Maine’s state capitol in Augusta. In times of economy downturn states must turn to the federal government to help augment their budgets as revenues decline at home .Maine’s future depends on the next President: with Obama new green technology jobs in a global economy could be created.

October/November 2008

Editorial by Ramona du Houx

In the past it has been true that while the nation suffers economic upheavals, Maine has been able to keep afloat by not being as directly impacted by economic trends.

This time around, while the subprime lending collapse has dramatically hurt some states, Maine had the wisdom during 2007 to enact one of the nation’s first comprehensive laws to protect homeowners from predatory lenders. Last month, Lloyd LaFountain, Maine’s head of the State’s Bureau of Financial Institutions contacted several banks and was reassured that banks were liquid.

But also, this time around, the state is suffering from worldwide increases in gas and oil prices, which have tragically forced some businesses to close. Because 80 percent of Maine businesses and homes still rely on oil, people are hurting, so the state has started a push to help people transfer from oil to wood pellets and become more energy efficient. The measures will help economically, as more money will stay in the state, from funds saved through wood heating and energy efficiency measures.

Maine is a progressive state, and the Baldacci administration has been working steadily towards becoming energy independent. The recent Governor’s Conference for the New England governors and Eastern Canadian premiers, held in Bar Harbor, recognized the region’s united interest in utilizing green technologies, like wind, tidal, and solar, to decrease the region’s energy dependency on oil. They also agreed to work on the transmission of electricity as a united body of influence. The state already has streamlined the process for windmill permits, offers incentives for biodiesel, and recently held its first cap-and-trade auction for energy credits, as part of the Regional Green House Gas Energy Initiative that cuts CO2 emissions. And with research and development taking place at UMO, new alternative energies are being developed. Despite the economic downturn, Maine continues to move forward.

To help citizens, more winterization measures have been introduced, so Mainers can take independent action to insulate themselves against the energy crisis. More energy auditors, who assess a homeowner’s needs, are being trained, and by calling 2-1-1, people can access information to help them immediately. Congressman Allen and Michaud, along with the governor, helped secure more LIHEAP funding for people most at risk from oil price increases.

The nation muddled through the energy crisis of the 70s, without significant shifts to green technologies, this time around individual states and regions are taking action, the end result should be a shift towards energy independence.

This economic crisis seemed to come from left field, but it had been building for years. Years of deregulation in Washington, DC allowed banks to take gambles with the hard-earned money of America’s middle class and extended lines of credit. In 2008 we are interlocked within a global economy. What happens in America affects the world’s markets directly; America needs a new President to lead.

Back in Maine, our fiscally responsible governor and his determination to streamline Maine state government have positioned the state better than other states. His consolidation efforts are paying off. Baldacci started in office with a $1.2 billion deficit, but now the state has a rainy day fund. Consolidation works.

But Maine is not immune from what happens with the national economy.

The State Budget Office recently released a bipartisan, detailed report about what can be expected for the state’s next two-year budget, which takes effect July 1, 2009.

Currently Maine’s budget is balanced. The state has been spending less each successive year since Governor Baldacci was first inaugurated. The state’s Rainy Day Fund is in part due to state government mostly being flat funded, only investing $800 million new dollars because of a voter mandate in education. Consolidation efforts enabled other investments to be made over the years, using savings achieved by these streamlined initiatives.

In the next two years, Maine has more projected expenditures—that voters approved—and are necessary investments in the state’s innovative economy. At the same time, the national economic condition is also projected to hit Maine’s economy more, which will mean fewer revenues that the state will take in. The state has to balance current services and the projected increases with the revenues that Maine will be gathering over the next two years.

So, planning ahead and responding to economic projections of a $508 million structural gap, the governor has ordered all state agencies to cut their spending budgets by 10 percent. This projected structural gap is money that won’t be there, because the state has to meet projected expenditures while taking the expected loss of revenue into account.

Maine could be in a financial conundrum like Rhode Island, which has a deficit and faces hundreds of millions of dollars in more cuts, or Massachusetts, whose structural gap has been estimated to be more than $1.5 billion.

Maine’s state government has cut its workforce, streamlined services, reduced programs, and restructured government.

The state’s tax burden has also dropped. For years, the rating agency determined Maine’s tax burden incorrectly, because they always included property taxes that out-of-state residents pay. Now that they have adjusted the figures, and because of the governor’s economic measures, which helped improve Maine’s tax rating, Maine is approaching a national average. Not bad. It didn’t happen overnight. It took years of consolidation work that started the moment Baldacci walked in the door. Now he is determined to lower taxes as well.

Now that the state has a rainy day fund and is seeing efficiencies because of new streamlined practices, the governor believes there are avenues that, working with the Legislature, will lead to tax cuts. Realistically, tax cuts will depend upon more consolidation efforts passing in the Legislature. The state needs to find the money to replace any taxes that are cut. Consolidation will be key.

In this global economy, the fate of Maine’s economy and the worlds really depends upon this Presidential election. Whether or not the governor can significantly cut taxes in Maine depends upon who will be President. With Barack Obama at the helm, it can happen.

In 2009 the economy, taxes, energy, and more comprehensive consolidation initiatives across the board will be on Baldacci’s agenda. Maine is one of a few states left that have state, county, and municipal governments. The tax dollars that keep this antiquated system going could be used to cut taxes, enhance economic development, schools, and health programs. With the availability of Internet technologies, the bureaucracy of three tiers of government has become more of a burden than a help. With more consolidation efforts, the state can enhance the community closeness that it is known for.

Maine’s quality of life is being enhanced and recognized nationally; Belfast was in the top ten as quality destinations to discover in a recent travel magazine. Portland has been recognized as an art center, as well as a restaurant mecca. Brunswick is known as one of the best communities for retirees. Projects like the Creative Hathaway Center in Waterville are putting stock in the state’s future as a destination location for creative entrepreneurs.

But in order to move forward at a pace that can position Maine better as a leader in the global economy, the United States needs to elect someone who believes in the potential of every American, someone who understands that the quality of life begins with family, friends and community. Someone who has a plan to jumpstart the economy with jobs of the future.

Barrack Obama’s energy plan will:

• Provide short-term relief to American families facing pain at the pump with a $1,000 Emergency Energy Rebate to American Families.

• Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future.

• Within ten years, save more oil than we currently import from the Middle East and Venezuela combined.

• Put one million plug-in hybrid American-built cars — cars that can get up to 150 miles per gallon — on the road by 2015.

• Ensure ten percent of our electricity comes from renewable sources by 2012 and 25 percent by 2025.

• Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.

Maine’s energy plans and the region’s are on course with Obama’s. The state has great potential for wind farms, onshore and offshore, tidal power and solar power, but needs a partner in DC.

How the state grows economically with the technologies of the future is now more important than ever; this election is the most important election of our lives.