BANGOR – Local residents, business owners, legislative leaders and economic development officials gathered at the Bangor Opera House on Thursday night to consider and challenge The Brookings Report, a study of Maine’s economy that advises the state to dramatically cut administrative spending and invest in a few critical investments.
The report asserts a need for the state to increase tourism taxes to fund land and economic development and other tax reductions, while critics fear that such an approach would turn visitors away and cause the loss of jobs.
The report, titled “Charting Maine’s Future: An Action Plan for Sustainable Prosperity and Quality Places,” was published by The Brookings Institution, a Washington, D.C., think tank, and commissioned by GrowSmart Maine, a nonprofit in Yarmouth that promotes sustainable economic growth.
Alan Caron, GrowSmart’s president and CEO, introduced Bruce Katz, a vice president and director at Brookings, and Mark Muro, a policy director at Brookings. They explained the results of their 18 months of research and discussions with Maine residents about the state’s economic future.
The authors told the crowd of 80 people that they first identified Maine’s most recent major changes: population growth, sprawl and a diversifying economy. Each change is related, they said, and together they demand urgent response.
Most important, Maine must preserve its “quality of place,” its outdoor activities, scenic countryside and small towns, the authors said.
“You’re beginning to look like Anytown, USA. That’s not the way people think of Maine. You’re losing your brand,” Katz said, inducing nods from the crowd.
The state also must encourage young, educated workers by investing in its emerging innovative economy, Katz said. To follow through with its recommendations, the report proposes cutting excessive administrative spending and investing the savings in land preservation, research and development, and tax reductions.
Caron said the report marks the beginning of a campaign to build enthusiasm among state residents and encourage elected officials to adopt the report’s action plan during the next legislative session, which begins in January.
In its plan for promoting sustainable prosperity in Maine, the report recommends a Government Efficiency Commission, a bipartisan effort that would scrutinize state and local government systems and locate up to $100 million in efficiency and structural savings within state government.
The savings could be applied to tax reduction, a $2 million Fund for the Efficient Delivery of Local and Regional Services and a $200 million Maine Innovation Jobs bond fund to support research and development in promising areas such as forest bioproducts, biotechnology, information technology, organic farming, advanced materials and precision manufacturing.
The report also recommends a 10-year, $190 million Quality Places bond fund that would combat sprawl by supporting land and farm conservation and access to forests and lakes, as well as advertising to attract tourists.
To pay for the fund, the report suggests charging tourists more by increasing the state’s lodging tax by 3 percent, raising the current rate of 7 percent to 10 percent.
Peter Daigle, chief operating officer of Lafayette Hotels, said he is worried that the tax increase will affect business at his 18 hotels, which are often frequented by Maine residents.
“You say that if you raise taxes, they [tourists] are still going to come,” Daigle said. “I’m not sure they’re going to come.”
Caron responded by asking the crowd how many people had visited Florida, and how many had called beforehand to ask what the lodging tax was.
“Up to now, Maine has been a cheap date,” said Katz, drawing laughter from the audience. Katz said he believes that if Maine continues to preserve its towns and rural areas, visitors will continue to come.
Rep. Emily Ann Cain, D-Orono, praised the action plan’s call to support research and development, noting that the University of Maine could use such funding. But Rep. Sean Faircloth, D-Bangor, was skeptical, pointing out that the report is one of many recent proposals to cut spending, many of which have failed.
“I’m wondering how is it going to work, and how is it going to work this time,” Faircloth said.
Katz said he understood that making radical system reforms is difficult, but said all Maine residents and officials must remain optimistic.
“Is the status quo an option?” Caron asked. “I believe the status quo is not an option and we are running out of time.”
Steven Ribble, a landscape architect with Ames A/E, a Bangor-based architectural and engineering firm, said the report was “effecting a major paradigm shift to the next economy.” Katz and Muro agreed.
Janet Ordway, a Bangor resident, said that excessive administrative cuts would mean a statewide loss of jobs. She asked whether any timeline had been proposed to accompany the action plan.
Katz said legislative officials would have to present a transition timeline if they adopt the plan.
In response to a request from the audience, Katz, Muro and Caron compared their report’s proposals to the Taxpayer’s Bill of Rights, or TABOR, a voter referendum designed to limit increases in state and local government spending by requiring majority approval from a governing body and voters for all tax and fee increases.
Both proposals recommend a closer look at government spending, Katz said, but the major difference is that the Brookings Report proposes investments in land and economic development.
“If TABOR passes, there will be more need for the Government Efficiency Commission,” Caron said. “If it does not pass, most people will realize we just dodged a very large bullet and something must be done to change where we’re headed.”
The Maine Heritage Policy Center, the group promoting TABOR, released a statement Thursday that said, “Mainers must recognize that entrepreneurs create jobs and wealth, not the government.” The center said it is opposed to the Quality Places and Innovative Jobs funds presented in the action plan.
The Brookings authors encouraged the audience to read the report in its entirety.
“I think this state is small enough and smart enough to make the right decision,” Katz said.
The Brookings Report may be read at www.growsmartmaine.org. For more information on TABOR, visit www.taxpayerbillofrights.com.