The Maine Heritage Policy Center Limited government, free enterprise and personal freedom for all Mainers 2016-05-24T13:31:16Z WordPress Liam Sigaud <![CDATA[Child Care Regulations Price Low-Income Families Out of Market]]> 2016-05-24T13:31:16Z 2016-05-24T13:31:16Z Continue Reading →]]> For many families with young children, especially single-parent households, child care is critical to being able work and earn a living. In 2015, an estimated 53,000 young children in Maine needed child care services outside the home. The availability of affordable child care often influences the decision to seek employment or rely on welfare.

Despite its importance, the cost of child care is often prohibitive for low-income Mainers. In 2015, an analysis by Child Care Aware of America revealed that in Maine, “a single parent with two children pays 73% of their income towards child care. A married family at the poverty line with two children pays 68% of their income towards center-based child care. [The] annual cost of child care for an infant and a 4-year-old is $16,381, which exceeds the cost of the state’s four-year public college tuition.” Before- and after-school center-based care for a child averages $4,439 per year, while full-time services for an infant typically cost nearly $10,000 annually. Even family-based providers that generally charge lower prices cost between $3,765 and $6,870, depending on the age of the child.

Not only are child care services too expensive, many parts of Maine – despite high demand – are experiencing acute shortages of day care facilities. Chantel Pettengill, who runs a child care center in Lewiston, recently testified to the Legislature: “We are…in a childcare crisis, I have been open since November…my infant rooms are full (16 infants), my toddler room has only 2 slots left, and the same for my 2-year-old room.” Commenting on the Legislature’s recent efforts to impose additional mandates on child care facilities, Vicki Gordon – who owns a daycare in Freeport – stated: “As more and more daycare regulations are passed, more and more great home daycares are closing, because it is becoming almost impossible to comply with all the rules and regulations.”

As the Washington Examiner noted in 2014, “excessive regulation of daycare and preschool mostly hurts the poor and working class. For one thing, it makes daycare rarer and more expensive.” According to Jeffrey Tucker, a research fellow at the Acton Institute, “child care is one of the most regulated industries in the country,” discouraging entrepreneurship and raising prices. A 2011 study published in the American Economic Review found that “the imposition of regulations reduces the number of center-based child care establishments, especially in low income markets.” A paper by the RAND Corporation concluded, unsurprisingly, “that regulations have an economically significant effect on the price of childcare, which in turn affects both the demand of regulated care and the labor force participation choices of the mothers.”

Intuitively, strict regulations on child care providers may seem necessary to ensure the safety of vulnerable children and promote high-quality services that spur cognitive, emotional, and social development. Yet, according to a report by the National Center for Policy Analysis, “state and local regulations significantly affect the price of care without improving quality.” A 2015 study by the Mercatus Center points out that policymakers often focus their regulatory efforts on structural, easily-observable aspects of child care — such as group sizes, zoning restrictions, and program administration—despite evidence that developmental outcomes are more closely linked to the quality of the interactions between the caregiver and the child.

Indeed, “the literature on early childhood development, psychology, and education suggests that the quality of child care depends most importantly on the level of education of immediate care providers—that is, lead teachers and child care center staff.”

In Maine, about 200 pages of regulations apply to child care facilities, nursery schools, or family child care providers. Depending on the type of child care provider and the age of the children being cared for, the Department of Health and Human Services imposes strict staffing ratios. For instance, in a small child care facility (defined as a business that cares for 3-12 children under the age of 13), one staff member may not supervise more than 12 children over the age of 5. Similarly, child care centers – facilities with more than 13 children – may not allow one staff member to care for more than four infants.

Though it’s important to ensure that children receive the attention and supervision they need, these staffing ratios increase labor costs, have not been demonstrated to be beneficial to child development, and are often restrictive than many other states. Thirty-five states, for instance, allow staff members to supervise more 5-to-13-year-olds than Maine; while Maine limits the number to 13 children per staff member, some states – like North Carolina and Florida – allow 25 children.

