Illustration by M. Scott Ricketts
Illustration by M. Scott Ricketts
Race to the Blaine House
Gubernatorial candidates Shawn Moody, Kevin Scott, Eliot Cutler, Libby Mitchell, and Paul LePage all say they can turn around Maine’s economy.Which one really means business?
Maine’s five candidates for governor must sleep well at night, with all the speeches and fundraisers and interviews they’ve experienced over the past several months. And they’re not done yet.
Over the first six issues of Maine Ahead, we asked some important people what they believe are pivotal issues that need attention if we’re to improve Maine’s business climate. Their insights served as the basis for the questions we asked the five candidates—with excerpted responses presented in alphabetical order. The issues:
• Hannaford CEO Ron Hodge revealed that New Hampshire trumped Maine in its financial incentives for their new distribution center. (Thankfully, they stayed in South Portland.)
• Dana Connors, Maine State Chamber of Commerce president, says the chamber spends most of its time on defense, dealing with bills that could hinder our economy.
• Tom Chappell, founder of Tom’s of Maine, wants our leaders to visit businesses and learn what their real struggles are.
• Charles Hewett, COO at Jackson Lab, notes that companies with great benefits plans still must foot the bill for Dirigo.
• Roger and John Gifford, owners of Gifford’s Ice Cream, feel Maine’s sales tax laws are arbitrary and audits too disruptive.
• Herb Ginn, real estate investor, doesn’t like losing so many community-minded friends to no-tax states like Florida.
• August’s J. Doe thinks Maine could cut costs by consolidating its UMaine and Community College systems.
• Finally, some questions were based on insights from interviews with Maine governors Baldacci, King, McKernan, Curtis, and Reed from Maine Ahead’s first issue.
Five names are on the ballot this year. Which one will get Maine’s stalled economy galloping forward? You decide.
ELIOT CUTLER, Independent • Born in Bangor, July 29, 1946
A graduate of Harvard University and Georgetown Law School, Eliot Cutler was a legislative aide to Senator Edmund Muskie, and worked on legislation such as the Clean Air Act and the Clean Water Act. He served under President Jimmy Carter as Associate Director for Natural Resources, Energy and Science in the White House Office of Management and Budget (OMB), and was the top White House official for energy matters from 1977 to 1980. After leaving government service, he founded Cutler and Sheffield LLP, which became the country’s second- largest environmental law firm and later merged with Akin Gump. He lives in Cape Elizabeth.
On Maine’s competitive advantage vs. New Hampshire’s:
New Hampshire has higher electricity prices than we do and their healthcare prices are not that much better than ours. They have a real advantage, though, in their tax structure. Our problem in Maine is that we do not keep investable capital in the state, that we’re not attracting investment capital. In large part that’s a consequence of an antiquated tax structure that is discouraging the expansion of business in Maine. We’re going to have to make major reforms, not incremental reforms. But Maine voters aren’t going to stand for any effort to reform the tax structure until we get spending under control.
On Maine laws that hinder business:
Our rules in Maine are tough, but they ought to be tough because we have important resources to protect. The real problem is that the rules are ambiguous and inconsistent. And the attitude with which they’re applied stinks. Customer service from government is lousy. I have proposed establishing, in the office of the governor, an office of regulatory review and repeal, where we will approve rules and regulations before they’re issued. And then we need a repealer, someone whose job it is to go through Maine’s rules and regulations and figure out what’s not working, what’s not needed, what we can change.
On the high cost of Dirigo Health:
Dirigo is well intentioned. Providing essential healthcare services to Maine people is a laudable, important objective and one I share. The problem with Dirigo is that we tried to do that through a system of insurance in a state where that’s not working very well and it’s very expensive. I’ve proposed some specific ideas that will displace Dirigo.
I’ve set out a proposal for creating a new framework that provides essential healthcare services to everyone in the state at a cost that’s affordable and sustainable, by making sure that the incentives for wellness and for quality care performance run in the right directions. We want to make you and your employees eligible to participate in that kind of program, instead of having—having! —to deal with one or three insurance companies that are taking 25 to 35 cents out of your dollar.
