Governor John Baldacci starts his second term being sworn by State Senate President Beth Edmonds in on a family bible held by his son, Jack. Photo by Ramona du Houx

Febuary/March 2007

By Ramona du Houx

“Maine has become a very different place than it was when I began serving on the Bangor City Council or representing the Second District in Washington.

Maine remains a beautiful place to live, work, and raise a family — the best place in the world!

But Maine, like many areas of the country, is more and more influenced by outside forces that have given way to a different brand of politics than we’re used to — more partisan, more divisive, and ultimately, more detrimental to our democracy.

We recently witnessed this divisive atmosphere in the lengthy and expensive campaign over the so-called Taxpayer Bill of Rights, a property-tax reform proposal that had its origins outside of Maine.

Maine voters rejected this idea.

But I’ve heard what Maine people are saying — loud and clear, and the debate over property taxes won’t end there.

The time has come to enact a property tax relief policy that is by Maine people for Maine people!

But before I talk more about that, there are a few other things I want to say. After all, this is my last Inaugural Address and the last elective office I will hold.

The political campaigns that were just completed served many important purposes, the most important of which is giving the voters clear choices on how their state will be governed and managed in the years ahead.

But in the age of 10-second sound-bytes and carefully crafted TV commercials, these campaigns have a downside.

All you hear are claims about what’s wrong with Maine.

You hear about its high tax burden, its ailing economy. You hear about out-of-control government spending, about young people leaving Maine in droves, about Maine’s inability to compete with other states and other countries.

All of this has the effect of making us more pessimistic about our future. It saps our can-do spirit and makes Maine seem a much gloomier place than it really is.

I know this may shock you, but not everything you hear in a political campaign is 100 percent accurate.

This was clear from the recently completed independent Brookings Institution report that exploded many myths about Maine. The Brookings study has given us not just a blueprint to improve our economy, but a way to lift the extensive pessimism that permeates this state.

You might have heard that people are leaving Maine, but in fact we have the fifth highest rate of any state in the country of people moving into our state. Who are these people moving to Maine? Many are highly educated, upper-income individuals looking for all the things that Maine has to offer that they can’t find anywhere else. And where are they coming from? More than half of them are coming from Massachusetts and New Hampshire, two states that are often held up as states Maine needs to emulate.

But if that’s true, why are so many people leaving those states and choosing to come to Maine? Because Maine has what the world wants: quality of life, a “gold standard” workforce. And we can compete globally.

We are the eighth fastest growing state in exports in the United States. Foreign Direct Investment magazine ranked Maine’s quality of life as the best in the nation. And Inc. Magazine included Portland, Lewiston-Auburn, and Bangor in its listing of the top cities for doing business and attracting entrepreneurs in America.

Large international companies competing on a global scale have located here and are thriving. TD Banknorth, National Semiconductor, and others employ thousands of hardworking Mainers. Their entrepreneurial spirit is mirrored in our homegrown small businesses crisscrossing the state: Oxford Aviation in Sanford, Sea Run Holdings of Eastport, and Maine Mutual Insurance Group of Presque Isle.

You’ve heard about Maine’s high tax burden — the amount of taxes Maine people pay relative to their incomes.

But you probably didn’t hear that Maine’s tax burden is coming down while incomes are on the way up. In fact, Maine’s average income is at an all-time high, and our goal is to keep it going higher. If we can raise the average Maine income just a few thousand dollars while keeping taxes in check, our tax burden will fall to somewhere in the middle of the 50 states, and we wouldn’t be having this debate at all.

So it’s not enough to simply address our high taxes. We’re going to have to address growing our incomes, too. I’ll discuss how we intend to do both in a minute.

You might have heard that state spending is out of control. But in fact, over the past four years, we have established the lowest average spending rate increase in the last 30 years. We’ve capped government spending at all levels. We’ve put $140 million in our Rainy Day Fund and paid off a quarter of a billion dollar credit line.

You might have heard that we sorely lag behind in jobs, but resident employment has grown by 32,000 workers in the past four years. There are more Maine people working now than ever in our state’s history.

You may have heard that there is no strategic plan for growing Maine’s jobs, but we recently competed for and won a $15 million federal grant to support and expand Maine’s leadership in the boatbuilding industry, adding over 2,000 jobs in seven years.

Does all of this mean that we really don’t have to worry about taxes and spending, or the state of our economy? Absolutely not!

But it doesn’t mean that everything is bad, or that we’re not doing anything right.

The fact is we are doing a lot of things right. But we must do more. And Maine can do it.

To accomplish this will take our coordinated efforts … Maine can do it. We can solve our problems and face our challenges. We need to celebrate our accomplishments, celebrate our achievements. We need to lift the cloud of pessimism that hangs over our state.

Maine is a leader once again on energy. Businesses are now flocking to Maine to harness our clean renewable energy resources: our wind, our tides, and our wood and wood wastes. Development of these energy resources will put money into the pockets of Mainers, rather than exporting them out-of-state and overseas. We have come a long way on the road to energy independence, and I will continue to move us in that direction.

