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For a more prosperous state, start building the foundation

The past quarter-century has seen no net economic progress, but adopting sound policies would help.

In March, the Maine Economic Growth Council, a nonpartisan statewide group supported by the Maine Development Foundation, released its 17th annual report: "Measures of Growth."

Tony Payne authored an excellent article on the report and its implications in the March 27 Maine Sunday Telegram. Tony's conclusion – after reviewing the last five years of reporting on each of the 25 key economic indicators tracked by the Growth Council – was that on balance, Maine has made no net economic progress.

The issues that have been perennial problems for the Maine economy – the cost of doing business, the cost of health care, the lack of research and development investment, the relative lack of higher education degree attainment, low per-capita personal income, and the high state and local tax burden – remain unresolved.

While there is an occasional bright spot in these annual reports, such as this year's performance in statewide land conservation, this is not encouraging reading.

Those of us who have tried to influence economic policy over the years cling to the hope that sound economic policies, consistently applied over a series of years, yield demonstrable results.

Such results are nowhere apparent in this report, except in three of the 25 indicators: conservation lands, where Maine has exceeded the benchmark; sustainable forestland, where Maine is meeting the benchmark; and health insurance coverage, where Maine is well above the national average.

While it is heartening to be meeting benchmarks in any area, none of the three indicators in which Maine has been successful are directly correlated to economic growth.

Such a lackluster record over so many years suggests that Maine has not had consistent policies toward economic development. We have had opportunities, most significantly those defined in the landmark study of Maine's economic future done by the Brookings Institution back in 2006. This study was the first well-funded, independent study of the Maine economy in the past 30 years.

The conclusion of that report is worth quoting: "For all its challenges, the state of Maine stands within reach of a new prosperity – if it takes bold action and focuses its limited resources on a few critical investments."

Brookings went on to recommend several bold initiatives: a $200 million R&D bond fund to invest in a small number of promising areas such as information technology and biotechnology; a $190 million quality of places fund to more effectively protect and promote Maine's No. 1 competitive advantage – the fact that there is no better, more beautiful or safer place to live and raise one's family than right here in Maine; and a major set of governmental cost reduction initiatives that would fund significant lowering of both property and state income taxes.

The Brookings Report was greeted with much ballyhoo and little effective follow-up. Brookings' three principal recommendations went nowhere or were so watered down that they had little impact.

The R&D bond fund that finally passed was $55 million rather than the $200 million recommended. The quality of places fund foundered on the inability of the Legislature to agree on the recommended approach to funding it – an increase in the lodging tax. Attempts to cut costs were highlighted by Gov. Baldacci's lengthy, hugely controversial and largely ineffective effort at school consolidation

The performance in Augusta was not quite as bad as the Keystone Cops. A few legislative leaders, like then-Speaker Glenn Cummings, pushed through the odd initiative, but overall the entrenched Democratic leadership resented the Brookings Report as something from "away" and worked hard to derail it.

The net of all this, as reflected in the latest report of the Economic Growth Council, is that Maine has squandered the opportunity that was so bright back in 2006.

Maine was not helped by the macroeconomic meltdown of 2008, of course. Nonetheless, much could have been done, but little was accomplished.

Now we must regroup, come up with a new plan and take a longer-term view. This debate was exactly what the November elections were about, and why the Democrats were appropriately penalized for blowing their opportunity to lead the state to greater prosperity.

Unfortunately, our new governor does not seem to have a plan for much of anything. He reacts, often unfortunately, to the issue of the moment.

But there is a chance here. The nation's economy is improving. Maine has a sequel to the Brookings Report: "Reinventing Maine Government" that outlines a solid approach to addressing Maine's problems and getting Maine going again.

I ask the governor to take some time on his Jamaican holiday to review "Reinventing Maine Government." It is not a bad workbook for his first term.