On streamlining regulations:
We ought to abolish the board of environmental protection. We have a terrific Department of Environmental Protection; the problem is that if somebody wants to do something in Maine and they go through the DEP process and they get a permit, if someone doesn’t want them to do that, that someone can petition the board for what a lawyer calls a de novo review, which takes it all the way back to square one. If you’re an investor, and you see that this is the process in Maine, it’s not going to be at the top of your list as a place to invest. We’re just about the only state left that has a citizen board sitting on top of DEP.
I’ve never believed that planning and permitting ought to be in the same agency, and in LURC it is. I want to take permitting and licensing out of LURC and put it in DEP. I want to keep LURC as a planning agency. We had a train wreck at Moosehead with Plum Creek, a five-year, $25 million train wreck. It didn’t have to happen.
On tax reform:
We need to undertake a major revision of Maine’s tax structure, which includes the income tax, the sales tax, and property taxes. And it’s not going to happen until we squeeze the bejeezus out of spending. We’re not going to have any political credibility until we do that. Then we have to have a serious statewide conversation about a new tax structure. My objective is to cut the marginal tax rate more than half of its current level. I would like to get it down to close to zero. The income tax right now stands in the way of jump-starting Maine’s economy. It’s driving capital out of the state and keeping new capital from coming in.
On Maine’s higher education system:
I’ve spoken out about the problems with public higher education in Maine. We are organized to fail. We have two separate systems that now report to two separate chief executives, that report in turn to two separate boards of trustees, and then report directly to the governor. We are desperately in need of major restructuring. We also spend so much less per capita on R&D in Maine, that when you look at a bar graph comparing us to the other New England states and to the United States as a whole, we are so far outstripped that it’s embarrassing. We need to invest in R&D.
On gubernatorial appointments:
A lot of people from business fit my criteria, people with management experience, who have demonstrable skills in and outside government, who understand the real world, who are visionaries, who are bold, who don’t have a separate political agenda, who want to make Maine work the way I do, who are pragmatic.
I’ll give you an example of the kind of person I want. I’ve told him this and I’ve told a lot of other people this: David Flanagan, who’s my campaign treasurer, former CEO of Central Maine Power, probably one of the most respected individuals in the state, I’ve said to David, I want you to take over HHS, or the department of education, and I want you to help me fix it.
Maine can be the biggest comeback state of the next decade. We can do this, and you give me 20, 30, 40 people like David, and we’ll get it done.
PAUL LEPAGE, Republican • Born in Lewiston, October 9, 1948
The oldest of 18 children, LePage grew up in an impoverished family and spoke French as his first language. After living for a time on the streets of Lewiston, he put himself through high school and earned a degree in business administration from Husson University and an MBA from the University of Maine. He started his career at Arthurette Lumber Company in Canada, followed by positions at Scott Paper and Forster Manufacturing. LePage has been general manager of Marden’s stores since 1996 and mayor of Waterville since 2003. As head of LePage and Kasevich, a private consultancy, he has provided services and advice to banks, law firms, client companies, insurance companies, bankruptcy courts, and trustees.
On improving Maine’s ability to attract new businesses:
The only way that we can become competitive is to have a cost structure for doing business in Maine that addresses our regulatory system, our healthcare costs, our energy costs, and the unpredictability of our state government. If we address those major issues, get those under control, and tell the private sector that we are your predictable place to do business, then we can attract those visionaries and creative people who take risks in the private sector.
On laws that hinder Maine’s economy:
The problem in Maine is that laws are passed in summary format. They go to the governor for signature, and then are sent down to agencies to write rules. In my administration, if the legislature wants me to sign a bill, I want it in its entirety, so I know exactly what’s in it.
On Maine’s sales tax laws:
Our tax laws are cumbersome. Some of them are idiotic. Case in point: In 1998, our company donated a trailer load of mattresses and a trailer load of water to help the victims of the ice storm, and the next audit we were charged sales tax on it because we took it out of inventory. I thought that was insane. I went on a mission to change that law and it took us four years. Now you can make those large contributions to help the needy during these crises and you’re tax-exempt.
