He said the state has developed a two-stage approach to attracting new companies to the state and convincing firms already doing business in the state to expand.

But, House Republican Leader Joe Bruno, R-Raymond, said last week that he has never seen a comprehensive economic development plan from Cashman or Gov. John Baldacci.

"I agree with the casino people on a lot of what they were saying," he said. "We have lost a lot of jobs, and we really don't have a plan to bring in new jobs."

Cashman said Pine Tree Zones should start yielding new jobs for the state next year. He acknowledged the state's current tax structure is an impediment to economic development, but the zones provide tax breaks to firms that locate in them.

"Pine Tree Zones are a start," Bruno said, "but there are many other states that have similar zones, and they do not have the tax burden we have. I was at national conference recently, and I can tell you, they laugh at our business climate."

Bruno said the wealthy entrepreneurs that Maine needs are concerned about the high income-tax rates. He said a person who has worked to develop a company does not want to pay one of the highest income-tax rates in the nation.

"We have to lower taxes," he said. "That is the best way to spur the economy and create jobs in this state."

Cashman acknowledged the tax burden in Maine is an issue, but not the only one. He said the high cost of health care and electricity are also issues with developers.

"We have to address all of them," he said. "And we are."

Cashman said Dirigo Health and other health-care initiatives will help address the health-costs issue and legislation is being developed to provide for lowering electricity costs in Pine Tree Zones.

"We are talking with several manufacturers now about opportunities in the Pine Tree Zones," he said. "We have had several inquiries on our Web site and so have some of the regional [development] groups."

Economists say the real stimulus to make Maine's economy grow will come from an improving national economy. University of Maine professor James Breece said Maine's economy is so integrated with the regional and national economy that decisions made by Congress often have more impact than decisions by the Legislature.

"Even a minor cut in Medicaid would have a major impact here," he said, "and all of the deficit spending by Congress will eventually catch up and cause problems."

Colby College professor Michael Donihue agrees state government has the lesser role in affecting Maine's economy, but he said there are significant problems state policymakers could address.

"The tax burden in Maine may well be having a negative effect on bringing businesses to the state," he said, "and if you can do some genuine tax reform, and make the overall business climate more favorable, that's the area where the Legislature could change our fiscal policy."

Donihue also shares the concerns that Breece has raised about the impact of federal policies on the state. He said states are struggling to meet budgets because of federal mandates that are not paid for by Congress.

While Cashman and Bruno differ on whether short-term policies will help the state's economy grow, they agree on long-range goals of increasing the number of Mainers with college degrees and the amount the state invests in research and development.

"We have a long way to go to get to the goals of 30 and a thousand," Cashman said, "but we are going to get there."

The goals are to have 30 percent of the state's work force have college degrees and for the per-capita investment in research and development to reach $1,000. The goals were set out in a study by the Maine Development Foundation a few years ago and have been strongly supported by lawmakers from both parties in the Legislature.

"This committee has had a strong commitment to R&D [research and development] bond issues," Sen. Lynn Bromley, D-South Portland, co-chair of the Legislature's Business & Economic Development Committee said last week. "I am sure we will continue that commitment."

Cashman said the bond issue approved by voters last June that included money for R&D investments will not be the last. He said to get the state to the $1,000 per-capital level of investment will take "several bond issues" on an ongoing basis. Last week voters also approved a bond issue to improve and expand higher education facilities.

"It's going to take time," he said, "we have to be in it for the long haul, and Gov. Baldacci has made that commitment."
"This content originally appeared as a copyrighted article in the Wednesday, November 12, 2003 edition of the Bangor Daily NEWS and is used here with permission."