CHARTING AINE S FUTURE - Brookings InstitutionCHARTING MAINE’S FUTURE: AN ACTION PLAN FOR...

Brook ings Inst i tut ion Metropol itan Pol icy Program

C H A R T I N GM A I N E ’ S F U T U R EAn Action Plan for Promoting Sustainable Prosperity and Quality Places

THE BROOKINGS INSTITUTION METROPOLITAN POLICY PROGRAM © 2006

C H A R T I N GM A I N E ’ S F U T U R EAn Action Plan for Promoting Sustainable Prosperity and Quality Places

THE BROOKINGS INSTITUTION METROPOLITAN POLICY PROGRAM2

ACKNOWLEDGMENTS

Many, many people and organizations contributed tothis project, so the Metropolitan Policy Program atBrookings has incurred many debts over the last18 months. Enlarging our sense of obligation is the uncom-mon generosity and community-mindedness of Maine people.

We owe our first debt to GrowSmart Maine, which invitedthis report, raised the money to enable it, and has begun tomobilize an unprecedented array of Maine citizens and con-stituencies to support this report’s recommendations.

In particular, we want to thank Alan Caron, GrowSmart’spresident and CEO, who in ways large and small has tire-lessly advocated for the importance of this work. All alongAlan has seen the potential for Maine people to rally arounda bold and appealing agenda that responds to Mainers’ desirefor both prosperity and a superlative quality of place, and wehope we have provided that. It has been our good fortune aswell as Alan’s, moreover, to benefit from the labors ofGrowSmart’s energetic staff, including Lisa Fahay, MaggieDrummond, Alison Rehnberg, and Irma Bauer-Levesque.

Thanks also go to GrowSmart for organizing the dozens ofhighly informative stakeholder dialogues around the state thatin a very real sense “set” the research agenda over the last 18months. These “listening” sessions culminated with anextraordinary series of nine town meetings held during threedays in late April, 2006 in every corner of Maine, fromCaribou in the North, to Eastport, to Waterville and Camdenon the Mid-Coast, to fast-growing Scarborough and Alfred inthe South. These meetings gave the research team invaluableinsight into state and regional issues; they also took us off thebeaten path and left us with vivid impressions: standing roomonly in most sites; an overflow crowd picking up chairs andstreaming into the larger gym in Dover-Foxcroft; hearing theobservations and concerns of 100 mostly rural and small-town residents crowded into the local church in Alfred—areminder that York County is more than the increasinglyupscale coast. In these meetings, the entire research teamwas struck by the special passion of Maine people for theirplace and their readiness to participate in an effort to workout answers to key problems. We owe our profuse thanks tothe hosts of these memorable events, including these localleaders:

• Northern Maine (Caribou, Houlton, Ft. Kent). PatriciaBoucher, Workforce Investment Board of Aroostook andWashington Counties; Jim Brown, City of Presque Isle;Robert Clark, Northern Maine DevelopmentCorporation; Allen Deeves, Presque Isle Chamber ofCommerce; John Edgecomb, Aroostook MunicipalAssociation; Mike Eisensmith, Northern MaineDevelopment Corporation; Ryan Pelletier, Town of St. Agatha; Rod Thompson, Maine Small BusinessDevelopment Centers / NMDC

• Down East (Eastport). Nancy Asante, Town of Perry;Bud Finch, City of Eastport; Marged Higginson, Eastportfor Pride; Joyce Weber, Eastport Arts Center; LoraWhelan, Eastport for Pride

• Northern Central Maine (Dover-Foxcroft). MichaelBush, Eastern Maine Development Corporation; MaryAnn Hayes, Maine Rural Partners; Tom Lizotte,Piscataquis County; Mark Scarano, Piscataquis CountyEconomic Development Council

• Western Mountains (Farmington). Richard Davis, Townof Farmington; Alison Hagerstrom, Greater FranklinDevelopment Corporation; Fred Hardy, Franklin CountyCommission; Bruce Hazard, Mountain CountiesHeritage, Inc.; Tanya Swain, Western MountainsAlliance; Mary Sylvester, University of Maine Farmington

• Central Maine (Waterville). John Butera, CentralMaine Growth Council; Alice Elliott, Goldfarb Center,Colby College; Shannon Haines, Waterville Maine Street;Mike Roy, City of Waterville

• Mid-Coast (Camden). Lynda Clancy, The Village Press;Scott Dickerson, Coastal Mountains Land Trust, Inc.;Tom Ford, Rockport Planning and CommunityDevelopment; Bob Hastings, Rockland-ThomastonChamber of Commerce; Michael Hurley, City of Belfast;Noah Keteyian, Midcoast Magnet; Jane Lafleur, Friendsof Midcoast Maine; Rodney Lynch, Town of Rockland;Sanna McKim, Maine Businesses for SocialResponsibility; Roger Moody, Camden National Bank;

CHARTING MAINE’S FUTURE: AN ACTION PLAN FOR PROMOTING SUSTAINABLE PROSPERITY AND QUALITY PLACES3

ACKNOWLEDGMENTS

Robert Peabody, Town of Rockport; Roberta Smith, Townof Camden

• Greater Portland (Scarborough). John Andrews, SacoBay Trails; Dan Bacon, Town of Scarborough; RonOwens, Town of Scarborough; Harvey Rosenfeld,Scarborough Economic Development Corporation;Laurene Swaney, Scarborough Land Conservation Trust;Joe Ziepniewski, Town of Scarborough

• Southern Mid-Coast (Brunswick). Donald Gerrish,Town of Brunswick; Theo Holtwijk, Town of Brunswick;William F. King, Jr., Maine Downtown Center and MainStreet Bath; Steve Levesque, Brunswick LocalRedevelopment Authority; Jayne Palmer, Maine DowntownCenter and Main Street Bath; Tom Rumpf, The NatureConservancy; Burr Taylor, Harpswell Comprehensive PlanCommittee; Steve Walker, Town of Brunswick

• Western York County (Alfred). Joey Donnelly, YorkHarbor; Cathy Goodwin, Greater York Region Chamberof Commerce; James Gulnac, Town of Sanford; J.T.Lockman, Southern Maine Regional PlanningCommission; Paul Schumacher, Southern MaineRegional Planning Commission; John Sylvester, Town of Alfred

But many other debts were accrued during the actualdevelopment of the report—one of the most intensely collab-orative inquiries the metropolitan program has ever engagedin. To start with, the Brookings team wishes particularly tothank Evan Richert of the University of Southern Maine whowas a constantly generous and incisive guide to virtually everyaspect of Maine’s public policy landscape throughout theresearch process. Evan’s wise counsel at numerous criticalpoints was simply indispensable.

In like fashion, Brookings wants also to express its appreci-ation and admiration for its core research partners in thisendeavor, including: Lori Allen of the Maine DowntownCenter; Charlie Colgan of the University of Southern Maine;Laurie Lachance of the Maine Development Foundation;Matt Murray of the University of Tennessee at Knoxville;Michael Moore of the Maine Public Spending ResearchGroup; Bob Thompson of the Androscoggin Valley Council ofGovernments; and Philip Trostel of the University of Maineat Orono. Each of these individuals produced important newresearch for this report. Each shared their expertise and

advice freely, enthusiastically, and patiently during a long andpainstaking research process. Maine is fortunate that six ofthese experts live in their state and add to its resource basewith their skill and deep knowledge.

In addition to these core research partners, though,Brookings has profited immensely from a large number ofother colleagues who provided invaluable perspectives, spe-cific information, or data. These sources included: RichardBarringer, University of Southern Maine; Kathleen Bell,University of Maine at Orono; Betsy Biemann, MaineTechnology Institute; Yellow Light Breen, Bangor SavingsBank; Deborah Burd, National Campaign for SustainableAgriculture; James Carignan; Maine State Board ofEducation; Judy Colby-George, Spatial Alternatives, Inc.; JayEspy, Maine Coast Heritage Trust; Robert Faunce, City ofLewiston; Kevin Gildart, Bath Iron Works; Bruce Hazard,Mountain Counties Heritage, Inc.; Chuck Hewett, TheJackson Laboratory; Rob Kenerson, Eastern MaineDevelopment Corp.; former-Gov. Angus King; Eric Kingsley,Innovative Natural Resources Solutions, LLC; Cheryl Kollin,American Forests; Charles Lawton, Planning Decisions, Inc.;Russell Libby, Maine Organic Farmers and GardenersAssociation; John Melrose, Maine Tomorrow; Sean Mahoney,Verrill Dana LLP; P.D. Merrill, Merrill Marine TerminalServices; Karen Mills, Solera Capital; Frank O’Hara,Planning Decisions, Inc.; John Oliver, L.L. Bean, Inc.;Kenneth Palmer, University of Maine at Orono; Ron Phillips,Coastal Enterprises, Inc.; Darcy Rollins, Federal ReserveBank of Boston; Jonathan Rubin, Margaret Chase SmithCenter for Public Policy; Tom Rumpf, The NatureConservancy; Harry Schwartz; Paul Schumacher, SouthernMaine Regional Planning Commission; David Silvernail,University of Southern Maine; Rhonda Sincavage, NationalTrust for Historic Preservation; Benjamin Smith, HNTBCorp.; Christopher St. John, Maine Center for EconomicPolicy; Richard Sutton, Reference Standard, LLC; RobertTannenwald, Federal Reserve Bank of Boston; MatthewTeare, Sea Coast Management Co.; Emily Templeton, NewJersey Department of Community Affairs; Mike Tetreault,The Nature Conservancy; David Theobald, Colorado StateUniversity; Peter Thompson, Kennebec Valley Chamber ofCommerce; Tilbury House Publishers; David Vail, BowdoinCollege; Ken Young, Kennebec Valley Council ofGovernments; and Sam Zaitlin.