It should come as no surprise that states with the most affordable child care – such as Mississippi – also have less restrictive staffing requirements. Using a limited dataset, a study by the General Accounting Office estimated that “decreasing the average child:adult ratio by one is associated with increased costs of roughly 4.5 percent. Thus if the average center, with 50 children and an average annual per-child cost of $6,500, were to reduce the child:staff ratio from 11:1 to 10:1, the annual cost per child would increase by about $306.”

In addition to the extensive regulations imposed by the state, many municipalities have enacted zoning and land use ordinances that create obstacles for entrepreneurs seeking to start a center- or home-based child care facility. In Rockland, for example, child care facilities are prohibited in residential zones unless the Planning Board grants permission. Similarly, Houlton requires Planning Board approval for day cares and nursery schools and imposes many limitations on those seeking to run a child care business from their home. Portland permits day care and home babysitting businesses located in residential areas, but imposes minimum lot size requirements, parking mandates and architectural regulations. These ordinances may help to explain why the percentage of child cared for in family day cares has declined sharply since 1995.

The motivation for tightly regulating the child care market—the desire to protect the thousands of children who rely on commercial child care from neglect or abuse—is laudable. Yet, despite extensive government involvement, the overall quality of child care in Maine remains mediocre while prohibitive costs prevent many poor families from pursuing professional or educational opportunities made possible by reliable child care. Carrie Lukas, writing in the National Review, offers the solution: “Reducing unnecessarily burdensome regulations would allow more entrepreneurs to enter the child-care arena and ultimately lead to more affordable options and a greater diversity in the kind of care arrangements that are available.

Nathan Strout <![CDATA[Thousands of Mainers Could See Premium Increases over 40%]]> 2016-05-20T16:05:50Z 2016-05-19T14:04:38Z Continue Reading →]]> Community Health Options (CHO), a Lewiston-based insurance provider, has asked the Maine Bureau of Insurance for a whopping 44.9% rate increase on their catastrophic level plan.

CHO is one of 23 nonprofit Consumer Operated and Oriented Plans (co-ops) created under the Affordable Care Act, over half of which have since failed. Being the only co-op to turn a profit in 2014, CHO was initially held up as a success story amidst the otherwise dismal performances of the co-ops. In 2015, however, CHO began to rack up significant losses and ended the year with losses of over $30 million and projected losses of $40 million for 2016.

In response, CHO announced that it would no longer be accepting new enrollments in the middle of the 2016 open enrollment period. The Maine Bureau of Insurance tried to help stop the massive losses by putting CHO into receivership and cutting thousands of plans, but the Centers for Medicare & Medicaid Services (CMS) rejected that plan. CHO has continued to work closely with the Bureau of Insurance along with CMS in order to get back on sturdier financial ground heading into 2016. Although CHO has yet to file a financial report for the first quarter of 2016, the Bureau of Insurance has noted that the nonprofit is largely keeping to a plan hashed out months ago.

The catastrophic plan, which will see the 44.9% rate increase, is available on the Obamacare exchanges for those under 30 or for those over 30 who have been granted a hardship extension–essentially, those who are not able to afford large premiums but who don’t qualify for Medicaid. Catastrophic plans have lower premiums and higher deductibles than most plans, and are generally seen as the most affordable insurance option. In the 2016 open enrollment period, 1% of the 84,059 Mainers who enrolled through the exchanges chose catastrophic plans. Anthem, CHO’s only competitor on the exchanges, has requested a rate increase on its equivalent catastrophic plan between 10% and 14%. CHO is actually raising all of its rates by double digits, with the lowest increase being about 17%, but most being over 20%.

[RELATED: Maine’s Obamacare Success Story Falters]

Curiously, the nonprofit insurer raised rates by only minimal amounts in past years and actually reduced rates on its catastrophic plan by 3% and 6% in 2014 and 2015, respectively. This, in part, speaks to the problems new insurers can have adjusting to the insurance market, especially when they are heavily pressured to offer plans at the lowest possible prices without data on what future payouts will look like. CHO was further jeopardized by the low levels of capital it kept to insure it in the case of massive losses like those seen in 2015.

Of course, the co-ops were never expected to stand on their own–at least for the first few years. Instead, the Affordable Care Act set up what are known as risk corridors. Essentially, risk corridors were meant to transfer excess profits from successful insurers on the exchanges to counter losses from unsuccessful insurers. These risk corridors could only be effective if there were net profits across the exchanges, but, perhaps unsurprisingly, 2015 showed net loss.

