New panel sees slow rebound
The state’s economic forecasting commission met this year for the first time in late March, issuing a report April 1 that slightly alters a report made in October by its predecessors. The report suggests Maine’s rebound from the recession and job growth will be slower than initially thought, but the surprising news is that the commission itself is made up of entirely new members.
Gov. Paul LePage and Maine’s Republican legislative leaders replaced all five members of the state’s economic forecasting commission in an unprecedented move, including the removal of Charles Colgan, a well-known Maine economist who had served on the commission since its formation in the mid- 1990s.
The Consensus Economic Forecasting Commission, a small but influential group, meets two or three times a year to analyze economic trends and submit reports on the state’s economy to the Revenue Forecasting Committee, governor and legislators. These forecasts help shape the state budget.
Christian Potholm, professor of government at Bowdoin College, says despite 30 years of watching Maine politics, he was still “very surprised” to hear of such a move. “Charlie Colgan, whether you’re a Republican, Democrat or Independent, Charlie is the guy you think is going to give you the numbers that are there,” he says.
Colgan, who teaches at the Muskie School of Public Policy at the University of Southern Maine, says he had anticipated a transition after the last election shifted control of both legislative chambers and the governor’s seat to Republicans. Chuck Lawton, an economist with Planning Decisions Inc., was also replaced. “I basically expected there would be changes in the commission beginning this year; I just didn’t know what they would be,” Colgan says. Both Lawton and Colgan say they would have been happy to continue serving if they’d been asked.
Commission members John Davulis, Kathryn Dion and Elizabeth Kilbreth were also replaced.
LePage appointed two members: J. Scott Moody and Eric Stinneford. The House speaker and Senate president appointed James Clair and Gradon Haehnel. These four members then selected Lawrence E. Dwight. (See “The new forecasting commission,” this page.)
The commission, despite being made up of appointed members, has historically worked to be nonpartisan and independent, according to Colgan. Colgan says the commission first formed during a recession, when the pressure of falling state revenues was pushing policy makers into back-and-forth arguing. “The commission came out of that experience,” Colgan says. “[They decided they] would turn over the process of making revenue projections into an independent process.”
James Clair, the new commission’s chairman, says “it is critical” the group establishes a nonpartisan stance. “Of course Scott [Moody] has his economic philosophy, and the Heritage Policy Center has its own reputation at the State House, but I think somebody could have said similar things about Charlie Colgan; everyone has bias in this world,” Clair says. “[Colgan] is excellent. He would have done a terrific job on the commission, as he has done all these years, but there is something to be said about a brand new group taking over the reins of the commission and taking a slightly different tack on this work.”
Clair says the commission’s biggest change will be to expand the data it uses to form its forecasts. Along with analyzing national forecasts from organizations such as Moody’s, HIS Global Insights and Standard & Poor’s, the commission will survey Maine business leaders to gather opinions about what is happening at the local level.
“I am getting more of the private sector involved,” Clair says. “So it’s not just a professional forecasting view of the world, but we’re also making sure we’re plugging into Maine’s economy in as relevant a manner as possible, so our forecasts are as accurate as possible.”
Commission member Moody says the April 1 forecast was updated to account for oil spikes and other recent events. The information was used by the legislative revenue forecasting committee, which anticipates a 2012-2013 state revenue shortfall of $47 million and a 2014-2015 shortfall of $170 million.
Moody also says Maine’s job growth will likely be slower than what was predicted. “Maine has one of the smallest shares of private income,” of any state, he says, making it hard for Maine to emerge from an economic downturn. “It’s harder for Maine to generate sustained economic growth, particularly after a recession. And we had a modeling projection that says we will be generating more jobs than we’ve had over four years; that clearly won’t happen.”James Clair, chair
The new forcasting commission
JAMES CLAIR
Current job: CEO, Goold Health Systems, Augusta
Education: MPA Syracuse University; MS, State University of New York; BS, University of Massachusetts
Background: Since 2004, Clair has worked at Goold Health Systems, a privately held management company that focuses on state Medicaid work with clients in 14 states. Between 1984 and 2000, Clair held different positions at the state Office of Fiscal and Program Review, and for one year was the executive director of the state's Office of the Executive Director.
J. SCOTT MOODY
Current job: Chief economist, Maine Heritage Policy Center, Portland
Education: MA, economics, George Mason University; BA, economics, Wingate University
Background: Moody has worked at the Maine Heritage Policy Center since 2006. Previously, he was a senior economist and policy analyst at The Heritage Foundation in Washington, D.C., and a senior tax policy economist at the Tax Foundation in Washington, D.C. He received a Koch Summer Fellowship in 1995.
GRADON HAEHNEL
Current job: Manager of rates, Bangor Hydro Electric Co.
Education: BS, finance, Indiana University of Pennsylvania; MS, resource and applied economics, University of Alaska-Fairbanks
Background: Haehnel has been with Bangor Hydro Electric Co. since 2005. Prior to this position, he worked for one year as an economist with Information Insights Inc. in Fairbanks. He's also been a volunteer high school economics teacher and a Junior Achievement volunteer.
ERIC STINNEFORD
Current job: Vice president, controller, treasurer and clerk, Central Maine Power Co.
Education: BA, mathematics, Colby College
Background: Stinneford joined CMP in 1981 as an operating assistant after graduating from college. He's worked for CMP in many capacities, including as director of electric supply, manager of power-contracts administration and director of energy trading and marketing.
"J" LAWRENCE E. DWIGHT JR.
Current job: President, Dwight Investment Counsel, Wilton
Education: BA, international business and finance, University of Massachusetts
Background: Dwight has worked at his investment management company since 1997. In addition, he has written Sun Journal columns "on economic, tax and government abuse of power issues," he says, and has served on the boards of Maine Audubon, the United Way, Friends of Rachel Carson National Wildlife Refuge and the Kennebunk Land Trust.
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