On losing retired Mainers to no-tax states:
I think that the ideal income tax for the state of Maine over time is zero. I do believe that in the next four to eight years, we should be able to reduce the income tax in Maine to 5%, but more important than just the income tax, the estate tax and taxes on pensions have to be eliminated. I think that’s crucial to keep elders here, those who are in retirement or on fixed incomes. People who retire have to stay away six months a year in order not to have the Maine revenue service dive into their lifetime earnings. When that happens, you have a capital drain in our state, but equally important, you have a drain in the wisdom and the knowledge and the experience of all our elders who can help the next generation.
On Dirigo Health:
Dirigo is not a good plan, particularly for Maine people and for the private sector. It has long been on life support, and I will pull the plug.
On reducing state spending:
I’ve spent 35 years in Maine dealing with what comes down from the legislature. Unfortunately, the Maine Legislature spends too much time looking for revenue rather than looking at how we make state government more efficient First, we shrink government by auditing and looking at every program to see if they’re efficient. Those that are not efficient we either fix or get rid of.
Welfare has ballooned to a third of our budget. We can save hundreds of millions of dollars in welfare by working with people and developing some self respect and responsibility and accountability for their families. If they become self-reliant, most people want to work. The problem is our state has programs that keep people in economic slavery. What I mean by that is, if you earn $18,000 a year, you’re entitled to $12,000 in welfare benefits. If you’re at $19,000, you get zero. We have to have a tiered system so that people can continue to work, and each time they meet a tier or a milestone, they lose a little bit of their benefits, but not all of them.
On streamlining higher education:
We need to take a look at where we can consolidate services in the Community College System and the University System. However, that’s not going to be my priority. My priority will be to fill the classrooms with Maine kids. Right now, only 80% of our students who start high school are graduating, and nationally, we’re probably one of the worst states as far as students going on to secondary education. If we can reduce the dropout rate, get more of our kids to go on to community college or the university system, and we control the tuition cost, then the state is better off because we’re preparing the next generation to take the next generation of jobs.
On gubernatorial appointments:
Appointments are critical. We have to find the best minds, in their field of endeavor, for the job they undertake for the Maine people. I don’t care if they’re Independent, Democrat, Republican, or Green. If they are the best minds and best respected in their field, they will be on our team if they choose to be. Not everyone in the cabinet is going to have business experience, but I will tell you that I will seek out people with private sector experience.
On staying in touch with businesspeople:
In order to have good government, you have to keep the citizens and the taxpayers of Maine in the loop. I’m going to bring back what they used to have years ago: the business round table. I’ll have a group of businesspeople from different sectors of Maine’s economy come to Augusta once a month for a two-hour breakfast and discuss things that we can do to help their industry.
The first year of my administration, I will be in the governor’s office from 8 in the morning to noon, no appointments needed, and I will talk to anyone who’s willing to talk to the governor.
LIBBY MITCHELL, Democrat • Born in Gaffney, South Carolina, June 22, 1940
Elizabeth “Libby” Mitchell was first elected to the Maine Legislature in 1974. She served nine terms in the House and three in the Senate, where she has served as Senate president since 2008. Mitchell earned her bachelor’s from Furman University, has a master’s in English from the University of North Carolina, and is a 1996 graduate of University of Maine School of Law. A practicing lawyer and resident of Vassalboro, Mitchell also serves on the boards of Maine General Health, Maine Coalition for Excellence in Education, New England Board of Higher Education, and Jobs for Maine Graduates. Other positions include seven years on the Federal Home Loan Bank board, four years as chair, and director of the Maine Homeless Coalition.
On our competitive advantage vs. New Hampshire’s:
Comparing Maine to New Hampshire is always difficult. Maine has more roads to support, and a much more scattered population. New Hampshire also has Interstate 93, which takes many of their citizens down to Boston where they can earn higher incomes on Route 128.
On increasing Maine’s ability to attract new businesses:
The quality of life here is very important to Maine businesses. We need a structure that supports quality schools because no CEO wants to live in a state where their children don’t get a good education. We want to make sure that we have good transportation, roads and bridges and rails, all the things that make Maine work. So we have to invest in what’s important to Maine businesses and also to make sure we have a tax structure that is supportive.