Under the law, the federal government was supposed to bail out the insurers with a massive influx of cash into the risk corridors, but a Congressional budget deal blocked any such bailout. Co-ops like CHO had used the promised bailout of the risk corridors as an excuse to keep capital low, as any major losses could be averted with a transfer from the profits of more successful insurers.

A mixture of unsustainably priced plans, higher than expected enrollment and less healthy enrollees helped lead to CHO’s 2015/2016 losses. Raising prices as proposed is one obvious way to stem the losses and get the organization back on the right track. In the process though, one is left asking what the point of the nonprofit co-ops was. If the point was to keep premiums low and avoid drastic rate increases like those noted, then CHO is failing on all counts.

Ultimately, if CHO can get back on solid financial ground, it’s unclear whether it will look any different than the for-profit insurers it was set up to replace.

John Eick and Joe Horvath <![CDATA[Subsidies and Cost Shifting Won’t Power Maine’s Economy]]> 2016-05-20T16:04:56Z 2016-05-12T15:22:35Z Continue Reading →]]> Anyone remotely familiar with Maine’s economy knows it’s at a crossroads. Between 2004 and 2014, its cumulative economic growth ranks 49 out of the 50 states, a mere 21.8 percent. Non-farm payroll employment has shrunk 1.2 percent over the same period, placing Maine’s employment growth at 48 in the nation. An economic resurgence is clearly needed, and state legislators have two options. They can loosen the reins holding back growth, or try to pick winners and predict market trends.

Recent history, especially in the Northeast, shows that reducing tax and regulatory burdens on businesses, individuals and investors leads to widespread economic opportunity. Distributing crony carve-outs, on the other hand, routinely fails to spur growth. With his recent veto of a “net metering” bill sustained by a House vote, Governor Paul LePage may have provided an opportunity for the rooftop solar industry to become fully self-sufficient, albeit by placing a small hurdle in its way.

An energy issue of increasing economic consequence, net metering has recently seen significant activity in states across the nation. For the uninitiated, net metering is a billing system whereby electric customers with rooftop solar or other small-scale, on-site distributed generation (DG) systems can obtain credit for any surplus power they may generate. The federal Energy Policy Act of 2005 mandates all public utilities offer net metering services to their customers upon request and 44 states currently maintain net metering programs, including Maine.

From a free market perspective, electric customers who value and can afford DG technologies should be free to install these systems on their homes or businesses. At the same time, however, these customers should pay for all costs associated with their decision without shifting financial burdens onto non-DG customers. Embedded in the retail rate of one unit of electricity is not just the cost to generate electricity, but also the cost to build and maintain the transmission and distribution infrastructure (i.e., the electric grid) necessary to deliver electricity to homes and businesses. When DG customers are reimbursed at the full retail rate for any surplus electricity generated, they in effect avoid having to pay for these services.

In addition to the infrastructure costs, there are other balancing and backup services unique to DG and net metering that must be accounted for. Americans have the perfectly reasonable expectation that when they flip a light switch, lights will come on. However, given the intermittent nature of solar and most other renewable sources, utilities must continuously monitor the amount of electricity generated by a rooftop solar customer and instantaneously supplant any gaps with electricity from the grid. Using data provided by the U.S. Energy Information Administration (EIA), the Edison Foundation’s Institute for Energy Innovation estimates DG customers shift roughly $60 in non-energy grid services to non-DG customers each month.

States should consider relatively modest reforms (e.g., a monthly grid hookup charge, reimbursement at the avoided cost rate, etc.) requiring customers who use services provided by the electric grid to pay for those services. Doing so would ensure fairness and provide all electric customers with greater transparency.

Earlier this year, the Maine State Legislature considered a bill that would replace the state’s retail net metering program with a new purportedly market-based incentives system. Under the proposal, the state’s utilities would purchase and aggregate the solar electricity generated from DG customers and utility-scale providers alike. The utilities would then bid this electricity into New England electricity markets where it could be used by electric customers. Other subsidies and incentives for rooftop solar would then decrease over time as market penetration increased.