And Brookings has other debts. In the public sector,numerous officials and staff people in state and local govern-ment provided important information and guidance to this


ACKNOWLEDGMENTS

project. Here, a first word of thanks must go to Maine’s stategovernment, which from top to bottom, across numerousagencies, has been remarkably forthcoming in answering ourquestions and fulfilling our many requests for data and expla-nation. On this front, special appreciation goes to MarthaFreeman, director of the Maine State Planning Office, andher staff, including Lana Clough, John Delvecchio, TimGlidden, Susan Inches, Jody Harris, Matthew Nazar, andCatherine Reilly. In addition, we remain indebted to: MichaelAllen, Maine Revenue Services; Jack Cashman, MaineDepartment of Economic and Community Development;John Dean, Maine State Fire Marshal’s Office; John Dorrer,Maine Department of Labor; Kathy Fuller, MaineDepartment of Transportation; Susan Gendron, MaineDepartment of Education; Bob King, Maine State HousingAuthority; Denise Lord, Maine Department of Corrections;David Lemoine, Maine Office of the Treasurer; Ryan Low,Maine Bureau of the Budget; Garret Oswald, Maine JobsCouncil; Grant Pennoyer, Maine Office of Fiscal andProgram Review; Doreen Shieve; Department of Audit; PeggySchaffer, Maine Department of Economic and CommunityDevelopment; Christina Sklarz-Libby, North Star AllianceInitiative; Jeffrey Sosnaud, Maine Department of Economicand Community Development; Karen Tilberg, MaineDepartment of Conservation; Rebecca Wyke, Department ofAdministrative and Financial Services; and Janet Yancey-Wrona, Maine Department of Economic and CommunityDevelopment. At the local level, likewise, we were greatlyaided by conversations or information from: William Bridgeo,City of Augusta; John Bubier, City of Biddeford; Steve Burns,Town of York; Mike Duguay, City of Augusta; Darcy Main-Boyington, City of Brewer; and John Edgecomb, Towns ofCastle Hill, Chapman, and Mapleton; and Dana Lee, Town ofMechanic Falls.

Beyond these contacts in government, the research teamprofited from exchanges with a number of statewide interestgroups and associations. Multiple conversations with mem-bers of the Maine Municipal Association (MMA), theSportsman’s Alliance of Maine (SAM), the Maine Softwareand Information Technology Industry Association (MESDA);and the Maine State Chamber of Commerce were particu-larly helpful. Jeff Austin, Kate Dufour, and ChristopherLockwood at the MMA; George Smith of SAM; JosephKumiszcza of MESDA; and Dana Connors of the chamber allprovided important perspectives.

Rounding out the research process, meanwhile, were sev-eral rounds of review. Heartfelt thanks are therefore overdue

for the careful reading and thoughtful comments that morethan a dozen Maine scholars, public officials, and other lead-ers provided to the research team. These comments substan-tially strengthened the manuscript.

As to the final step of creating an actual document fromthe research team’s bulky manuscript, we are grateful againto Sese-Paul Design for managing the lay-out and publicationof the report. That work greatly improved the accessibility ofthis work. So do the photographs in the report, many ofwhich come courtesy of the Maine photographers NanceTrueworthy, Wright-Ryan Construction, Maine DowntownCenter, Terrence J. DeWan & Associates, Maine Departmentof Agriculture, Alan Holt, and Herb Swanson.

However, the final responsibility for this analysis rests inthe end with the Brookings research team, which was led byMark Muro, anchored by David Warren, and bolstered byRebecca Sohmer and Joseph Cortright, a Brookings nonresi-dent senior fellow. Bruce Katz provided constant guidanceand vision. Also making important contributions were AlanBerube, William Frey, Amy Liu, Dave Park, Robert Puentes,and Jeffrey Sandberg. Supporting the project in other essen-tial ways were Chuck Anderson, Michelle Daniels, JamaineFletcher, Kim Henry, David Jackson, Elena Sheridan, andAndy Yarrow.

To all: Thank you. ■

Note: The views expressed here do not necessarily reflectthose of the trustees, officers, or staff members of the BrookingsInstitution; the project’s funders; or the members of the pro-ject’s steering committee.

5

Executive Summary....................................................6

I. Introduction .........................................................14About the Analysis ..........................................................17About the Data ...............................................................19

II. Emerging Trends in Maine: The State of the State ..............................................20

Maine is growing again, even as it ages ..........................22

Once based on goods production, Maine’s is becoming a diverse, innovation-oriented service economy ..............29

Mainers are suburbanizing and sprawling throughout the state .......................................................42

III. Emerging Implications of Maine’s Trends: Opportunities and Challenges ..................................50

Maine’s population dynamics are bringing new vitality, but serious workforce challenges remain ........................52

Maine’s innovation-oriented industry clusters are growing, but they remain a small part of the state economy .................................................................57

Maine’s development patterns are giving many places new life, but widespread suburbanization is driving up costs and threatening the state’s “brand” ...................60

IV. Working toward Change:Past State Efforts, and Remaining Challenges .........68

An inconsistent economic-development stance over many years has weakened the state’s efforts to improve its economy...................................................70

Often high costs of government and an unbalanced revenue system hinder the state’s ability to promote sustainable prosperity .....................................................74

Barriers to development in regional hubs combined with weak regional growth management are eroding the state’s unique character and contributing to sprawl.....................................................88

V. An Action Plan for Promoting Sustainable Prosperity in Maine .................................................96

Invest in a place-based, innovation-focused economy .........................................................................98

Trim government to invest in Maine’s economy and finance tax reform..................................................105

Support the revitalization of Maine’s towns and cities while channeling growth......................................118

VI. Conclusion .......................................................130

Endnotes ................................................................132

Selected References...............................................138

About the Brookings Metropolitan Policy Program.......................................................143

Thank You: Contributors ........................................144

CONTENTS


For all its challenges Maine stands within reach of a new prosperity—if it takesbold action and focuses its limited resources on a few critical investments.

The moment is urgent. After decades of industrial restructuring and drift, the pace of transformation is

quickening, and the slow replacement of the old order is yielding a new one that may bring better lives for

Mainers.

New population growth is bringing new people and new wealth to the state.

EXECUTIVE SUMMARY

The ongoing and still painful shift to a more diversifiedservice-oriented economy means that the state has less to losein the future and more to gain. And for that matter, popula-tion growth is in some cases restoring life to towns andregional centers that have been saggingfor decades.

Moreover, the wheel may now beturning in Maine’s direction. As thesearch for quality places grows in impor-tance, Maine possesses a globally known“brand” built on images of livable com-munities, stunning scenery, and greatrecreational opportunities. Likewise, as“innovation” drives more of the econ-omy, Maine’s reputation for Yankee ingenuity and resourceful-ness matters more. On several counts, in short, Maine issurprisingly well-positioned for the future.

And yet, for all that, Maine’s future success is by no meansassured.

Workers see quality jobs—their own and others’—beingreplaced with lower-paying ones yet often lack the skills oropportunity to trade back up. Policymakers tout the promiseof Maine’s traditional and high-tech industry clusters, butmeanwhile the hoped-for future of plentiful, good-paying newjobs seems to come too slowly—especially in rural areas. Andall the while unplanned, haphazard suburban developmentrushes along too fast, in many places taking somethingaway—a cherished woodlot or open field, a favorite point ofwater access for fly-fishing, the way a certain small town felt.

Adding to these complaints are the state’s high taxes, ongo-ing fiscal challenges, and continued partisan bickering over

such issues as the efficiency of state and local governmentand the direction of state economic policy.

In sum, a state with much promise seems stuck: surpris-ingly pessimistic about its future, aware that great change is

upon it, but fearful that it isn’t adapting as well as it needs to.This report takes the measure of this moment. Sponsored

by GrowSmart Maine and funded by a wide array of Mainefoundations, businesses, conservation groups, and private citi-zens, “Charting Maine’s Future: An Action Plan forPromoting Sustainable Prosperity and Quality Places,”assesses the current state of the state and suggests a routeforward.

More specifically, the analysis offers the state a unifyingview of its situation followed by a focused agenda for state-level policy reform aimed at promoting a new era of “sustain-able prosperity” in Maine.

In that vein, the pages that follow draw a number of con-clusions about the state:

As the search for quality places grows in importance,

Maine possesses a globally known “brand” built on

images of livable communities, stunning scenery, and

great recreational opportunities.


