State to track funding activity Development entities at issue

AUGUSTA – Maine has 55 separate economic development programs, from tax credits to technical assistance, and a state agency assigned the responsibility of promoting the state’s economy. But, for the first time, a comprehensive study will try to determine whether they are effective.

“What we are looking for and what Maine people are looking for is the plain, unvarnished truth with respect to these programs,” said Sen. Karl Turner, R-Cumberland, a member of the Legislature’s Appropriations Committee. “We have spent a lot of money and continue to spend a lot of money under the guise of economic development. We want to get our money’s worth.”

Members of the Appropriations Committee supported Finance Commissioner Becky Wyke issuing a request for proposals for the study, which could cost up to $150,000. The report will be made next year to the new Legislature elected in November.

The review grew out of a report from the Legislature’s Office of Program Evaluation and Government Accountability that concluded hundreds of millions of dollars are being spent on programs identified as economic development, but with no clear definition of economic development and no way to measure the effectiveness of the programs.

The OPEGA study identified more than $600 million in spending to promote economic development from 2003 to 2005. But OPEGA acknowledged it had not tracked down all spending.

“We have since become aware of other programs we would have surveyed had they been brought to our attention,” the report stated. “For example, our surveys captured information on one Applied Technology Development Center being administered by River Valley Growth Council. We subsequently learned that there are six more being administered through different regional organizations that are part of the same program.”

The council includes several communities along the Androscoggin River, and OPEGA concluded that simply identifying a program did not provide enough information because many programs have several sources of funding.

During the session, members of the Appropriations Committee, the Taxation Committee and the Business Research and Economic Development Committee met in a rare joint meeting to discuss economic development programs and policies. The group also focused on the OPEGA study as an indicator that a review of programs was needed.

“We have some tax breaks on the books that haven’t been used,” Sen. Joe Perry, D-Bangor, the co-chair of the Taxation Committee, said. “We do need to look at everything and see if it is effective.”

With so many committees, and state and local agencies involved, members of the Appropriations Committee decided to assign oversight of the study to Commissioner Wyke, the only member of the governor’s Cabinet who looks at the entire state budget.

“Over the years, over time, we have accumulated for whatever reason an awful lot of programs,” Wyke said. “We haven’t been particularly diligent about putting measurable outcomes attached to those programs so that we know whether or not they are working so that we can best invest our [tax] dollars.”

The issue of accountability for state spending has been growing in importance for lawmakers. Several years ago lawmakers started to write into the research and development bond issues the funding for an independent review of their effectiveness. Researchers from the University of North Carolina reviewed the bonds from 2001 to 2006 and concluded that the bonds were leveraging significant additional investment and that more should be authorized to grow Maine’s economy.

“Those were significant findings,” said Rep. Emily Cain, D-Orono, a member of the committee and co-chair of the panel that reviewed the UNC findings. “I think having a report that says these are all the programs, here is what they were intended to do and here is what they actually do is extremely informative. I wish we had it today.”

There was broad agreement among panel members. Some legislative committees had indicated they wanted to do a separate evaluation of the economic development programs under their oversight, but that was rejected as an approach by the Appropriations Committee.

“We want everything looked at objectively, by an outside group,” said Sen. Peggy Rotundo, D-Lewiston. “This needs a thorough and independent evaluation.”

Wyke hopes to have a contract signed early this summer, with a report to the new Legislature next spring.