Citing cost concerns and after negotiations with legislative leaders failed, Governor LePage vetoed the bill. The governor specifically sought to cap the amount money reimbursed to solar customers for their surplus electricity to guard against significant electricity price increases. The Maine Public Utilities Commission (MPUC) estimated that the legislation would cost ratepayers around $22 million in aggregate annually, and Maine’s general fund itself would incur $200,000 of costs in the first year of enactment and $263,000 in 2019. These costs, while not unmanageable, are unfairly placed on consumers and taxpayers to support a particular industry that, if demand were as high as some say, would be able to support itself.

“The solar industry itself admits that the average ratepayer would see an increase of around 31 cents per month,” Krysta Lilly of the Maine Heritage Policy Center recently wrote. “That doesn’t sound too bad until you consider that for large electric consumers (and employers) such as Sappi, Bath Iron Works and Fairchild, this ‘modest increase’ could be in the hundreds of thousands of dollars each month.”

Despite fairly widespread support in-state, the Maine House of Representatives was unable to muster enough support to override the veto. MPUC will now be forced to address the issue, given that rooftop solar is nearing caps limiting the current net metering program to 1 percent of peak load. MPUC will now have the opportunity to redesign the state’s net metering program in a way that accounts for the cost-shift. This could very well mean striking a balance, allowing new and innovative technology to spread without placing an undue burden on Maine taxpayers and businesses.

Subsidizing a single industry and a small group of consumers at taxpayer expense will not help Maine grow its gross state product or improve employment. If Maine policymakers want the state to be economically competitive like nearby New Hampshire and Massachusetts, then a good start would be to cease attempting to manipulate the market. Instead, Maine government should allow freer competition and let informed consumers make their own choices.

Liam Sigaud <![CDATA[It Takes 1,500 Hours to Become a Barber in Maine]]> 2016-05-09T15:17:34Z 2016-05-09T15:16:47Z Continue Reading →]]> Your barber has to get government permission to cut hair, or risk jail time.

In Maine, barbers must be at least 17 years old, have completed 10th grade or its equivalent, have finished a 1,500-hour course of instruction or a 2,500-hour apprenticeship, passed an approved examination and paid a $20 fee (renewed annually, of course).

Practicing barbering without a license is a class E crime—punishable by up to six months in jail—and a civil violation punishable by a fine of up to $5,000 and not less than $1,000. Other charges, such as theft by deception, might also apply, potentially resulting in a felony conviction.

According to a 2012 report by the Institute for Justice, barbering is “among the most widely and onerously licensed occupations” across the country; all fifty states require licensure. The amount of training required, however, varies from state to state. Aspiring barbers in New York only need to complete about 288 hours of instructional coursework. Residents of New Hampshire must undergo 800 hours of preparation, while applicants in Colorado, Massachusetts, Missouri, New York, Vermont and Washington need 1,000 hours of training to become licensed. In Iowa and Nebraska, 2,100 hours are required.

Other requirements vary as well. In Vermont, barbers must be at least 18 years old and have completed 12th grade. In Georgia, 16 year olds are welcome to apply. The application fee in Connecticut is $100, while Michigan—you have to give them points for creativity—charges $50 on even-numbered years and $80 on odd-numbered years.

Do these differences in state policies result in disparities in service quality and consumer safety? Not that anyone can tell.

Yet formal training requirements impose significant burdens on those considering a career in barbering, especially for young people and the poor. According to the Bureau of Labor Statistics, the median annual wage for barbers is $24,850. For instance, the Capilo Institute, located in Augusta, charges $11,500 for the limited barber course—more than 46 percent of the average barber’s annual income.

Those who have the time and resources to obtain a barbering license, of course, enjoy less competition, resulting in higher prices. An analysis by the Mercatus Center in 2015 concluded, “A careful examination of the data shows that occupational licensing of barbers…increases the earnings of the professionals without any measurable benefit to consumers.”

The only possible justification for imposing such onerous regulations on barbers would be a concern for public safety, coupled with an empirical demonstration that market forces are inadequate to warn consumers of incompetent barbers. Yet Maine requires those seeking to become an EMT-Basic to only undergo 120 hours of training; would anyone argue that an incompetent first responder is less likely to inflict harm, or that an EMT’s skills require less time to master?