1. Maine is changing in dramatic, sometimes surprisingways. In this respect, Maine’s current demographic, eco-nomic, and development trends describe a state in the midstof significant transformation. These dynamics confirm thatMaine is neither what it once was nor quite what it thinks it is:

• Once stagnant, Maine’s population is growingagain. In the standard view (which has some truth to it),Maine is an aging state that almost always grows slowerthan the rest of the country and New England. And it’strue that Maine’s population virtually stopped growing inthe 1990s while the number of 25- to 34-year-olds resid-ing in Maine has continued to decline. However, a closerlook reveals that Maine is now experiencing a significantincrease in population growth. Since 2000, the state’sannualized growth rate has nearly doubled, jumping 20places from 46th in the 1990s to 26th since 2000—byfar the biggest acceleration among the 50 states. Drivingthis growth, meanwhile, has been the nation’s fifth-high-est domestic in-migration rate since 2000. Every countyin Maine witnessed net gains of transplants from outsidethe state between 2000 and 2004, and because of thatMaine is now growing faster than all other New Englandstates except New Hampshire. Every major region is nowparticipating in the growth. Two positive results of thisacceleration include the arrival of newcomers with rela-tively higher household incomes, and the attraction ofmore young adults to the state. A more troubling relateddevelopment has been rapid home-price appreciation,especially along the coast and in Southern Maine

• Once based on goods production and naturalresources industries, Maine’s is becoming a diverse,innovation-oriented services economy. On the econ-omy, the conventional wisdom assumes Maine is in crisisbecause its fortunes revolve around manufacturing andnatural resource-based industries that are now collapsing.And it’s true enough that manufacturing and naturalresources industries continue to shed significant numbersof jobs. However, a closer look confirms that Maine out-performed the nation on job creation during the last eco-nomic cycle, and now enjoys a per capita income at a50-year high compared to the U.S. average. Shaping allof this, meanwhile, is a dramatic and ongoing restructur-ing of the economy that has seen Maine’s goods-produc-tion “super sector” shrink to essentially the same size of

the nation’s as a share of employment even as its con-sumer and business-services sectors have grown. Alsoshaping Maine’s fortunes is the increased organization ofkey industry “clusters”—groups of interrelated or similarfirms in “traded” (or export) sectors such as boat-build-ing, forest industries, information technology, biotechnol-ogy, tourism, or agriculture whose success or failure atinnovation will determine the state’s ability to producegreater numbers of higher-quality jobs over the long haul.These shifts have together allowed the state to add jobseven as traditional industries contracted. But they haveso far resulted in modest pay increases (especially in ruralMaine). The reason: Many high-paying manufacturingand forest jobs have been replaced by lower-paying con-sumer services positions given that massive job growthhas yet to emerge in good-paying “export” clusters or theprofessional services sector

• Once mostly rural, Maine is suburbanizing. Finally,the conventional view of Maine’s development status alsoneeds revising. In the conventional wisdom, Maineremains overwhelmingly rural—a “place apart” from thevast waves of development sweeping much of the AtlanticCoast. However, the standard view does not account forthe fact that more than 65 percent of the state—morethan 860,000 Mainers—now lives in the 164 towns thatcomprise Maine’s more-populated metropolitan and“micropolitan” areas. Within and beyond this populousmetropolitan zone, moreover, dispersed, low-density sub-urban-style development has become the state’s dominantsettlement pattern. Overall, just 23 percent of Maine’spost-2000 population growth has occurred in regionalhub towns. By contrast, 77 percent of recent growth hastaken place in surrounding towns, newer emerging towns,and rural areas distant from traditional centers. As aresult, the state is converting extraordinary quantities ofrural fields and woodlots to residential uses. From 1980to 2000, for example, Mainers altered the character of869,000 acres, or more than 1,300 square miles, of ruralland—a territory roughly the size of Rhode Island. In the1990s only Virginia lost a greater share of its rural landthan Maine as every region consumed rural territory

EXECUTIVE SUMMARY


2. These changes have brought some benefits to thestate—but on balance they pose serious challenges.These challenges represent urgent problems as the statestrives to usher in sustainable growth:

• Demographic change is raising education levels andmay be replenishing the workforce . . . However,many workers remain unprepared for tomorrow’sjobs. In this regard, recent gains in in-migration andhigher-education attainment do not change the fact thatMaine’s aging population includes too few young workersand too few highly skilled or educated people. In the nearterm, these factors are producing both labor shortages insome areas and low pay for many asmore of the best jobs require higherskill levels. Going forward, continu-ing shortcomings in the size andskill levels of Maine’s workforcecould complicate efforts to upgradethe state’s economy and improve thelivelihoods it provides to Maineworkers

• Economic restructuring is producing quality jobs inemerging innovation clusters . . . However, theseclusters remain very small. On this front, too, the con-tinued progress of Maine’s traditional and emergingexport sectors and clusters cannot obscure the fact thatthese industries lack critical mass and are not yet gener-ating large volumes of jobs. To be sure, Maine’s more tra-ditional export industries—tourism, healthcare, non-storeretailing, and finance and insurance—all slightly out-per-formed their national counterparts between 2000 and2004 in terms of job creation. Moreover, this growth andgrowth in other innovation clusters like boat-building,advanced materials, and biotechnology is producing jobsthat pay more than the state average. And yet, despitethese gains, many of Maine’s most important industrysectors and clusters remain modest in size, populated byfew companies, and sometimes very loosely organized.This “thinness” across Maine’s most promising sources ofgood-paying future growth limits the state’s prospects foreconomic progress

• Recent development patterns are beginning to givesome cities and towns new life . . . However, subur-banization is increasing government costs anddegrading the state’s small towns and environ-ment—its true “brand.” The good news here is that thestate’s overall quickening growth has brought new popu-lation to many of the state’s traditional regional hubs—many of which were losing population in the 1990s. Butfor all that, widespread suburbanization and sprawl aredriving up costs and may well be damaging the state’s topcalling card—its scenic beauty, the feel of its towns, itsquality of place. On the cost side, the state’s sprawlingdevelopment patterns necessitated the construction of

more than one dozen new schools statewide in the lastdecade at a cost of $200 million—more than one-quarterof the state’s total school-capital outlay. Additional costsare being imposed on once-rural towns as new growthrequires them to provide more expensive suburban-typeservices and on households forced to drive farther out tofind an affordable home. But what matters even morethan these costs is the fact that Maine’s development pat-terns are undermining the state’s alluring brand, soimportant to its current and future economy. Crucial tothis brand is the integrity of Maine’s distinctive townsand villages and the stunning natural areas that liebetween them. Unfortunately, far-flung, often-haphazardresidential development is more and more blurring thosecrisp scenes as it impinges on forests, fields, and water-fronts all around the state

EXECUTIVE SUMMARY

Economic restructuring is producing quality jobs in

emerging innovation clusters . . . However, these

clusters remain very small.


3. Exacerbating these problems are at least three serious state-level policy challenges. In each case, shortcomings of state policy—accumulated over many years—must be counted either indifferent or negative influences on the state’s chances of shaping a new era of “sustainableprosperity.”

• An inconsistent economic-development stance overmany years has weakened the state’s efforts toimprove its economy. Maine has had no shortage ofthoughtful leaders and bold ideas on economic develop-ment over the years. However, the state has frequentlyfailed to stick to and sustain its ideas, with the pre-dictable result that it has undercut the effectiveness ofnumerous intelligent but under- or un-funded initiativesthat might have otherwise made a larger difference. Inthis respect, numerous state or quasi-public institutionsintended to promote economic development remain smallor under-funded, while other promising innovation- anddevelopment-finance programs and funds have beenunder-capitalized. This short-funding has limited the

impact of otherwise valid efforts to grow the state’s smalleconomy and enlarge “thin” export and innovation clusters

• Maine’s often-high costs of government and theunbalanced revenue system that supports them hin-der the state’s ability to promote sustainable pros-perity. On the spending side, Maine’s unusually highexpenditures on a number of state-level administrativefunctions as well as on K–12 education are likely squeez-ing out necessary spending in other areas even as theycontribute to high taxes. (For its part, local governmentappears rather frugal by comparison to national andrural-state norms, though this may be because peer statesrely more heavily on county governments that have widerresponsibilities. In any case, it is noteworthy that munici-pal spending on services like police and fire goes upsharply in rapidly suburbanizing areas like SouthernMaine—an indication that as sprawl forces growingtowns to convert from mostly volunteer to mostly paidstaffs the costs of redundant small governments goes up.)On the revenue side, meanwhile, Maine’s high state-local

EXECUTIVE SUMMARY

Maine is changing in dramatic, unexpected ways, generating both opportunities and anxiety

20 Number of places Maine moved up in its population growth rank since 2000. Maine's jump from 46th to 26th was the

biggest turnaround in the nation

5th Maine’s rank on the rate of per-capita net domestic in-migration since 2000. Only Nevada, Arizona, Florida, and Idaho outpaced

Maine's growth on this measure

32,000 Net number of migrants who moved to Maine from out-of-state between 1999 and 2004. More than half of the new residents came

from Massachusetts and New Hampshire

12 percent Share of Maine employment in goods production. That share is almost exactly the same as the national share

21 percent Total share of Maine's employment in consumer services. That share exceeds the U.S. average by 6 percent

$13,000 Difference in average annual wages between higher-paying business services jobs and the average Maine wage

91 percent Maine’s 2004 per-capita income as a percentage of the U.S. average. This matches the state’s 50-year high

$300,000 Median home sale price exceeded by 17 towns in Maine in 2005. Only one town reached this mark in 2000

