Maine’s business climate nothing to boast about

For years, Maine has been notorious for its hostility to business. In one national survey after another, we have ranked near the bottom – 48th or 49th – in friendliness to employers. Many companies have responded by leaving the state. Others refuse to even consider Maine for corporate expansions. It’s no wonder our business environment seems stagnant and Maine household incomes are so low, while much of the country is going gangbusters.

You might assume it couldn’t get much worse. But now comes word that our business climate has nose-dived even more sharply since 2002, when the last major survey was conducted.

A Florida company called Market Research Insight (MRI) recently released results of an extensive questionnaire answered by 531 business leaders in Maine. In summing up their findings, the authors pulled no punches. “When compared to 2002 survey results,” they wrote, “business leaders in Maine are more pessimistic today on almost every issue tested.”

In fact, after conducting similar surveys in 27 other states, they reported, they found that Maine business leaders paint a more negative picture than did executives anywhere else.

This is an alarming development for Maine. With military base closures potentially wiping out 12,000 jobs – directly and indirectly – we need a business community that can generate employment. We also need a job-creating engine to keep our best young people from leaving the state.

With Maine now established as one of the most lavish welfare states in the country, we need strong revenue growth just to pay for Medicaid “clients,” now one-fifth of our population. And at a time when the federal government is running staggering deficits and cutting aid to states, Maine needs to be as economically self-sufficient as possible.

When you read the catalog of complaints from the company owners and senior executives in the survey, however, you begin to grasp the magnitude of the predicament we face.

Topping the list of negatives in the study, conducted for Maine Economic Research Institute, is our state and local tax burden – the most suffocating in the country for nine years running. It’s like throwing a heavy canvas tarp over a campfire and expecting the fire to keep burning – without oxygen. Nineteen of every 20 respondents cited state and local taxes as the most serious problem. Now the Democrats plan to double the cigarette tax to $2, which undoubtedly will damage convenience stores anywhere near the New Hampshire state line. Thousands of Mainers will cross the border to dodge the tax – and while they are there, they will make other purchases they would otherwise make in Maine.

Health insurance costs ran a close second in the survey’s list of problem areas, and health care costs placed third, followed by energy costs, workers’ compensation costs and Maine’s oppressive regulatory apparatus. But also in the top 10 are the two things that bear perhaps the greatest guilt for creating such horrendous conditions for business – the Maine House of Representatives and the Maine Senate.

As a legislator, I don’t enjoy seeing the House on that list. But I take some consolation in knowing that one party – and not mine – has held power in the House for 30 straight years. The greatest economic harm has occurred on their watch.

No single action has made our business climate so unappealing to entrepreneurs and executives. It’s more like a termite attack – hundreds of different laws, rules, taxes and fees that combine to undermine the structure. The controlling party, seemingly oblivious to the facts of business economics, has heaped regulations and costs on one industry after another, driving down their profitability.

With lower profits, companies hire fewer employees and provide workers with fewer benefits. They also have less capital to build and expand.

In short, much of the harm has been self-inflicted. You don’t wind up with the nation’s most brutal taxation by accident. It springs from uncontrolled spending by state government and an unwillingness to say “no” to any special interest. It’s telling that even with the country’s highest taxes, we still cannot balance the state budget.

A regulatory morass doesn’t come from space aliens. It grows out of a relentless hostility to free-market capitalism. Gradually the rules, regulations and paperwork reach intolerable levels and choke off economic activity.

Our health insurance rates are among the highest in the country.

In fact, our rates are two or three times more expensive than in many states. No need to wonder why – look to Augusta. The majority party has imposed insurance regulations so onerous that all but a few insurers have left the state. We used to have more than 25, now we have three.

Our bizarre approach to health insurance has cost Maine companies and consumers hundreds of millions of dollars in wasted premiums. This is nothing short of governmental malfeasance on a grand scale.

Most states – all but five, in fact – have created subsidized “risk pools” for people with exorbitant medical bills, thereby lowering insurance costs for everyone else. Maine lawmakers insist on sticking with so-called “guaranteed issue,” a disastrous policy that has driven health insurance out of reach for thousands of families and companies. Skyrocketing insurance rates, in turn, help pound our “business friendliness” rating through the floor. In the face of this fiasco, the majority party clings grimly to their failed policies.

When you’ve wrecked your business climate with self-inflicted wounds, it stands to reason that those mistakes can be corrected. If enough voters can be awakened to our perilous situation, we can send the majority party to minority status in the next election – a two-vote swing in the House would do the trick. Then we could begin the task of restoring normal economic conditions here.

Rep. Joshua Tardy, R-Newport, is the assistant leader of House Republicans.