In fact, licensing barbers—and many other professionals—may lead to a decline in service quality as practitioners grow complacent in the absence of vigorous competition. When barriers to market entry are removed, incompetent workers are quickly dealt with (would you go back to a barbershop after receiving a third-rate haircut?) while skilled practitioners—regardless of their formal training—thrive.

As the Wall Street Journal highlighted in 2012, some entrenched interests in the barbering profession oppose licensing reforms. In response to a proposal to repeal barber licenses, the director of a barbering school in Michigan said: “I’m not saying we are as important as doctors, but we are the closest you can get. We are turning this into the Wild, Wild West….I’d like to see them get a haircut in a barber shop five years from now. It will be like rolling the dice.”

Go ahead, roll the dice. We’ll be okay.

Beth O'Connor <![CDATA[Corn Ethanol, the Saga of Government Boodoggles and Impending Doom]]> 2016-05-09T15:27:34Z 2016-05-04T17:21:03Z Continue Reading →]]> When thinking about ethanol, I am reminded of a song my children listened to in the 90’s sang by Kermit the Frog, “It ain’t easy being green.” Selling corn ethanol as a fuel additive makes being green impossible, never mind not easy. The only thing “green” about the ethanol Renewable Fuel Standard (RFS) is the billions of green it takes from taxpayers and consumers to fund politicians, who pass the green to corporate giants, who then return some of that green as campaign contributions to get those politicians re-elected, and the beat goes on.

Did you know that corn-based ethanol requires 2,500 to 29,000 gallons of freshwater per million Btu’s of energy? This is a pretty scary statistic as we witness places like California go through one of the most serious droughts in history. But still, the corporate cronies keep insisting we reach the goals of the RFS and that federal law requires that the ethanol mandate must keep rising: from 9 billion gallons of ethanol in 2008 to 14 billion now and 36 billion gallons by 2022.

Now ask yourself, where does all that water go and what’s in it? Much of it is nitrogen fertilizers that get washed off the land and into waterways that drain into the Gulf of Mexico, where they cause giant summertime algae blooms. When the algae die, their decomposition consumes oxygen in the water creating enormous low and zero-oxygen regions that suffocate marine life that cannot swim away.

The RFS in all its Tom foolery would lead you to believe that gas would cost more if it was not blended with ethanol. This is rubbish. Ethanol is 30% less efficient, which results in we the consumers shelling out more money for fewer miles driven. I can’t even begin to estimate the economic loss caused by damage to our lawn mowers, snow mobiles, four wheelers and every other vehicle. Ethanol collects water, gunk’s up fuel lines, corrodes engine parts and to boot it must be delivered in stainless steel tankers that are filled with diesel fuel.

Then we have another big problem. MAN WHO BURNS HIS FOOD GOES HUNGRY! U.S. corn prices went higher than an elephant’s fanny from $1.96 per average bushel in 2005 to as much as $7.50 in autumn 2012 and $6.68 in June 2013, before dropping in 2014 due to record yields and lower demand for corn and ethanol.

Since the inception of this boondoggle, the cost for feed for chicken, turkey and pig farmers has risen by $100 billion, that is billion with a capitol B. The guaranteed income to grow corn is an incentive for farmers to convert land that would otherwise be used for wheat and rye or used as conservation or pasture land, and again, corn requires huge amounts of irrigation, fertilizers, pesticides and lots of gasoline and diesel fuel.

Now if that doesn’t tick you off to a fairly well extent, maybe this will twist your knickers into a knot.

I believe is the biggest flat out lie we have been told is that corn ethanol produces cleaner air quality. It does not. The only thing it has done is substitute one set of pollutants for others. In the early stages of examining this, the standards imposed from the Clean Air Act of 1990 have not been met, nor have the goals proposed in the RFS been met.

Think hard about that statement. Perhaps they were never intended to be met, and perhaps no one thought about the ramifications from really bad policy. That happens in government, a lot. Never mind Shades of Gray, there could be a best seller called Shades of Green, and it could be killing us and driving up our health care costs.