77 percent Percent of population growth between 2000 and 2005 that occurred outside of Maine’s regional hubs

869,000 Number of acres converted from rural to suburban use between 1980 and 2000

2nd Maine’s rank among states on the loss in share of rural land in the 1990s. Only Virginia converted a larger share of its rural land

$200 million Cost of 13 new schools built between 1995 and 2005 in response to population dispersal

7th Maine’s rank on K–12 expenditure as a share of total personal income

11.1 Number of teachers for every school or district administrator in Maine. The state's administrator-to-teacher ratio is ninth-highest in

the country

48 percent Average property tax rate differential between higher-tax regional hubs and fast-growing emerging communities in 2003

Source: Brookings analysis of data from: U.S. Census Bureau; Interal Revenue Service; Bureau of Labor Statistics; Bureau of Economic Analysis; Maine State

Housing Authority; National Center for Education Statistics; David Theobald, Colorado State University; Philip Trostel, Margaret Chase Smith Policy Center,

University of Maine; Matthew Murray, University of Tennessee at Knoxville


tax burdens and how they fall on various taxpayers maywell be contributing to negative economic and land-useoutcomes. High overall burdens, the second-highestproperty taxes in the nation, and the state’s low thresh-olds for its very high personal income tax top rate all maywell be sending negative signals to workers, entrepre-neurs, and retirees about the state as a place in which tolive and do business. Likewise, the wide 48-percent dif-ferential between the average property tax rates inregional-hub communities and those in outlying emergingcommunities serves a significant added spur to sprawl

• Barriers to development in traditional regionalhubs combined with weak local and regionalgrowth management are eroding the state’s uniquecharacter and contributing to sprawl. On the onehand, Maine’s convoluted state and local constructionrules combined with the absence of significant catalyzinginvestment serve to discourage development in olderplaces and discourage the reuse of historic structures.Along these lines, Maine’s crazy-quilt of differing localand state building-code regimes, the orientation of mostcodes toward new construction, and the variable qualityof code interpretation virtually guarantee that most devel-opment veers away from the state’s traditional centers. Itdoes not help that key state programs aimed at spurringredevelopment are grossly under-funded. On the otherhand, Maine’s ineffective state and local planning systemleaves most Maine localities unable to manage growthand vulnerable to region-scaled sprawl. In this respect,the combination of Maine’s intensely localistic planningsystem and the absence of sufficient support and incen-tives for municipal and regional planning efforts has left most Maine towns and regions susceptible to sprawlthat further weakens town centers and degrades rurallandscapes

4. Given these challenges, finally, Maine must seizethis moment to make urgent investments in its futurethat will enhance its distinctive strengths. To guide theseinvestments, “Charting Maine’s Future” proposes—and suggests how to pay for—the following “Action Plan forPromoting Sustainable Prosperity in Maine.” Three majorstrategies, each encompassing a number of initiatives, are crucial:

Invest in a place-based, innovation-focused economy.To foster economic growth, Maine should adopt a two-pronged investment strategy focused both on protecting andenhancing the state’s quality of place and spurring businessinnovation by supporting the emergence of new ideas andvibrant industrial clusters.

To that end we recommend that Maine:

• Establish a $190-million Maine Quality Places Fundto promote the revitalization of Maine’s towns and cities;augment land and farm conservation; protect traditionaluses of and access to Maine forests, farms, and lakes;and promote high-quality tourism and outdoor recreationgiven their importance to Maine’s economic well-being.The fund could be financed as a revenue bond supportedby a 3-percent hike in the state’s lodging tax, which is pri-marily paid by Maine visitors

• Support a $200-million Maine Innovation Jobs Fund,$180 million of which should support job-creating R&Din promising scientific and technical disciplines, whileanother $20 million goes to a new Maine ClusterDevelopment Fund to foster the business-led partner-ships that catalyze cluster-based job creation through col-laborative work on key challenges like workforcedevelopment and marketing. Both of these funds wouldbe financed by government efficiency savings located bythe Maine Government Efficiency Commission(described below). Candidate areas for investmentinclude:

• forest products• agriculture, organic farming, and specialty foods• coldwater aquaculture• marine research• information technology• biotech• toxicology• advanced composite materials• outdoor recreation and tourism

Trim government to invest in Maine’s economy andfinance tax reduction. To redirect scarce resources towardthe investments it needs to make, Maine should seek costsavings in state and local government that can be appliedeither to financing the Maine Innovation Jobs Fund and theCluster Development Fund or tax reduction. Here, Maineshould adopt a high-level business plan that demands hard-nosed cost-cutting as well as determined investment.

EXECUTIVE SUMMARY


On the spending side we recommend that Maine:

• Establish a Maine Government EfficiencyCommission to propose specific reforms to producebetween $60 and $100 million a year in cost savings instate government through the elimination of structuralredundancies and excess administrative overhead. Therecommendations would be subject to an up-or-downvote by the Maine Legislature within a specified timeperiod. Savings should be applied entirely to investmentsin future prosperity and tax reductions

• Fully fund and enlarge the Fund for the EfficientDelivery of Education Services to promote voluntarycollaborations between schools and districts to reduceK–12 costs

• Reduce its K–12 administrative expenditures to thevicinity of the national average of $195 per pupil, and sosave about $25 million a year

• Appoint a high-level school district reorganizationcommittee to substantially reduce the number of schooladministrative units

• Develop the state’s first-ever state school capital planto ensure that the state’s future investments in construc-tion and renovation are made rationally

• Fully fund and enlarge the Fund for the EfficientDelivery of Local and Regional Services to promotevoluntary collaborations to reduce service costs

• Support one or two major pilots in regionalized serv-ice delivery to explore and showcase far-reaching effortsat multi-municipal reorganization and cost reduction.The pilots can be funded by $1 or $2 million a yeargleaned from the Government Efficiency Commission’swork

On the revenue side we recommend that the state:

• Apply to property and income-tax reductions anystate-government spending savings located by the effi-ciency commission that exceed the $27 million needed tosupport the innovation and cluster funds as well as thelocal government pilots. Tax reductions might include, in order of priority:• reimbursements to towns with large amounts of

tax-exempt property• extensions of the homestead and circuit-breaker

programs• increases in the state’s low threshold for its top

income-tax rate• reductions in the top income-tax rate

• Explore ways to “export” tax burdens onto Maine visi-tors and non-resident second-home owners

EXECUTIVE SUMMARY


Support the revitalization of Maine’s towns and citieswhile channeling growth. Finally, Maine needs to tend tohow its rules and policies shape communities. To accomplishthis, the state should support its investments in place-makingby making development easier in its traditional towns andcities and fostering improved local and regional planning.

Concerning redevelopment and revitalization, we recommendthat Maine:

• Perfect and champion the state’s new model buildingand rehabilitation codes; support their wide adoptionwith technical assistance, training, and outreach; andcampaign over time for code uniformity

• Create and disseminate as a local option a new modelzoning ordinance specifically designed to complementand enhance the special value of Maine’s historic,densely built, traditional centers

• Better fund and use existing revitalization and rede-velopment-oriented programs and organizations.Three programs in need of bolstering are the MunicipalInvestment Trust Fund (MITF), theMaine Downtown Center (MDC),and the state’s historic preservationtax credit. Most critically, MITFshould garner $90 million from theMaine Quality Places Fund to sup-port matched grants to communitiesfor catalytic investments in down-town-type infrastructure projects—riverfront parks, sidewalks, public reconstruction projects

Concerning local and regional planning we recommend thatMaine:

• Provide substantial new visioning and planningresources to individual towns to help them reach con-sensus on how they wish to grow, and then implementtheir vision with ordinances. Funding for these and otherplanning activities could come from a new MaineCommunity Enhancement Fund, supported by a rea-sonable $20 increase in deed recordation fees

• Foster much more regional planning by providinggrants from the Community Enhancement Fund togroups of towns that agree to plan together. Even boldercollaboration could be encouraged by offering evenstronger incentives for towns to actually implementregional growth-management plans. These incentivesmight include giving priority in the awarding of key stategrants and aid flows to towns engaged in cross-boundaryplanning, or awarding authority for a local-option salestax to towns that implement truly regional plans

In the end, this report affirms Mainers’ abiding intuitionthat economic success and quality places matter equally andcan be fostered by effective, frugal government. Along thoselines, “Charting Maine’s Future” concludes that a moreprosperous, more sustainable, and ultimately more equitablefuture can be Maine’s if it sets gridlock aside and moves deci-sively to invest in its economy and quality places, while takingtough steps to trim government and streamline its land-useand development rules.

Move along these lines and Maine people will achieve agood measure of what they so earnestly desire. ■

EXECUTIVE SUMMARY

Maine should make development easier in traditional

towns and cities while doing much more to support

and stimulate local and regional planning.

