Forbes ranks Maine business 48th Baldacci disagrees with magazine, says sources have bias against state

AUGUSTA – Forbes magazine published its annual “Best States for Business” ranking this week, and Maine slipped from 46th to 48th place. Gov. John Baldacci brushed off the report, saying he does not believe it reflects Maine today.

The Forbes ranking uses 36 measures divided into six categories: Business Costs, Labor, Regulatory Environment, Economic Climate, Growth Prospects and Quality of Life. The measures are a mix of government statistics and subjective appraisals that are used to predict such indicators as job and income growth.

“I am not discouraged by these kind of outlooks by these organizations,” Baldacci said in an interview Thursday. “It’s really the same old, same old.”

The governor said he believes some of the sources for the subjective part of the rating, such as the Tax Foundation and the Pacific Research Institute, have biases that make Maine look worse than it is. He said some of the objective measures, such as the cost of energy, are not new and that state government has been doing what it can to address the high costs.

“The fact is that these people have particular issues that they want to focus on,” Baldacci said. “What I focus on are the objective studies.”

The Forbes ranking uses Moody’s Economy.com, Pollina Corporate Real Estate, the Pacific Research Institute, the Tax Foundation, the Corporation for Enterprise Development and Sperling’s Best Places as sources for its data.

Baldacci said a lot of the data in the Forbes ranking are out of date. For example, he said, it does not reflect business tax changes that have been passed by the Legislature and other state actions that would improve the state’s standing in the ranking.

“We have the repeal of the business equipment tax and this year we have the reduction of the unemployment tax [by] $68 million,” he said. “We just had our credit rating improved by Standard and Poor’s.”

But another study, from State Policy Reports using federal government data, also indicates a sluggish economy. The Index of State Economic Momentum measures personal income growth, employment growth and population growth. The June 2007 index, based on data from the second quarter of this year, ranked Maine 44th in the country.

State Policy Reports is a Washington, D.C., think tank funded principally by the National Governors Association and the National Conference of State Legislators.

Bill Becker, president of the Maine Heritage policy center in Portland, a conservative think tank, said the numbers in all of the data are clear and that Baldacci and other state leaders need to fundamentally change some state policies.

“We have been on the wrong path for far too long,” he said. “We have been trying the same things over and over again, and we need to move in a new direction.”

Becker said the state’s tax burden is too high and the cost of doing business here needs to be reduced for Maine to move up in the rankings. He said most of the Forbes rankings are based on federal statistics and even the subjective categories that seek to project how the state will do in the future are based on current data.

“We have created an environment where businesses are hesitant to open up new businesses and create jobs in Maine,” he said. “The simple answer is cut taxes, make health insurance more affordable, and start restraining the growth of government so the tax burden does not grow any worse.”

Baldacci said he and the Legislature have worked together to reduce taxes and restrain the growth of government. He said the cost of health care is an issue that needs to be addressed.

But he said he is encouraged when he talks to Maine companies and pointed to recent business expansions that have been announced.

“You’ve got expansions like the 500 jobs in Brewer, manufacturing industrial jobs, and Old Town [Red Shield] is doing well,” he said. “Sure, we have challenges, but we are transforming our economy. We recognize the challenges, and I think we are moving ahead.”