The combustion of ethanol creates increased acetaldehyde in the air we all breathe. Vehicle and factory exhaust can create a chronic exposure source to those who live near heavily trafficked areas or who spend hours commuting on highways. Acetaldehyde contributes to smog formation when it reacts with other volatile substances in the air. Open car windows increase exposure, as does breathing in acetaldehyde-containing fumes near gas pumps. Auto exhaust research has shown that low dose chronic exposure to acetaldehyde may still be sufficient to gradually damage proteins, enzymes and other cellular structures in the brain and other organs.

Furthermore, acetaldehyde can cause a depletion of vitamin B1, B12 and B9. Even mild, chronic B1 deficiency can produce brain-related symptoms such as emotional instability, confusion, depression, fatigue, irritability, headaches, sensitivity to noise, insomnia, decreased short-term memory, brain-fog and a feeling of impending doom (I feeling I get often walking through the State House doors).

Seriously, deficiencies in vitamins B1, B12, B9 (folate, folic acid), cause issues with red blood cells. Vitamin B1 causes the red blood cell which is 7 microns in size, to harden. Capillaries are 2 microns in size. A normal red blood cell is flexible and able to change shape to go through a capillary; a hardened red blood cell requires more pressure to force it through the capillary. A red blood cell also carries oxygen to every part of the body. With deficiencies in vitamins B12 and folate, there is a decrease in red blood cells, which means less oxygen for the body to function. This results in reduced brain and heart function.

To make matters worse, acetaldehyde is heavier than air, therefore, there is now less oxygen available. The more ethanol is increased, the less oxygen that will be available, the more severe our health issues will be, including higher drug use and increased aggression.

If one looks at, (map below) you can see Iowa is the epicenter of the ethanol boondoggle. It is also the home of the first presidential primary election. Iowa has over 183 gas stations that sell ethanol-free fuel. Nationwide, over ten thousand locations sell ethanol-free fuel and Alaska has no ethanol in their fuel. Maine has six locations selling ethanol-free fuel, all are located at airports or marinas. That is probably because we can’t be having airplanes crash to the ground or boats stranded at sea when the engines start sputtering out.

corn producers for ethanol

Do you want to get rid of corn ethanol in Maine? I know I do and I need your help. Call all of your representatives at every level and call your Governor. Call your local gas stations and tell them there are no laws from preventing them from purchasing and selling ethanol-free fuel in Maine and that you would like the option to purchase it.

Ethanol manufacturer’s will balk at this and so will big Petroleum. I ascertain the reason for big oil’s aversion would be that they have contracts at places like Walmart, Target, Lowes, Ace Hardware and many other places to sell ethanol-free fuel in little 1 quart cans for about $7.88 each or $31.52 per gallon. I bet they don’t want to give up that cash cow.

The bottom line here is that corn ethanol as a renewable energy source is a science and engineering joke, not common sense energy policy, never mind wise environmental, economic or health policy, and it is time to put an end to it.

Nathan Strout <![CDATA[Zoning Regulations Are Driving Up Portland Rents]]> 2016-05-03T16:23:47Z 2016-05-03T16:23:47Z Continue Reading →]]> Renting in Portland remains unaffordable for many of its residents. Instead of saving up money for new clothes, a new car, or a much deserved vacation, many Portlanders are trapped in situations where rent takes up the lion’s share of their paycheck, leaving them little to nothing in their pocket. But that’s nothing new for the Forest City. Former mayor Michael Brennan introduced an inclusionary zoning ordinance before he was voted out of office, and current Mayor Ethan Strimling has formed a committee to address the affordability gap in Portland’s rental housing market.

The “solutions” suggested or implemented so far are bound to fail. Inclusionary zoning is a policy that requires developers to include a number of low income housing units in any rental building. While this obviously discourages development by increasing their costs and diminishing their returns, it also fails to make a significant dent in Portland’s sky high rental market. Such piecemeal attempts at solving the problem give the illusion that the city is addressing the problem without doing much of anything. Other proposed solutions, such as a temporary freeze on rents, is an even worse idea. What Portland desperately needs is a comprehensive, long-term solution to the rental housing crunch.