Three-point increase

($20 million per year)

This 10-year $190 million revenue bond fund will support: ■ Community revitalization ■ Land and farm conservation ■ Access to forests and lakes ■ Tourism promotion

An annual stream of $2 million—derived from savings located by the GovernmentEfficiency Commission—will fully fund this existing program which promotes efficiencythrough inter-governmental cooperation on service delivery

Savings from the Maine Government Efficiency Commission in excess of $27 millionper year should go toward easing tax burdens through: ■ Reducing property taxes ■ Lowering the top income tax one-half point ■ Increasing the income threshold for the top income tax bracket

Grants will support: ■ Full implementation of building code reform ■ The Maine Downtown Center ■ Better visioning assistance and planning tools for towns ■ Incentives for multi-municipal and region-scale planning

Some $180 million of this $200-million bond fund—financed by savings located by the Government Efficiency Commission—will support research and development in promising areas like: ■ Forest bioproducts ■ Biotechnology ■ Information Technology ■ Organic farming/specialty foods ■ Advanced composite materials ■ Precision manufacturing

A related Maine Cluster Development Fund of $20 million will support industry-led partnerships that catalyze job growth through workforce development, network-building, and marketing

A bipartisan commission that will:

■ Locate program savings of $60 to $100 million

■ Propose reforms

■ Send proposals to the legislature for an up or down vote

Savings will be invested in economic development activities and tax reduction

$20 increase ($5 to $8 million per year)

MAINE QUALITY PLACES FUND

LODGING TAX

FUND FOR THE EFFICIENT DELIVERY OF LOCAL AND REGIONAL SERVICES

MAINE GOVERNMENT EFFICIENCY COMMISSION

MAINE INNOVATION JOBS FUND

TAX REDUCTIONS

DEED TRANSACTION FEE

MAINE COMMUNITY ENHANCEMENT FUND

ACTION HOW TO PAY FOR IT

AN ACTION PLAN FOR PROMOTINGSUSTAINABLE PROSPERITY IN MAINE


EXECUTIVE SUMMARY


For all its challenges, Maine stands within reach of a new prosperity—if it

takes bold action and focuses its limited resources on a few critical investments.

I . INTRODUCTION

The moment is urgent. After decades of industrialrestructuring and drift, the pace of transformation isquickening, the slow replacement of the old order isyielding a new one that may bring better lives forMainers.

New population growth is bringing new people andnew wealth to the state.

The ongoing and still painful shift to a more diversi-fied service-oriented economy (which has likely gottenpast its hardest stages) means that the state now hasa more balanced small-business economy with less tolose in the future and more to gain. And for that mat-ter population growth is in some cases restoring lifeto traditional towns and regional centers that havebeen down on their luck for decades.

Moreover, the economic wheel may now be turningin Maine’s direction. As the search for quality placeswidens and grows in importance, Maine possesses aglobally known “brand” built on images of livablecommunities, stunning scenery, and great recreationalopportunities. Likewise, as “innovation” becomes amore important force in the economy, Maine’s reputa-tion for Yankee ingenuity, resourcefulness, and crafts-manship means even more. On several counts, inshort, Maine is surprisingly well-positioned for thefuture.


I . INTRODUCTION

And yet, for all that, Maine remains a work in progress—itsmood anxious and at times sour, its future success by nomeans assured. Much seems promising, yes, but the averageMainer seems frustrated, even disturbed by the tenor andpace of change.

Workers see quality jobs—their own and others’—beingreplaced with lower-paying ones, yet many lack the skills oropportunity to trade back up. Policymakers tout the promiseof Maine’s traditional and high-tech industry clusters butmeanwhile the hoped-for future of plentiful, good-paying newjobs seems to come too slowly—especially in hard-bitten ruralplaces. And all the while unplanned, haphazard suburbandevelopment rushes along too fast, in many places seeming totake something away—a cherished woodlot or open field, afavorite point of access for hunting or fly-fishing, the way acertain view toward the water always looked or a certain smalltown felt.

Adding to the complaints are the state’s unusually hightaxes, ongoing fiscal challenges, and continued partisan bick-ering over such issues as the efficiency of state and local gov-ernment and the direction of stateeconomic policy.

In sum, a state with much promiseseems stuck: surprisingly pessimisticabout its future, aware that great changeis upon it but fearful that it isn’t adapt-ing as well as it needs to.

Which is where this report comes in:Sponsored by GrowSmart Maine andfunded by a wide array of Maine founda-tions, businesses, conservation groups,and private citizens, “Charting Maine’s Future: An ActionPlan for Promoting Sustainable Prosperity and QualityPlaces” assesses the current state of the state and suggests aroute forward.

More specifically, this new analysis seeks to help Mainersmove beyond gridlock by offering the state what we hope willbe a unifying view of its situation followed by a focusedagenda for state-level policy reform aimed at promoting a newera of “sustainable prosperity” in Maine.

What is “sustainable prosperity”? To be sure, the ideal of sustainabledevelopment lacks a precise defini-tion, as notes public policy scholarRichard Barringer of the University ofSouthern Maine.1 And yet, for yearsnow there has been a growing globaland national recognition that economic viability, ecologicalintegrity, and community vitality frequently occur togetherand may ultimately depend on each other.2

In this respect, economic growth is more and more seen asessential to support environmental and community health,but so are the latter goods recognized as essential to securingthe former. For example, just as globalization has increasedregions’ focus on economic competitiveness, so is that con-cern increasingly intertwined with questions about environ-mental protection, energy efficiency, and climate change.

A state with much promise seems stuck: surprisingly

pessimistic about its future, aware that great

change is upon it, but fearful that it isn’t adapting

as well as it needs to.


This holistic insight, moreover, is one widely shared byMaine people, many of whom want badly to both improvetheir economy and protect their state’s special environment—and see little contradiction in the two agendas. Nor is thisview only a product of the state’s longstanding tradition ofconservation and environmental activism. Instead, it’s bred in.Maine people don’t live in the state accidentally, after all.Whether to the north or south, Maine people stick stubbornlyby the state, despite its cold climate and various problems,because they love its mountains and seacoasts and traditionaltowns and feel at home with its hard-won economy of hardwork and community.

And so this report responds to Mainers’ intuition that eco-nomic success and quality places matter equally—are, in fact,linked inextricably.

Accordingly, the two chapters of thereport that follow this one review thestate’s intertwined demographic, eco-nomic, and development trends, andidentify their consequences. These sec-tions document that the state is grow-ing and changing, but that some of itsmost crucial new industries remainsmall even as haphazard, sprawlingdevelopment patterns impose added costs on the economyand may be undercutting its precious “brand.”

After that, the chapter entitled “Working toward Change”probes several ways that longstanding state-level policy short-comings are influencing the way Maine is growing and arelikely hindering the state’s progress toward sustainable pros-perity. This section contends that the state’s scattered eco-nomic development efforts, often high spending and taxes,and outmoded building and planning rules are impeding thestate’s progress toward a sustainable prosperity.

Finally, the report’s last major chapter offers “An ActionPlan for Promoting Sustainable Prosperity in Maine.”Informed by many Mainers’ confidence that economic vitality,a more efficient government, and healthy communities andlandscapes go together, this section lays out a practicalagenda for making substantial near-term progress toward thegoal of sustainable prosperity in Maine.

To that end, the report urges decisive action to:• Invest in building a place-based, innovation-focused

economy in Maine• Free up the resources to do that (as well as reduce

taxes) by making government more efficient• Foster the revitalization of Maine’s towns and cities

while channeling growthNo, this slate of strategies does not cover every issue con-

fronting the state, and neither does it propose a radical effortto “start over again” in Maine. However, it does encompassthe initiatives we deem most critical to building sustainableprosperity. To that extent, the strategies offered here repre-sent what we hope will be a broadly appealing, actionable,and fiscally defensible plan for making major progress towardsustainable prosperity.

Move boldly along these lines andMaine people might yet achieve a goodmeasure of what they so earnestlydesire.

Which brings up a final note: In theend, this is an optimistic report. To besure, the pages that follow detail seri-ous flaws with the status quo of statepolicy as it has accumulated in several

areas over many years. And yes, substantial policy changes arerecommended.

But for all that these chapters reflect a strong convictionthat Maine is a special place possessed of outstanding, trulyenviable potential.

Throughout its research the project team has marveled atastounding natural endowments embodied in Maine’s longcoast, rolling meadows, and big woods. All along we haveadmired the authenticity of the state’s human-scaled townsand villages and the town-meeting traditions that animatethem. And above all, we have come to deeply respect the ide-alistic, dedicated, and free-thinking people of Maine, who weknow will figure out the way forward.

For those reasons, this report seeks not to rebuild Maine inthe image of some other place. Instead, these pages endeavorto help the state become more successful by becoming evenmore distinct and more itself.

I . INTRODUCTION


I . INTRODUCTION

ABOUT THE ANALYSIS

The expansive land area of Maine, encompassing 16counties of widely varying size and nearly 500 smalltowns, requires a sharp geographical lens with whichto analyze the state’s trends.

Several classifications of Maine’s regions and munici-palities are utilized in this report. Large county-based regionsprovide a regional context for the data while a typology ofMaine’s towns frames municipality-level trends. At times,“labor market areas”—areas of common social and economicinteraction—provide a more regional focus.

Maine’s six regions. The regions most often referred toin this report were assembled by aggregating the state’s 16counties based on similar demographic and economic trendsand a general sense of shared experiences. Throughout thereport, these regions provide a framework for reporting onregional similarities and differences within Maine.

Maine’s cities and towns. This report assembles Maine’s488 municipalities into four types of towns: regional hubs,older surrounding communities, emerging communities, andrural towns.