I would support reducing the income tax; I would continue to support efforts like Pine Tree Zones, which are major business incentives because they reduce both income and property taxes for a number of years. I would also expand seed capital because start-up companies have a great deal of trouble in that middle period when they’re getting products to market. I would improve our broadband so that our businesses can operate anywhere in this world of technology. We’re getting there but we’re not there yet.
I would like to see more activities like aquaculture. We could create processing of fish all up and down the coast. People would like to consume things more locally whether it’s schools or colleges or hospitals, but there are some infrastructure barriers. For example, I learned in Aroostook County there’s enough land and food for raising all the beef cattle, in an organic, pure way, that the entire state of Maine would need. But, guess what? There’s no
slaughterhouse.
On laws that effect Maine businesses:
No good legislator wants to pass laws that are ambiguous or have unintended consequences. We try very hard not to do that, but I’m sure it happens. Laws need to be well written and clear and people need to know what to expect.
Business is part of Maine, and I care deeply about successful businesses. I grew up in a small business. None of us can make any sense of our lives without promoting and making sure that business succeeds. But the legislature represents all the people of Maine. Certainly they want jobs, they want business to succeed, because their constituents need to work. There’s nothing more important in this difficult recession than jobs. At the same time, we have to pass laws that deal with corrections, with elderly people who have no family to care for them, with environmental issues. It isn’t just about business.
On Dirigo Health:
I think Dirigo Health served an important purpose in taking care of working people. We want people to work, but they earned too much money to qualify for MaineCare and yet they couldn’t afford any policies. They paid on a sliding scale, by the way.
But Dirigo will be gone. We have an opportunity under the federal reform legislation to create what’s called an exchange. In simple terms it’s like a big purchasing pool to help those small business owners. My son is self-employed, he has one or two employees, and it’s very difficult for him to get any kind of insurance now because the deductibles are enormous. But, with this healthcare exchange, we can help solve that sooner rather than later. I would like to bring together the best and the brightest in business, in health care, providers, insurers, all to the table to see how we can get that up and running immediately.
On Maine’s income tax rate:
I do believe that we should lower our income tax. The top brackets are way too high. I would push again to lower the tax by as much as 25% from what it is now. You do have to pay for it, so we would have to look at other things that are more acceptable to Maine people. For example, some people thought it was unfair that higher-end sales tax items like skiing and gold were exempt when miniature golf or repairing your truck were not.
You can cut government, and we’ll be doing that because there’s a billion dollar shortfall anticipated for next year. There probably still won’t be enough money to pay for the kind of income tax reduction we’re talking about. We may have to approach it incrementally.
On consolidating our higher ed system:
I’m always in favor of consolidating administrative pieces, because they don’t affect delivery and quality of product. More things could be shared by ITV in terms of classes; a small class in one college may be able to beam it to the other college. The community college system has served as a gateway for many people of all ages to get back into school. I want to make sure that’s affordable. I want to consolidate functions, but I also want to protect the nimbleness of the community colleges.
On having a vision for Maine:
It’s a transformative time. We’re coming out of the deepest, darkest recession that most of us can remember and it’s given us a chance to reevaluate how we deliver services and what’s most important to us. We’re on the cusp of delivering health care better, of being the biggest producers of green energy of any state in the country. I want Maine to be number one in all of those things, and I believe it’s a vision that Maine people share. So it’s an exciting opportunity.
SHAWN MOODY, Independent • Born in Holyoke, Massachusetts, October 24, 1959
Shawn Moody grew up in Gorham (from the age of 2) and attended local public schools, graduating from Gorham High School. In his senior year, he opened an auto repair shop, which he has built over the years into Moody’s Collision Centers, the largest auto collision repair business in New England. Moody’s company has operations in Portland, Gorham, Scarborough, Biddeford, and Sanford, employs 75 people, and serves more than 7,000 customers annually. In 2003, Moody’s won the Governor’s Award for Excellence in Business.
On making legislation more business-friendly:
We’re going to change the tone and the attitude. When you look at any law or legislation, you can look at it from many sides. We are going to look at it from a pro-business side. If the speed limit is 50 mph, most law officials will allow you leeway of a few miles over. The legislation operates like “if you’re going 51, we’re gonna nail ya.” We’re going to err on the pro-business side of these laws and interpret them in a business-friendly manner.
