Maine is focusing on the right areas for policy changes and more investment to boost the state’s economy, according to an annual report from the Maine Development Foundation. The areas where the state gets low marks – tax burden, health care costs, degree attainment and access to technology, for example – have been the focus of legislative attention. At the same time, improvements in research and development funding and health insurance coverage show what such sustained attention can achieve.

In its annual Measures of Growth report, the group found that the state made progress in 11 areas, but regressed in nine. The positives included employment, personal income, on-the-job injuries and land conservation. The negatives included tax burden, international exports and affordable housing.

Maine received a gold star for exceptional performance in the area of research and development expenditures for spending more than 1 percent of gross state product in this area for the first time since 1995. The group’s goal is for the state to be at 3 percent, which is a nationally and internationally accepted standard for healthy R&D investment, by 2010.

Maine has belatedly realized the benefits of R&D investments and it shows. Although Maine led the nation in the percentage of increased funding for R&D between 1993 and 2002, the state still ranks 50th in university research, according to the Corporation for Enterprise Development. Even with a doubling of academic R&D spending, Maine’s investment in such endeavors remains small nationally. The top performing states all had more than $8 billion in R&D; Maine generates around $430 million. The recently announced Science and Technology Plan for Maine calls for the state to boost its share to $120 million annually by 2010 to increase overall state R&D activity to $1 billion a year. Such increases will require consistent funding from the Legislature, something that has been lacking.

In the area of state and local tax burden, the state was given a red flag. Although the burden has stabilized, it has yet to begin dropping toward the New England average of about 10.5 percent, which is where the group would like it to be by 2010. However, a report released last week on the effects of LD 1, which aims to reduce property taxes by devoting more state funds to K-12 education, found that the law may be working. Although only based on limited data, the report found that property tax growth had slowed.

Again, lawmakers must be consistent in their commitment to increase state education funding to 55 percent of the total, as LD 1 requires, if local taxes are to drop.

Income growth will also help re-duce the state’s tax burden and there is good news on that front. Last year, personal income grew faster than the national average.

On the health care front, Maine received a gold star for insurance coverage because the percentage of state residents without coverage declined by nearly 5 percentage points while the trend was the opposite nationally.

However, the state got negative marks for the cost of health care. Instead of moving toward the state average, health care costs continue to climb in Maine. The administration’s Dirigo health plan addresses both areas by improving insurance coverage and seeking to lower costs by improving quality and capturing savings.

As the report shows, Maine is moving in the right direction in many areas, but continued legislative commitment is needed to tackle big problems such as health care funding and tax burdens.