• Regional hubs: Known as “service centers” in the policycommunity, regional hubs are also referred to in thisreport as “regional centers” or “core cities and towns.”The regional hubs exactly match the 63 state-definedregional service centers, which are the traditionalanchors of Maine’s economy.3 This report pays carefulattention to trends in these cities and towns because oftheir important role of providing a majority of the state’sjobs, commercial activity, and social resources such ashigher education and health care4

• Older surrounding towns: The older surrounding townsinclude the 14 towns designated by the state as beingadjacent to—and essentially part of—one of the 63regional hubs, as well as all towns that had housing den-sities of at least one housing unit per 10 acres by the year1970. Many of the older surrounding communities sharethe same characteristics as the regional hubs, offering asignificant number of jobs, commercial exchanges, andsocial services

Aroostook

Somerset

Piscataquis

Penobscot

Washington

York

Franklin

Cumberland

Oxford

Hancock

WaldoKennebec

Lincoln

KnoxAndroscoggin

Sagadahoc

SouthernMid-CoastDown EastNorthernWesternCentral

Maine’s regions


I . INTRODUCTION

• Emerging towns: Emerging towns are more recentlydeveloping places that are further removed from regionalhubs and achieved average housing densities of one unitper 10 acres only after 1970. Most of these communitiesare located in Southern and Mid-Coast Maine

• Rural towns: Maine’s rural municipalities, containingless than one housing unit per 10 acres, cover the vastmajority of the state and contain many important naturalassets. Because housing densities were calculated for theyear 2000, rapid development may have actually subur-banized many of these towns, making them feel less ruraland more suburban than the numbers indicate.Nevertheless, all are historically rural, which is importantwhen examining trends over the past few decades

Maine’s 31 labor market areas. Metropolitan andMicropolitan Areas, as defined by the U.S. Office ofManagement and Budget based on population and commut-ing trends, make up 10 major labor market areas (LMAs) inMaine. Examples include the Portland Metropolitan Area andthe Augusta Micropolitan Area. In addition, the U.S.Department of Labor defines 21 smaller labor market areasbased on economic integration of groups of towns, gleanedfrom Census commuting data. Generally, labor market areasare regions in which a person can change jobs without havingto change homes. Or, more simply, LMAs can be thought ofas “people-sheds.”

Regional HubsOlder Surrounding TownsNewer Emerging TownsRural Towns

Maine’s cities and towns

YorkLMA

WatervilleMicropolitan

Area

WaldoboroLMA

SkowheganLMA

SanfordMicropolitan

Area

SaintGeorgeLMA

Rumford LMA

RocklandMicropolitan

Area

Rochester-Dover,NH-

MEMetroArea

PresqueIsle LMA

Portsmouth,NH-MEMetroArea

Portland-SouthPortland-Biddeford

Metro Area

PittsfieldLMA

Millinocket LMA

MadawaskaLMA

Machias LMA

LincolnLMA

Lewiston-Auburn

Metro Area

HoultonLMA

FarmingtonLMA

Ellsworth LMA

Dover-Foxcroft LMA

Conway,

NH-ME LMA

CamdenLMA

Calais LMA

BrunswickLMA

Bridgton-Paris LMA

BoothbayHarbor LMA

BelfastLMA

BangorMetroArea

AugustaMicropolitan

Area

Maine’s labor market areas

Source: Brookings analysis of U.S. Census Bureau data Source: Maine Department of Labor

ABOUT THE DATA

Several state and federal data sources were used to con-duct analyses for this report.The decennial censuses from the U.S. Census Bureauprovided the most comprehensive data for all geographiesexamined for the years 1970 through 2000. While now sixyears old, data from the most recent census are still the mostcomplete and accurate set of demographic information avail-able for smaller levels of geography. Unless otherwise noted,all decennial figures reported in the text derive from thesedata.

For the latest population figures, this report used the 2005estimates from the U.S. Census Bureau’s Population Division.These estimates—current to 2005—are calculated using ahost of administrative documents and datasets. State andcounty populations are estimated using previous Census fig-ures along with birth and death rates, recent data from fed-eral tax returns, Medicare enrollment, and other records thatallow for the approximation of migration flows. County popu-lation estimates are then distributed to cities and towns basedon the sub-county areas’ average household sizes from the2000 Census and housing unit estimates derived from build-ing permits and other housing data. The resulting numbersare by no means exact, but they provide the best up-to-datepopulation figures available.

For recent information at the state level on indicators likeeducation and aging, the Census Bureau’s 2005 AmericanCommunity Survey was utilized. Because the ACS is a sampleand not a census, caution must be taken when interpretingreported values. Fortunately, margins of error for Maine esti-mates of indicators used in the report are quite small, thoughany significant causes for concern are noted.

Economic data came primarily from the federal Bureau ofLabor Statistics and the Bureau of Economic Analysis. MaineRevenue Services and the Maine Municipal Association pro-vided a wealth of tax related data. And data and reports fromthe Maine State Planning Office and the Maine Departmentof Labor are frequently cited.

Any other data sources used are clearly noted within thetext and references. ■



Maine is beginning to grow again. After decades of relative stagnation, the pace of

transformation is quickening, the slow rearrangementof the old order is accelerating.

New population growth is bringing new people.Wrenching economic shifts continue to cancel tradi-tional, good-paying jobs (especially in rural Maine)

and produce new and different ones,often in the suburbs. And meanwhilean extraordinary bout of suburbansprawl is intruding upon the state’sstoried rural landscape in manyareas.

In short, much is unsettled in thestate of Maine just now, and that is the story of thischapter of “Charting Maine’s Future.” Three majortrends are detailed:

• Once stagnant, Maine’s population is growingagain

• Once based on goods production and extrac-tion industries, Maine’s is becoming a diverse,innovation-oriented services economy

• Once mostly rural, Maine is suburbanizingTogether, these dynamics describe a state that is

neither what it once was nor quite what it thinks it is.They also describe a moment of anxiety as well as

opportunity.

II . EMERGING TRENDSIN MAINE:

THE STATE OF THE STATE

Maine today is neither what it once was

nor quite what it thinks it is.

After decades of relative

stagnation, the pace of trans-

formation is quickening, the

rearrangement of the old

order is accelerating.


II . EMERGING TRENDS

THE STANDARD VIEW:

MAINE’S AGING

POPULATION ALMOST

ALWAYS GROWS SLOWER

THAN THE NATION

In the standard view, Maine is a chronically stagnantstate that almost always grows slower than the restof the country. And it’s largely true: Only during the

1970s “back to the land” movement did Maine’s growth rateexceed the U.S. rate in the last century.

In fact, Maine’s population virtually stopped growing inthe 1990s, as its growth rate trailed all but four states.

In adding 47,000 people for a 3.8-percent growth rate, thestate’s population growth surpassed only Connecticut,Pennsylvania, West Virginia, and North Dakota in a decadeduring which the nation grew by 13.2 percent. Such anemicgrowth represented a significant slowdown after the 1970sand 1980s, when Maine grew 13.4 and 9.2 percent, respec-tively—near or above the U.S. rate.

TREND:

MAINE IS GROWING AGAIN,EVEN AS IT AGES

Source: U.S. Census Bureau

During the 20th century Maine almost always grew slower than the nation

1900s

25%

20%

15%

10%

5%

0%1910s 1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s

Perc

ent

Popu

latio

n G

row

th

Maine U.S.

Indeed, while some parts of the state grew faster thanothers, all regions grew more slowly than the nationalaverage in the 1990s. Southern and Mid-Coast Maine werebright spots in the 1990s, as they added people at rates of10.9 and 8.6 percent. However, neither region attained thenation’s growth rate. Down East Maine kept pace with thestate average, growing 4.2 percent, while Central andWestern Maine saw small increases of just 1.4 and 0.6 per-cent. Northern Maine took the largest hit, losing over 16,000people or 6.4 percent. In fact, Aroostook County alone lost13,000 people—over one-seventh of its 1990 population.