On losing Maine’s elderly to no-tax states like Florida:
Do you know what it would take for someone like Herb Ginn to leave the state? He loves this state. He’s put his life into this state. He’s a smart man and his financial advisors have probably been telling him for years that he’s losing thousands of dollars by staying here. We’re forcing our residents to make decisions that they wouldn’t ordinarily make because of our tax structure.
It’s not just taxes. I think a lot of these affluent people who have left the state are just as fed up with the way their tax dollars were being spent. Deep down they may think, “If we had a governor who was frugal and fair-minded and would run this state with fiscal discipline and responsibility, I’m back in.” They’re financially secure. They’re looking out for the next generation—their kids and grandkids.
On gubernatorial appointments:
I have a tremendous amount of faith in people. I’d sit down and share our vision and if I saw in their eyes that they were committed to trying to achieve those goals and meet our vision, then I’d give them the opportunity to move this state forward I am also a good judge of character. If we had to make department head transitions, we’d be prepared to do that.
The people who are already there know what’s going on. To think you’re going to hire someone green to go in there and shake things up is a little naïve. We’ll work with the folks who are there first.
On reducing state spending:
We can’t afford the overhead that we have in state government anymore. We couldn’t afford it last year, but we plugged it with stimulus money. I call it “look the other way leadership.” They didn’t make tough decisions. They didn’t come up with a plan for Maine. They just pushed it off to the next budget cycle hoping to get another check from the federal government.
When you think about a business, you want growth, to hire more people, and take better care of your customers. The object is to deliver the best service for the dollar. Of course, we need to reduce our overhead in a responsible way. I understand the cause and effect of social safety nets that are so crucial. You start cutting those and it’s going to affect law enforcement, hospitals, the courts, etc.
We’re going to start something called surplus sharing—like profit sharing in the private sector.
The budget process now is, if you don’t spend it, you don’t get it next year. Instead, we’ll give departments financial incentives and recognition for saving. We’re going to create an intranet inside the organization so those best practices can be shared interdepartmentally. Departments can cross-pollinate ideas and best practices. What it does is start a spark of enthusiasm for savings. Our 100,000 state employees are taxpayers, they’re Maine citizens. We’ll turn our focal point from spending to saving and customer service. When people start using their creativity and innovation, hold on!
On Maine’s small business climate:
Most of of my friends are businesspeople; I’ve been getting an earful for decades
Half the small businesses in Maine have less than 20 people. We’re going to recategorize them as microbusinesses and create exemptions for them. Regulations benefit big business, in a sense, because they’ve got the lobbyists to help craft the legislation. But it crushes the small businessperson. So we would create exemptions to help microbusinesses walk before they run.
On having a unique vision for Maine’s future:
Running any organization requires a vision. I’ve always been able to see today, next week, next year, five years down the road. How are you going to lead if you don’t know where you’re going? We’ve got our goals stated clearly, like 6% unemployment, 30% fewer high school dropouts, 20% more college grads staying in Maine, workfare instead of welfare, competition in health care, merit pay in education, a responsible budget surplus by 2014.
The voters will never get another chance to vote for a candidate like myself, a tradesperson, a craftsman. When you talk about wind energy, tidal energy, having that mechanical aptitude is something that none of the other candidates possess. I’ve laid water pipe, run equipment, taken engines apart and put them back together. I not only know how things work economically, I know how they work mechanically and I know how human nature works. Put that into a package and it packs a punch.
I started with nothing and still work like I’ve got nothing. I don’t have a fancy car; I drive a 9-year-old truck with 160,000 miles on it. I can afford a new truck, I can afford a suit, but that’s not who I am.
We don’t need a politician in the Blaine House. We need a working person who has common sense and a great track record of success.
KEVIN SCOTT, Independent • Born in Rumford, January 21, 1968
Kevin Scott grew up in Mexico, Maine. He is a 1990 graduate of George Mason University in Fairfax, Virginia, with a degree in government and politics. In 1998, he established Recruiting Resources International, an employment firm that places engineering and CAD professionals around the world. His clients include the Center for Astrophysics at Harvard University, which does development work for NASA on deep-space telescopes. In addition to operating Recruiting Resources International, he currently chairs the board of trustees of the Andover Water District, and is a Maine state licensed public water system operator.