A report from the Mercatus Center may have an answer to the city’s woes. According to researchers with Mercatus, zoning regulations lead to higher costs, with low-income residents absorbing the brunt of the costs. Policies such as minimum lot sizes, parking requirements, and inclusionary zoning can have massive effects on a city’s housing stock. According to the report, onerous zoning often causes inefficient land use, limited development, and “regulatory taxes” of over 10% in major cities.

Take a look at this map of zoning in Portland and tell me if you think it’s encouraging or discouraging development.


That is just the tip of the maze of land-use regulations that developers need to navigate in order to begin a project in Portland. Developers need to comply with height restrictions, inclusionary zoning, minimum lot sizes, limits on the number of units, and a vast array of inane and obscure rules.

And if they slip up on just one, they can be guaranteed that an anti-development activist group will sue them in court and do everything they can do destroy the project. Zoning compliance can add an obscene amount of costs to a new project, and a successful lawsuit can completely sink the development. A culture of anti-development activism has taken hold in parts of the city, and any major project should expect a group of “concerned citizens” to bully and harass them from the outset. These small groups are masters of getting press coverage of their pet causes, and use any tactic they can think of to delay, limit, or fully stop construction that will lower their property values. Many developers will avoid Portland and its associated costs and risks altogether and build projects in friendlier municipalities.

Portland residents desperately need more rental units to drive down prices, and developers want to build them–it’s a win/win. Portland needs to stop standing between renters and housing suppliers and let the market work.

If Mayor Strimling and the city council are truly interested in addressing Portland’s affordability gap, then they need to do a cost-benefit analysis of the city’s zoning code. Instead of discouraging development with an unwieldly zoning environment and enabling anti-development protesters, Strimling and Co. need to streamline the city’s regulatory structure, limit frivolous lawsuits, and give developers more freedom to operate.

If Portland’s government could just get out of the way, developers would be able to provide more housing for the low-income families who truly need it.

Liam Sigaud <![CDATA[Minimum Wage Advocates Disregard Evidence]]> 2016-04-29T16:28:50Z 2016-04-29T16:28:50Z Continue Reading →]]> As The Maine Wire has repeatedly shown here, here and here, proponents of a minimum wage increase in Maine seem more concerned with soundbites than responsible public policy. The Maine People’s Alliance’s website, for example, under the heading “Why increase Maine’s minimum wage?,” states that “it’s not right that a single mother of two can work full time and still not make ends meet for her family.” That’s true, but the website fails to provide any evidence that a minimum wage increase would achieve the goal of helping poor single mothers.

The little scholarly research the Maine People’s Alliance has appealed to is the work of Michael Reich, an economics professor at UC Berkeley, who has argued that a minimum wage up to 60 percent of the median full-time wage does not reduce employment, and that higher ratios do not have “substantial negative employment effects.”

In a recent New York Times article, however, Dr. Reich is quoted as saying that the precise ratio of minimum to median wage at which significant job losses occur has yet to be definitively defined. “We don’t know at what point that kicks in,” he is quoted as saying. “We know that hasn’t happened at 50 percent or 55 percent.”

Even if we accept this 60 percent rule at face value, however, problems immediately become apparent. As Nathan Strout has pointed out, applying this 60 percent rule to median wages in Maine fails to account for significant disparities between counties, since median wages in Cumberland County ($17.85) and Washington County ($14.85) are far from the same. In addition, indexing the minimum wage to the cost of living, as the Maine People’s Alliance’s referendum would, reveals how little they care about following the 60 percent rule at all; if wages stagnate (especially among entry-level workers) while the cost of living continues to rise, the ratio of minimum-to-median wage could increase sharply, leading to significant job losses.

Yet as Michael Saltsman of the Employment Policies Institute noted in a letter-to-the-editor to the Portland Pres Herald in March, even the 60 percent rule is based on dubious assumptions and analysis. “Reich’s work is an outlier in the minimum-wage literature, with most credible studies showing that negative employment effects kick in at a much lower threshold. This suggests that any minimum-wage hike in Maine will be counterproductive,” wrote Mr. Saltsman.

