cost of energy and right to work are the two biggest issues that are brought up. International companies are asking these questions.”

Two right-to-work bills were killed by a legislative committee in 2011 and two new ones were killed by lawmakers on mostly party-line votes earlier this year.

LePage entered office with a very distinct view on how to grow the economy, according to John Porter, CEO of the Bangor Region Chamber of Commerce.

“He believes by shrinking government, lowering taxes and pushing ahead with as much deregulation as is reasonable that those are the keys to growing the economy,” Porter said.

In those efforts, he has accomplished “modest successes,” but they haven’t yielded much in terms of measurable results, Porter said.

“Those are helpful steps, but not game changers,” he said. “If [LePage] achieved his full agenda I’m sure there would be some debate about whether that would bring economic growth in the first place; certainly he’s been able to move the needle, but it has been fairly marginal.”

Porter believes LePage’s economic development vision is too narrow, and lacks focus on the need for investment in areas such as education and infrastructure.

“Depending on how you view things, that is not necessarily the governor’s vision. I don’t think he sees government having a critical role in investment as a direct creator of jobs. I think he feels lowering taxes and regulatory burdens is the way to go,” Porter said.

Maine’s job situation is improving, though, according to Labor Commissioner Jeanne Paquette. She attributed the growth to a rebounding economy and LePage’s concentration on streamlining regulatory and permitting processes. Paquette said there are data that indicate that many people who have held onto substandard jobs for several years are beginning to move to new ones.

“You’re going to start to see some turnover and movement and it’s because we’ve been able to create between 6,000 and 7,500 private-sector jobs since the bottom of the recession,” said Paquette. “I think we have created an environment here where we have looked at being dual-focused, concentrating on listening to businesses and helping businesses in working through regulations. We’ve changed the culture to where we are customer-service-oriented.”

Some disagree. Sen. Seth Goodall, D-Richmond, chairs the Legislature’s Joint Select Committee on Maine’s Workforce and Economic Future, which was created this session by Democrats as a way to focus on those areas.

Goodall, who is about to resign from the Senate to become a regional director for the Small Business Administration, called LePage’s job creation agenda “misguided” and said LePage has taken several steps that impede job creation. Among those were LePage’s opposition to an omnibus energy bill enacted last week by the Legislature — and specifically LePage’s objections to a major offshore wind farm proposed by Statoil — and proposals by LePage to repeal various tax exemptions and end the Business Equipment Tax Reimbursement program. Statoil announced this week that it was putting its project on hold because of the “risk and uncertainty” created by a last-minute bill that gives the University of Maine more time to submit an offshore wind power proposal to the state.

“The governor needs to look in a mirror and realize that these actions, when you actually speak to businesses, were more serious than anything in the biennial budget,” said Goodall. “The governor seems to be on a race to the bottom.”

Keith Van Scotter, president and CEO of Lincoln Paper & Tissue, is generally wary of politicians’ ability to help businesses.

“In general, politicians can generally do more harm than they can actually do good,” he said. “By that I mean if you have a really anti-business, Democratic liberal, they can do a lot of harm.”

LePage, while his efforts to lower electricity costs for Maine businesses haven’t born fruit, is doing all right, Van Scotter said.

“To his credit, he tries not to do harm, but he doesn’t have much he can do to create growth and demand,” he said. “You’re not going to grow jobs if demand isn’t growing, regardless of what any politician might do.”

But Van Scotter said it’s not the state government and its policies that are holding job creation back.

“The biggest impediment to job growth is at the federal level now. The growth of the federal government far overshadows anything that’s happening at the state level,” he said. “It’s the federal government I fear.”

Placing all the blame of Maine’s slow pace of job creation on LePage’s shoulders isn’t fair, according to Amy Fried, a professor of political science at the University of Maine.

“No governor is a magician that can wave a magic wand and change the state’s economy,” she said.

However, Fried does believe that some of the governor’s policy decisions contributed to slow job creation in Maine.

“On the one hand, Maine does recover slowly, but there are policies that make a difference, and not approving a lot of the construction bonds … I think that made a difference,” Fried said. Those bonds would have created jobs that would have created “a ripple effect on the rest of the economy.”

James Melcher, an associate professor of political science at the University of Maine at Farmington, agrees that governors shouldn’t bear the full responsibility of the state’s economy.

“There’s an old saying in sports,” Melcher said. “‘The manager is never as bad as he looks when the team’s losing and never as good as he looks when the team’s winning.’ I think that’s true on all kinds of levels.”

A governor inherits many things he or she has no control over, such as a state’s geography and the education level of its populace — things that have a big effect on the state’s economy. That’s not to mention national and global economies that play a part in Maine’s economy.

“There are issues Maine’s got that no governor could have fixed,” he said. “I think it’s important to not make it black-and-white: This governor has succeeded, and this governor has failed.”

That being said, the governor does deserve some scrutiny because he promised during the campaign that his policies would create jobs, Melcher said.

“It’s partly a function of the promises made, and I think that’s the fairest yardstick you could use,” he said.

While the short-term numbers don’t look “fantastic,” Melcher said, the full implications of LePage’s policy decisions may not be felt for quite some time.

The governor is “planting seeds on some of these things that won’t bear fruit immediately,” he said.

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