We’ve protected our environment. This year we completed the vision of Percival Baxter by adding Katahdin Lake to the Baxter State Park. We continue to protect traditional land uses — like hunting and fishing — and have added three-quarters of a million acres of land to preserve Maine’s way of life for the future.

When we in Maine look back at the first years of this new century — an era driven by technology and innovation and a knowledge-based economy — one critically important action will stand out: the creation of Maine’s Community College System. In just four years, thousands of citizens — hardworking Maine people displaced from traditional manufacturing jobs, young high school graduates unsure of their future, underemployed adults struggling to make ends meet — have flooded our community colleges. Enrollment has soared by 47 percent. Our community colleges are building new skills for a new economy and a brighter economic future for our entire state.

The University of Maine system enrolls 34,000 students. The vast majority of these are Maine people: your sons and daughters, nieces and nephews, friends and neighbors. Most of these students build their careers in Maine. By focusing on quality education, and pursuing R&D to create private-sector jobs, the University has an important impact on Maine’s future.

And the fact is, we’ve provided property tax relief to over 200,000 Maine households by doubling the individual Property Tax and Rent Refund Program, and tax relief to all Maine homeowners by increasing the homestead exempt valuation up to $13,000. And we increased the amount of state aid to education by replacing local property tax dollars with $800 million in new state funding and putting spending caps on state, county and local government. But more must be done.

The people of Maine have spoken again and again of our collective need to stop the skyrocketing costs of property taxes.

At the state level, we can — and we must — do something. It must be bold and it must send a strong signal that we cannot continue doing business as usual.

We must support excellence in education, not excess administration.

Maine has twice the number of school district officials per student than the national average. We spend $2,000 more per student than the national average, and pay our teachers $7,000 less.

We can and we will do better.

My plan will reduce the number of superintendents from 152 to 26. Establishing 26 regional centers similar to the technology centers that now serve the state. We will save a quarter billion dollars in the first three years of operation alone.

With the budget I will be submitting Friday, the State will have met the commitment that the people of Maine voted for — to have the State pay 55 percent of local education costs.

But this year I am going to insist that the savings available from increased funding be directly passed on to taxpayers for immediate property tax relief. If it’s not guaranteed, I will veto the legislation.

But I believe that’s still not enough.

After listening to thousands of people all over the state, I am insisting that we move forward to freeze property valuations on homes of permanent Maine residents for tax purposes. This must be done to prevent people from being tax valued out of their homes. Permanent Maine residents will have their property tax valuations frozen until such time as they sell their property; then the valuations on that property can and should rise.

This freeze is a vital component of our overall tax and spending priorities.

Of course there will be opposition to this. I expect it. I welcome it.

Change is always threatening, but it is time we put the needs of permanent Maine residents ahead of all the special interest groups and ahead of those who benefit from the ever-rising property tax burden.

Enough is enough … The people of Maine require a bold initiative, and the package I am presenting: reducing state and school administrative costs, fulfilling the promise of state funding of local education to 55 percent, guaranteeing savings be passed along to residents, and freezing permanent residents’ property valuations for tax purposes — achieves this. We cannot continue the status quo and I won’t stand for it! …

We must raise the average income of Mainers to reduce the tax burden, too. It takes both sides of the ledger.

We will raise incomes by making investments in key areas to prepare Maine people for good-paying, private-sector jobs …

Our people can compete anywhere in the world, but we need to build our capacity and our competitive edge in the global marketplace.

We will do this by committing to investments in innovation and research and development that fuel private-sector jobs and economic growth.

We will expand Pine Tree Zones, enabling companies in Maine to have a level playing field and attract new business to this state.

We will do this by making commitments in education through 50 percent tuition reimbursement at community college rates for those students who couldn’t afford to otherwise and who attend a state college or university. We will open the doors to higher education wider than ever before, so students are ready to learn and ready to succeed here in Maine.

We must change the status quo in Augusta. We must look at things from a different perspective. And tonight I want to challenge Maine people to have the courage to change as well, in your own communities, whether that means partnering with other communities, sharing services, or joint purchasing. We have to use our God-given Yankee ingenuity — something no one else possesses — to accomplish this change.

Maine is truly at a crossroads.

Our people are experiencing the transition from an old economy to a new one. In the past our economy relied heavily on manufacturing to create wealth. Today we are moving to a new focus on innovative products and knowledge-based services. This change has brought pain and dislocation, but it also heralds the possibility of a prosperous future for all Mainers.

In this new economy, Maine stands head and shoulders above any state in the nation. Our good people and strong communities, along with our natural beauty and small-town character, have become scarce resources in a crowded world. The Maine brand represents quality, pride, integrity, innovation, and craftsmanship — things that the world today needs and wants more of. These are Maine’s competitive assets in the new 21st-century economy.

If we preserve and enhance these unique assets, if we can develop and attract the kinds of businesses — from biotechnology to alternative energy, from new forest products to specialty foods — it will offer a truly sustainable prosperity.

This means high-quality, high-paying jobs for our generation and the next. It means a thriving and innovative business climate, so that our young people want to stay here and raise their own families. It means that if we make the right choices, the 21st century is Maine’s century. It means: Our time has come.”

—Governor John Elias Baldacci