Maine housing, health costs up Study finds some gains, red flags

A Maine Development Foundation report set to be released today paints a mixed picture of the state’s economy, still burdened by high business and housing costs, but gaining ground in other key areas.

The report, “Measures of Growth in Focus 2005” – the 11th such report to come from the foundation – found that Maine’s business climate demands attention, with the cost of doing business steadily climbing over the past five years.

“It’s holding back investment in our state that we desperately need,” said Laurie Lachance, the foundation’s director and a former state economist.

The study, conducted for the Maine Economic Growth Council, will be released today at a 10 a.m. news conference in the State House.

Affordable housing continued to be a source of concern for the report’s authors, who found the median sales price of Maine homes increased 12 percent from 2003 to 2004, compared to a 9 percent jump nationally.

Based on the report’s estimates, home prices in 2004 were nearly five times annual household incomes.

That marks an alarming trend, say experts, who blame the high housing costs for forcing people to live outside of communities in which they work, increasing commute times and requiring expensive development of outlying areas.

The housing numbers do show regional differences, with the highest home prices in the coastal and southern areas of the state. But Bangor officials say those differences are diminishing.

“[Lack of affordable housing] is an issue that’s creeping up the coast and now it’s right in our back yard,” said T.J. Martzial, Bangor’s housing programs manager, predicting an even tighter housing market once employers L.L. Bean and Penn National Gaming set up shop in the city, bringing hundreds of jobs between them.

The report also found some progress, albeit slight, in Maine’s state and local tax burden, which has long been among the highest in the nation. The burden dropped from 12.4 percent of income in 2003 to 12.3 percent of income in 2004, according to the report.

“We still need to keep our eye on that ball,” said Lachance, although noting that during the same period, New England’s tax burden showed a slight increase.

Maine showed improvement – and even fared well – on several of the report’s economic indicators, including income and educational measures.

Fewer Mainers (10.5 percent) lived in poverty in 2003 than the previous year (11.1 percent). During that period, poverty nationwide increased to 12.7 percent.

More Mainers had health insurance and earned college degrees in 2003 than in 2002, according to the study, which based its numbers on 2004 U.S. Census Bureau reports.

Among the report’s other findings were:

. The value of international exports from Maine increased 11 percent from 2003 to 2004. During the same period, U.S. exports increased 13 percent.

. In 2003, health care costs increased to 17.6 percent of Maine’s gross state product, up from 17 percent in 2002. On the national scale, health care costs amounted to 13.2 percent of the gross national product.

. New business starts and manufacturing productivity in Maine decreased since the last report.

. Maine reduced the number of workplace injuries in 2003, with 7.7 reported injuries and illnesses for every 100 full-time industrial workers, a 5 percent decrease from the previous year.

On the Net: www.mdf.org