On Maine’s ability to attract business vs. New Hampshire’s:
It’s an issue, but it is not a major issue. I think we have larger issues out there than this perception.
What I would do, and what I’ve discussed publicly as well as on my website, is look to work with existing Maine business so that they have a partner in government in terms of creating a business–friendly environment. If we can help existing Maine businesses grow—and by help, I mean create an environment where the legislation enables tax favorability for business, labor cost, education, and healthcare—I believe, then, existing Maine businesses will be the best spokespeople for attracting new business to Maine.
On legislation with unintended consequences for business:
The quality of a law that is supportive of business is one that supports all business—Mom–and–Pop to National Semiconductor. When you start targeting specific industries and specific laws to benefit one group in particular, that’s where those unintended consequences can come from. Solving this takes being involved with those legislative members who are sponsoring, getting together and making certain that we’re looking at it with a fresh set of eyes—and reaching out to members in the business community who are not involved in the process and bringing them to the table.
On Dirigo Health:
I do not see Dirigo surviving a term where I serve as governor. I think we need to abolish it and look forward to an entirely new model. What that is right now, I don’t know, but I know it’s a more private-driven, profit-driven model that makes certain we’re doing things from a practical, commonsense point of view.
On improving Maine’s ability to attract new businesses:
I haven’t examined it, so I don’t know what the return on the investment of the DECD [Department of Economic and Community Development] is, but I will say this, it hasn’t gotten us to where we want to be.
Innovation is the way we do economic and community development. Look at North Carolina, Virginia, Georgia, Texas, consistently ranked in the top 10 states in the country to do business in. Let’s go and talk to those folks and find out what they’re doing and inject those types of practices if possible—emulate success-—but with that Maine character and unique value of place.
On streamlining Maine’s business taxes and regulations:
If I have my way, the issues I’ll address first are the ones that are shared with me through a consensus–building project. I don’t have specifics now; if I had specifics I wouldn’t be a very good executive. Executives need to learn from the people who are dealing with the challenges every day and then execute policy based on that.
The most important thing, I think, is to talk to the Giffords, talk to the other folks in the private sector, and get their top 10 issues, or see if you can find some common thread. But then, before you go running down that path, you’d better get with the people in state government who are responsible for those rules and regulations, because you know what? They know which ones are a hassle, too.
I don’t believe Maine state employees take a particular pleasure in making a hassle for businesses. I think they’re duty-bound; they have a culture that is conflicted, because they don’t have an executive leadership that’s giving them their marching orders in terms of working more as a partner with business. If you went to DEP or DHHS [Department of Health and Human Services] and said, “Which of these things is driving you crazy?”, they might overlap quite nicely with the ones that drive the private sector crazy, too.
On maximizing our higher ed system:
Research and development is so critical. It’s the classic “It takes money to make money” scenario. When you look at an MIT or a Stanford or a Georgia Tech, or even the University of Chicago with their economics and physics programs, these are world-renowned centers for excellence that incubate and grow economies. I don’t see that here in Maine.
We have Orono, we have our composites center, we’re starting to get a lot of traction after many years of hard work, but we really need to make sure that we have a comprehensive vision—where the university system is brought into that, the general public is brought into that—and we can start or continue to incubate and really grow those companies.
On bringing a new vision to Augusta:
Under my leadership, there will be a major push to get unenrolled legislators into Augusta. Within two years of the next governor being seated, the entire legislature will be up for reelection. We have 344,000 unenrolled voters in the state of Maine, 260,000 Republicans, 320,000 Democrats. How many unenrolled legislators do we have in any given session? One or two?
I would like to see unenrolled senators and representatives up there proportionate to the number of voters we have unenrolled. I will go out after I am elected and begin to let those individuals know—Republican, Democrat, unenrolled, Green, whoever they are—that they have a person who’s a leader who will help them, protect them, stand with them, and promote them through some of these local races against incumbents, and we’ll make progress
that way.
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