Maine has also been losing young adults. The number of25- to 34-year-olds residing in Maine dropped from about205,000 in 1990 to 158,000 in 2000, a 23.2-percent decline.Only North Dakota lost a greater share of young adults overthis period. To be sure, the size of this age group is shrinkingacross the nation as large baby boom cohorts are beingreplaced by smaller “gen-X” cohorts. Still, Maine lost youngworking-age adults at a rate three times faster than thenation. And the loss has continued: Maine dropped from 45thin 2000 to last in 2005 in terms of the percent of the popula-tion aged 25 to 34.1

Meanwhile, the senior population continues to grow.At 14.4 percent, the share of Maine’s population that is 65and older ranked seventh in the nation in 2000 and exceededthe U.S. figure by two full percentage points. To put that incontext, the percentage of Maine’s pop-ulation age 65 and over increased bythe fourth-highest amount in the1990s, a change that trailed only thatposted by Hawaii, Alaska, andWyoming. While 2005 estimates show aslight decrease in the elderly percentageof the population, the state moved uptwo spots to fifth nationally on thismeasure. And Maine now ranks as theoldest state in the nation with a medianage of 41.2, almost five years older thanthe U.S. figure.2


TREND: MAINE IS GROWING AGAIN, EVEN AS IT AGES

Source: Brookings analysis of U.S. Census Bureau data

Since 2000, Maine’s rate of population growth has surpassed that of all the New England states but New Hampshire

A CLOSER LOOK:

MAINE IS GROWING

Acloser look reveals that Maine is now experienc-ing a significant increase in population growth.Since 2000, the state’s growth rate has nearly dou-

bled. Based on annualized growth rates, Maine jumped 20places from 46th in the 1990s to 26th since 2000—by far thebiggest turnaround in the nation (only Connecticut cameclose, climbing 15 spots to rank 32nd). The state’s 0.72 per-cent annual population increase from 2000 to 2005 outpacedall New England states except for New Hampshire, which isgrowing at 1.17 percent per year.3

In fact, all Maine regions are now growing, thoughsouthern regions remain the state’s fastest-growingareas. Leading the way are the Southern and Mid-Coastregions—now growing by 1.1 and 1.0 percent annually, sur-passing or matching the 1.0 percent pace of the U.S. and eas-ily outperforming New England’s 0.5 percent annual growthrate. Within Southern Maine, York County is now increasingits population by 1.6 percent per year, over 50 percent as fastas the nation. For their part, the Mid-Coast counties ofLincoln, Sagadahoc, and Waldo are all meeting or exceedingthe U.S. growth rate with gains at or above 1.0 percent peryear. Every other region has also been growing. Down EastMaine continued on its recent path, recording slow but

Ann

ualiz

ed P

opul

atio

n G

row

th R

ate

1.4%

1.2%

1.0%

0.8%

0.6%

0.4%

0.2%

0.0%

Unite

d Stat

es

New

Hamp

shire

MA

INE

Conn

ectic

ut

Rhod

e Isla

nd

Verm

ont

New

Engla

nd

Massa

chus

etts

Annualized Population Growth, 1990–2000Annualized Population Growth, 2000–2005

steady annual gains of 3 percent. Meanwhile, Western,Central, and Northern Maine all posted significant popula-tion turnarounds. Northern Maine, for its part, reversedcourse, moving from annual losses of over 1,600 people ayear in the 1990s to gains of nearly 400 people per year since2000. Noteworthy, however, have been the continued popula-tion losses in Aroostook and Washington counties. But evenhere there has been something of a turnabout: Both of thesetraditionally struggling counties began growing for the firsttime in years in 2002.4

Driving the new growth has been aquickening of in-migration to thestate, which is now over seven timeslarger than natural increase. Thisrepresents a major change in Maine’sdemographic situation. After all, follow-ing on the state’s average net loss of440 people per year in the 1990s,Maine gained an average of 8,200 netnew residents per year between 2000and 2004—7.5 times more than itsaverage annual natural increase of1,100 and the largest in-flow in over 50years.5 In fact, the state’s domestic in-migration rate of 6.3 residents per1,000 since 2000 ranks fifth in thecountry, behind the popular Sun Beltand Rocky Mountain destinations ofNevada, Arizona, Florida, and Idaho,and just ahead of neighboring NewHampshire, which ranked sixth.

In fact, every one of Maine’s 16counties is now experiencing netgains of people from outside thestate.6 Not surprisingly, York County ledthe state with a net inflow from otherstates of over 9,000 residents between1999 and 2004. But it bears emphasiz-ing that in-migration from other statesis now bolstering every region andcounty. While six counties lost morepeople to other states than they gainedfrom 1995 to 1999, all saw positive net

in-migration between 1999 and 2004. Indeed, no countyadded fewer than 500 net migrants. Aroostook County, whichexperienced a net loss of nearly 700 people to other statesfrom 1995 to 1999, added over 1,100 net in-migrantsbetween 1999 and 2004. Penobscot County turned a loss ofover 2,100 people into a gain over 500 in the same period.Beyond that, Cumberland County added over 6,500 net in-migrants and Androscoggin, Hancock, Kennebec, Knox,Lincoln, Oxford, and Waldo counties all received over 1,000net in-migrants.



Source: Brookings analysis of U.S. Census Bureau data

All Maine regions are now growing; population growth rates in most regions haveincreased substantially since 2000

Maine’s accelerating in-migration rate ranks it just behind fast-growing Sun Belt andRocky Mountain destinations

Rank Domestic Migration Rate per 1,000 Residents, 2000–20041 Nevada 23.32 Arizona 12.23 Florida 11.44 Idaho 7.25 Maine 6.36 New Hampshire 6.17 Delaware 5.98 Georgia 4.89 North Carolina 4.710 South Carolina 4.6

Source: U.S. Census Bureau

Maine SouthernMaine

Mid-CoastMaine

WesternMaine

CentralMaine

Down EastMaine

NorthernMaine

0.38%

0.72%

1.04% 1.00%1.08%

0.83%

0.06%

0.67%

0.14%

0.55%0.41%

0.32%

0.16%

-0.66%

U.S. (2000–2005)

Annualized Population Growth, 1990–2000 Annualized Population Growth, 2000–2005 U.S. (1.0%)

These new inflows are alteringMaine’s traditional regional popula-tion dynamics. While many Mainerscontinue to leave places like AroostookCounty for other parts of the state—particularly the south—those from out-side Maine are offsetting those internalrelocations. For instance, about 4,600people from Aroostook County movedto other counties in Maine from 1999to 2004, about 1,300 more than thenumber of Mainers who relocated toAroostook. But at the same time, 5,900newcomers to Maine settled inAroostook County in those years com-pared to the 4,800 residents who left“The County” for other parts of thecountry. This 1,100-person net gainfrom out-of-state nearly erased the1,300-person in-state loss. Just asimpressive as the migration to the northfrom out of the state is the acceleratingpace of in-migration to SouthernMaine. In recent years Cumberland County saw nearly fourtimes as much net in-migration as it did in the second half ofthe 1990s, adding over 6,500 out-of-staters. And York Countymore than doubled its inflow, netting over 9,000 new resi-dents from outside Maine in five years.

Metropolitan Boston’s recent population losses, mean-while, explain much of Maine’s recent gain. The sevencounties comprising metropolitan Boston lost over 135,000people to migration from 1999 to 2004,during which years Maine counties andregions gained over 32,000.7 In thatsense, Boston’s loss has become Maine’sprofit. In fact, the Boston metro, on net,contributed nearly 12,000 migrants toMaine between 1999 and 2004—some36 percent of Maine’s net inflow.Another 3,400 net migrants came from the remainder ofMassachusetts—including more than 1,100 from WorcesterCounty—while the non-Boston metro remainder of NewHampshire contributed 1,800 despite the absence of a stateincome tax. In all, net migration to Maine fromMassachusetts and New Hampshire brought nearly 17,000residents to the state, and contributed more than half of thestate’s net gain.



All of Maine’s 16 counties are experiencing net gains of people from outside the state,reversing the late-1990s trend

Massachusetts and New Hampshire contributed more

than half of the state’s net in-migration between

2000 and 2004.

Source: Brookings analysis of Internal Revenue Service county-to-county migration data

609

660

543

664

573

16191617

9112

1396

6530

1586

15041189

1117

503

1470

9

-5-670

35

-2137

167

442

-155

3901

544

1683

-1162

787-679 682

278

1995 to 1999 1999 to 2004

Net Out-of-State Migration

Loss

of O

ver 2

,000

Loss

of 50

0 to

2,000

Loss

of 50

0 to

Gain

of 50

0

Gain

of 50

0 to

1,500

Gain

of 1,5

00 to

5,00

0

Gain

of O

ver 5

,000

These flows and others are bringing into the state resi-dents with considerably higher household incomes thanthose of native Mainers. Between 1999 and 2004, newarrivals in Maine enjoyed an average household income of$48,000 compared to $46,500 for Maine’s non-migrants.8 Butthese figures vary. In-migrants from Middlesex County,Massachusetts—the origin of 3,500 net migrants—had aver-age household incomes of $55,700, almost 20 percent higherthan stationary Maine residents. For their part, arrivals fromSuffolk County, Massachusetts, had incomes of $59,200 ayear, and those from Rockingham County, New Hampshire,made $50,275.

