Daily Catch

Whoever wins, Maine’s next governor needs to address these challenges

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After the sounds of boisterous campaign rallies fade and the realities of the job sink in, Maine’s next governor will face a state with serious long-term challenges.

The bold policy proposals and big promises that characterized the election season will have to adapt to the realities of leading a deeply divided state and unifying a fractious legislature around a common vision. Politicians campaign in poetry, the saying goes, but govern in prose.

Here are five public policy areas the next administration must tackle to set Maine on the path toward greater prosperity.

Declining population

Maine isn’t just the oldest state in the union, it’s also one of the few that hasn’t seen recent native population growth. In other words, the meager uptick in our population numbers over the last few years has been thanks to new immigrants, most of whom have come from abroad.

Attracting individuals and families from around the world is key to setting Maine on a sustainable demographic course. That requires nurturing entrepreneurship and removing obstacles to good jobs. Reforming our occupational licensing policies, for example, would give Maine a competitive edge over other states and open doors of opportunity to thousands of Mainers who might otherwise move to a different state in search of a better job.

High taxes and overspending

Despite the progress made by the LePage administration in lowering Maine’s tax burden and reducing the individual income tax in particular, Maine remains one of the highest-tax states in the country. Some estimates suggest that Maine’s total tax burden ranks 3rd nationally, behind only Hawaii and New York.

Of course, all of those taxes go to fund state government, which is growing rapidly. Every biennium, with rare exceptions, Maine’s political leaders approve a new budget that spends hundreds of millions of dollars more than the last. Meanwhile, the incomes of many Mainers continue to stagnate.

Welfare dependency

Reforming Maine’s welfare safety net was one of the LePage administration’s signature policy achievements. Re-instituting time limits and enforcing work requirements dramatically reduced the number of Mainers dependent on government. But the percentage of Mainers receiving welfare assistance remains high by national standards, and more needs to be done to encourage self-sufficiency.

The next step in welfare reform should be to expand the Earned Income Tax Credit (EITC) while reducing the portion of the state budget devoted to other social programs. The EITC is already the most successful anti-poverty program in Maine. By supplementing the wages of low-income workers, the EITC draws more people into the labor force, strengthens the incentives to hold a job, and (unlike most welfare programs) never punishes a worker for earning higher wages.

Health care costs

Health care prices continue to soar in Maine at an unsustainable pace. In 1991, Mainers, on average, spent $4,779 on their health care in inflation-adjusted terms. In 2014, per capita spending had risen to $10,285 — a more than 100 percent increase. Wage growth did not even get close to keeping up.

Today, the average cost of a 30-minute office visit is now $154, while a CT scan of the abdomen costs an average of $803 — more than the weekly earnings of the median worker.

Ending the government’s regulatory stranglehold on the health care market would immediately re-inject competitive forces and lower prices for consumers. For example, Maine’s certificate of need laws inflate the cost of hospital services by trusting bureaucrats to micromanage the supply of medical care. More pricing transparency is also needed to empower patients to comparison shop for the best quality at the lowest price.

Housing affordability

Across the state, but especially in southern Maine, families are finding it harder to put a roof over their heads. In 2017, a household needed to earn $52,000 to rent a 2-bedroom home in Portland, up from $44,000 just a year earlier. Overall, 54 percent of households in Maine couldn’t afford to purchase a median home in 2017, and the trend line is worsening. Nor do we compare favorably to national figures — Maine is the 9th most unaffordable state for housing.

The source of this problem isn’t mysterious — as Maine’s housing stock has aged, the supply of available units has shrunk, causing prices to surge. Addressing this crisis will require shifts in local policymaking, especially zoning ordinances, building codes, and other red tape that raise the cost of construction.  About 25 percent of the cost of a typical new single-family home is the result of government regulation.

About Liam Sigaud

Liam Sigaud is a former policy analyst at The Maine Heritage Policy Center. A native of Rockland, Maine, he holds a B.A. in Biology from the University of Maine at Augusta and has studied policy analysis and economics at the Muskie School of Public Service at the University of Southern Maine. He can be reached by email at liam.sigaud@maine.edu.

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