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December 28, 2009 CHARTING THE COURSE

Opportunity knocks | A new economic action plan should inform all of Maine's gubernatorial candidates

By Christian Milneil

“Charting the Course” is written by GrowSmart Maine, a Portland nonprofit that promotes and encourages new ways of thinking about Maine’s future. This issue’s column is written by Christian MilNeil, GrowSmart’s communications director.

 

It’s a fact of recession that every job announcement attracts more than the usual number of resumes, no matter how miserable the job might be. In a few months, the human resources committee of the Maine electorate will make their pick for Augusta’s biggest job opening. They’ll have no shortage of choices.

But whoever wins the governor’s race will have a tough term on the job. By inauguration day next year, Maine’s economy will have officially started its recovery. But unemployment will still be high and growth in household income and consumption, the main sources of the state’s public revenue, will be slow.

Meanwhile, notwithstanding the efforts in Washington, the costs of health care are likely to continue their rapid inflation. The state spends a lot on health care, from school teachers’ health insurance plans to Medicare payments for Maine’s elderly, and in recent years their spiraling costs have crowded out spending on other government services.

In other words, the good old days when governors could spend fiscal surpluses on laptops for every fifth-grader in the state are long gone. The next governor will have to take politically unpopular steps to aggressively cut costs.

Silver lining

The smart candidates will talk more about the other side of the budget equation: growing household income, through new jobs and businesses. Not only will this generate new income tax revenue to pay for schools, health insurance and infrastructure, it will also inspire goodwill and confidence among Maine’s voters.

This is the feel-good opportunity behind Maine’s current fiscal crisis, and a good way for politicians to blunt the pain of budget cuts: people will feel less sore about cost streamlining in government if there are abundant private-sector opportunities available to them.

Still, fostering job growth and enterprise is a trick that’s all too easy for politicians to botch. In the past, Maine has made the mistake of spreading its economic development budgets too thin, or distributing funds based on political lobbying or nostalgia for doomed industries. We literally can’t afford to make those mistakes anymore.

Instead, Maine needs to place its economic development investments carefully, with specific goals in mind. Investments should be made through competitive grants, not earmarks: politically influential industries aren’t necessarily the ones with the highest potential to grow. And we should hold our public investments accountable to measureable benchmarks, so we can kill programs that aren’t working and bolster support for programs that are.

Making a plan

Every five years, the Maine Office of Innovation works with the state’s leading academic research institutions and tech-sector business leaders to produce a “Science and Technology Action Plan” for the state. The latest version came out this fall at the Juice Conference in Camden and is now available at the Maine Office of Innovation’s website, www.maineinnovation.org.

The new action plan notes that Maine has made substantial progress in the past decade. In 1997, for instance, our state ranked 49th out of 50 in terms of per capita research and development spending; in 2005, we ranked 35th, with more than half a billion dollars in statewide activity.

But there is still plenty of room to improve, especially when it comes to translating research at universities and other nonprofit institutions into successful, high-employment enterprises. So the new plan aims for three ambitious benchmarks to be met in the next five years: increase total R&D activity to $1.4 billion — 3% of gross state product — by 2015, add 5,400 new jobs to the state’s innovation sectors, and increase the state’s per capita income to $42,000 by 2015, up from $33,962 in 2005.

To increase total R&D spending, the plan calls for new incentives for the private sector. To increase employment, the plan outlines strategies to support businesses and industrial clusters that have a high potential for growth. And to increase income, the plan proposes to build the skills of Maine’s workers, and recruit more skilled workers (and their businesses) to move to our state.

Economic development investments are not blank checks; these programs are held accountable to produce tangible results. The Office of Innovation will continue to track the state’s progress toward these goals, and the efficacy of the state’s public economic development investments, through the state’s annual Innovation Index. Based on past experience, Maine can expect a 12-fold return on every research and development dollar it invests.

Implementing the latest Science and Technology Action Plan should be a prominent plank in every candidate’s platform — and a valuable cause for optimism in what could otherwise be a gloomy outlook for the next four years.

 

Christian MilNeil can be reached at christian@growsmartmaine.org. Read more of Charting the Course at www.mainebiz.biz.

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