The new demographic reality mayalso include the return of youngadults to the state after their longdrift away from it. Most notably, datafrom the Census Bureau’s AmericanCommunity Survey, an annual surveyfeaturing a smaller sample of the popu-lation than the decennial census, sug-gest that while the state is nowreceiving in-migrants in all age groups,adults aged 25 to 44 made up a largeproportion of the state’s net arrivals inthe last few years.9

Another related development:Housing prices have been rapidlyappreciating. From 2000 to 2005, theinflation-adjusted median sales price ona home in Maine jumped from$125,000 to $184,000, a 48-percentincrease that exceeded the nationaljump of 39 percent. But the story variessharply by region. Down East Maineexperienced the sharpest appreciation,with real prices increasing 62 percentfrom $117,000 to $189,000. Inabsolute terms, Southern Maine sawthe largest price increases, as realmedian prices surged from $148,000 to

$236,000 between 2000 and 2005—a nearly $90,000, or 59-percent, increase. Western Maine’s prices jumped 50 percentto $139,000 while Mid-Coast, Central, and Northern Maineall recorded increases of at least 40 percent. Within regions,many towns recorded even higher gains. In Mid-Coast Maine,prices of Boothbay Harbor homes shot up 93 percent to$274,000 while prices in Rockport jumped 85 percent.Southern Maine towns of Saco and Freeport saw medianprices pass the quarter-million dollar mark, up over 55 per-cent. Even inland towns have witnessed sizable price gains offtheir lower bases. Bangor’s prices rose 66 percent to$140,000 while Waterford, in Oxford County, saw homesnearly double in value from $93,000 to $184,000 in the five-year period.10



A net total of 17,000 people migrated to Maine from Massachusetts and New Hampshire between 1999 and 2004

Source: Brookings analysis of Internal Revenue Service county-to-county migration data

1,8451,845

Northern andNorthern andWesternWesternNew HampshireNew Hampshire 11,62511,625

Western andWestern andSouthernSouthernMassachusettsMassachusetts

BostonBostonMetro AreaMetro Area

3, 3673, 367

1,845

Northern andWesternNew Hampshire 11,625

Western andSouthernMassachusetts

BostonMetro Area

3, 367

M A I N E

Under $100,000

$100,000 to $200,000

$200,000 to $300,000

Over $300,000

2005 Median HomeSale Price


Sharpening the impact of rising house prices has beenthe super-charged appreciation of homes in towns nearand along Maine’s coast, which has created substantialhouse-price differentials among towns and regions. Realestate prices in coastal towns have been appreciating farfaster than those elsewhere. Between 2000 and 2005, themedian home price in coastal towns in Southern and Mid-Coast Maine increased by about 56-percent.11 Similarincreases occurred throughout the Southern and Mid-Coastregions while the rest of the state experienced 44-percentgains. Most striking is the explosion of very high-pricedhomes. In 2000, only one town—Kennebunkport—hadmedian home prices above $300,000. By 2005, that numberhad risen to 17 towns, and all were located along the coast.The result is a widening of the state’s sharp price gaps. A

nearly $100,000 real five-year increase in Scarborough, forinstance, exceeded appreciation in nearby inland towns byanywhere from $5,000 to $14,000. Differentials were evenhigher further up the coast: Rockport out-paced its inlandneighbors of Hope, Union, and Warren by well over $100,000each while Camden recorded real appreciation between$24,000 and $61,000 higher than those same towns.


Median home prices in 17 towns now exceed the $300,000 mark; most towns inSouthern Maine and along the coast have median prices that surpass $200,000

Between 2000 and 2005,

the median home price

in coastal towns in

Southern and Mid-Coast

Maine increased by about

56 percent.

Source: Brookings analysis of data provided by the Maine State Housing Authority


At the same time, population growth is bringing devel-opment challenges and social tensions. Most obviously,an influx of people into towns both large and small puts addi-tional pressure on state, regional, and local infrastructure,planning, and service-provision systems. Some local planningboards in southern Maine are overwhelmed by the growingflow of subdivision applications. Development and itsspillovers in a state with nearly 500 small municipalities mayexacerbate regional coordination problems. And for that mat-ter the state’s immemorial culture clashes between nativesand those “from away” may sharpen as the pace of changequickens and the income gap between natives and newcomerswidens. Growth in this respect will bring change, and newanxiety, along with opportunity.

Moreover, new vitality—however promising—cannoterase serious long-term demographic challenges.Particularly troubling is the long-term loss to other states ofMaine’s 25- to 34-year-olds, a crucial cohort for the work-force. Combined with the state’s rapid aging and the fact thatmany of the state’s incoming new residents are likely olderbaby-boomers nearing retirement, these net out-flows ofyounger adults portend tough social and economic reckon-ings. Continued losses of younger Mainers will further thinthe ranks of the state’s most productive workers, at a timewhen a major report from the Aspen Institute details employ-ers’ increasing dependence on native-born workers to fill theirstaffs and replace the retiring baby boomers.12 Likewise, thestate’s emerging status as a retirement destination impliesgrowing pressure on the state’s health care system and socialprograms. Finally, despite the spread of more growth to morecounties, the reality of the “two Maines” persists. Southernand Mid-Coast Maine’s recent migration gains, for example,reiterate the extent to which those regions’ proximity toBoston increasingly allows them to tap into, and benefit from,the dynamism of the massive “Bos-Wash” corridor, with itshundreds of thousands of young workers and affluent retiringbaby boomers. By contrast, though, the much more modestinflows to the vast interior and north of the state underscorethe remoteness and continued isolation of that region—andraise again questions of its long-term vitality.


WHAT THIS MEANS:

Maine’s improved population dynamics validatethe appeal of the state’s high quality of placeand underscore Maine’s potential. Population

growth and in-migration do not by themselves indicate healthor good prospects. Still, to the extent mid-decade demo-graphic trends offer a rough indicator of the relative appeal ofa state they provide Mainers grounds for optimism. Maine’srecent population growth amounts to improved performanceon a basic determinant of economic well-being. In-migrationfrom other states means people outside the state are “votingwith their feet” and at least for now rating the state’s qualityof life on a par with faster-growing, highly desirable Sun Beltlocales. And for all the tensions that in-migration from theBoston metro area may create, Maine undoubtedly stands tobenefit from such inflows and their close proximity to thisaffluent, highly-educated region. Related to this is the“golden opportunity” of the state’s likely emergence as a desti-nation for healthy retirees and down-shifting baby boomers.In short, the Pine Tree State’s new status as a regional desti-nation state bespeaks its high quality of place and provides awelcome opportunity for progress, as new residents may bringnew talent, money, ideas, and experiences to a state that hasstruggled in recent decades.

THE STANDARD VIEW:

MAINE’S TRADITIONAL

ECONOMY IS DISINTEGRAT-

ING, AND NOTHING IS

REPLACING IT

In the standard view, Maine’s economy revolvesaround manufacturing and resource-based indus-tries that are now collapsing. And in fact, the state’s

manufacturing and natural resource-based industries, whichmade up over one-third of all private employment as recentlyas 1970, did lose ground in the 1990s.13 And with the excep-tion of shipbuilding, which saw a slightincrease, all the principal industries inMaine’s manufacturing sector saw fur-ther job losses between 2000 and 2004.As a result, today Maine has less than70,000 manufacturing jobs, 35,000fewer than it did in 1990.14


TREND: MAINE’S CHANGING ECONOMY IS GROWING AND DIVERSIFYING

TREND:

ONCE BASED ON GOODS PRODUCTION, MAINE’S IS BECOMING A DIVERSE,INNOVATION-ORIENTED SERVICE ECONOMY

Source: Bureau of Economic Analysis Wage and Salary Employment Estimates

Maine has steadily lost manufacturing jobs over the past few decades

Man

ufac

turi

ng Jo

bs

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

The standard view also bemoansthe fact that Maine’s economy pro-duced only tepid job growth in the1990s. As it happens, employment inthe state, including full-time, part-time,and self-employed workers, rose by amodest 12 percent, or 85,000 jobs, inthe decade to reach a total of 792,000positions. Given that the nation as awhole increased its employment by 19percent, Maine’s much slower percent-age increase in job creation ranked just43rd among the 50 states.15

Explaining it all in the conventionalwisdom are Maine's high taxes and

poor business climate. Maine is frequently criticized ashaving a bad business climate, and frequently that is said toexplain most of its problems. And it is true that Maine’s over-all tax burden as a fraction of per capita income ranks amongthe highest in the nation. Moreover, the somewhat controver-sial Tax Foundation rates Maine as having one of the 10 leastbusiness-friendly tax environments among the 50 states.16

Looking beyond taxes, the state rates onlya “C” for business vitality, and a “D” fordevelopment capacity, according to thelatest “Development Report Card of theStates” from the Corporation forEnterprise Development, although thestate earned a “B” for economic perform-ance.17

Accentuating these concerns has been a series of high-profile uncertainties and negative events. During thepast year, an unusual series of threats loomed, and under-scored Maine’s economic vulnerability. The Base Realignmentand Closure Commission (BRAC) reviewed the need forMaine’s defense establishments. A proposed “winner-take-all”procurement policy threatened Bath Iron Works. Risingenergy prices penalized Maine consumers (and visitors). AndBank of America’s acquisition of MBNA has led to the closingof several facilities, making many Maine workers fear thatthey—or someone they know—may see their job disappear.



Source: Bureau of Labor Statistics

Many manufacturing industries in Maine continue to shed jobs

Maine is frequently criticized as having a bad

business climate, and frequently that is said to

explain most of its problems.

1,197

-10,241

-7,462

-5,065 -4,413 -4,433

-894

-3,533

795

-640

1,159

-1,600

Ship and BoatBuilding

Apparel,Textiles,Leather

Forestry,Wood, and

PaperProducts

Electronics Agriculture andFood

Processing

Metals,Machiners

2,000

0

-2,000

-4,000

-5,000

-6,000

-10,000

-12,000

Cha

nge

in Jo

bs

1990–2000 2000–2004

A CLOSER LOOK:

DESPITE CHALLENGES,

MAINE’S ECONOMY HAS

GROWN AND CONTINUES

TO DIVERSIFY

Look closer, however, and Maine outperformedthe nation during the last economic cycle.Specifically, Maine’s economy grew faster or con-

tracted less than the nation every year from 1998 through2004. Along the way the state experienced a much shorterand shallower recession starting in 2001 than did the rest ofthe country. In fact, Maine only experienced one year ofactual job declines (2002). Unfortunately, Maine’s growthslowed in 2005

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