The people of Maine shouldn’t be used as guinea pigs in a poorly designed study of labor market dynamics; many other states have already supplied ample evidence that minimum wage hikes make it harder for low-skilled workers to find employment and benefit only a small population, largely made up of adolescents whose household incomes far exceed the poverty line.

When a policy’s advocates refuse (or don’t bother) to grapple with hard numbers and empirical evidence, they usually have something to hide.

Matthew Gagnon <![CDATA[Healthcare Price Disparity report on WGME]]> 2016-04-25T20:55:13Z 2016-04-25T20:11:16Z Continue Reading →]]>

AUGUSTA (WGME) — A just released report from the Maine Heritage Policy Center shows considerable price variations between different hospitals in Maine for a lot common medical procedures.

Krysta Lilly <![CDATA[Release: Healthcare Costs in Maine Report Now Available]]> 2016-04-19T19:22:56Z 2016-04-19T19:22:56Z Continue Reading →]]> AUGUSTA- Today, The Maine Heritage Policy Center – Maine’s premier free market think tank – unveiled its latest research publication, Healthcare Costs in Maine. The report compares prices for common medical procedures between thirty-three hospitals and exposes substantial price variation between facilities.

Health care costs in Maine are among the highest in the nation, and consumers continue to face surging premiums and deductibles. Average annual health care spending per person reached $8,521 in 2009, with total aggregate expenditures surpassing $11 billion. In 2014, Maine ranked 11th nationally in terms of personal health care spending per capita. Meanwhile, health insurance premiums have risen sharply. In the individual market in Maine, average monthly premiums per person were $335.61 in 2013, 43 percent more than the national average and a 12 percent increase since 2010.

Now, more than ever, consumers need to be aware of price disparities between providers. Across the country, researchers have revealed enormous – and seemingly arbitrary – price variation in the health care market. In 2013, the Centers for Medicare and Medicaid Services released data that, according to Fierce Health Finance, a health news organization, “highlighted dramatic price variances including charges ranging from $5,300 to $223,000 for a joint replacement in different states and prices for heart-failure treatment ranging from $9,000 to $51,000 in the same city.” Yet consumers remain largely unaware that such disparities exist.

Healthcare Costs in Maine demonstrates that wide price variation exists between hospitals in Maine and identifies – drawing on data from the twenty most commonly-performed medical procedures provided by the Maine Health Data Organization – the most expensive hospitals (Aroostook Medical Center, Stephens Memorial Hospital, and Cary Medical Center), as well as the most affordable (York Hospital, Central Maine Medical Center, and MaineGeneral Medical Center). Procedures like a knee replacement, for example, range in price from $35,774 to $50,454, with modest variation occurring based on location, hospital size and rurality.

Joe Horvath <![CDATA[Rich States, Poor States: Maine Gets Richer, but Still Among the Poorest]]> 2016-04-19T12:52:14Z 2016-04-19T12:38:06Z Continue Reading →]]> In the recently-released ninth edition of the Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index rankings report, Maine earned its highest all-time rank of 38. While near the bottom of the 50 states, the mark is commendable in that it is the first time Maine has escaped a ranking in the 40s. Additionally, since its all-time low of 48 in 2011, Maine has improved every year, save one. Because of work done by the Maine State Legislature and Governor Paul LePage to reduce tax burdens on individuals and businesses, Maine is becoming more competitive in the New England region. The work, however, is far from over if Maine wishes to be as economically attractive as New Hampshire, Massachusetts, Rhode Island or the higher-performing states across America.

As a matter of tax and fiscal policy, Maine is headed in the right direction and individual citizens are beginning to recognize it. Of the eight states that combine to form the New England/Tri-State Area, only two saw more Americans move into their borders than out of their borders in 2014. One of those states was New Hampshire, which levies no personal income tax, sales tax or estate tax, and is in the midst of an ongoing reduction on business taxes. The other was Maine, a state that is, and should continue to, emulate New Hampshire’s fiscal policies. When individuals move into a state, they bring with them income, jobs, entrepreneurship and commerce.

Maine, which significantly cut taxes on net during the 2015 legislative session, is one of 17 states that qualified for the most recent State Tax Cut Roundup. As noted in the report, “the 2015 session underscored Governor Paul LePage and the Maine [State] Legislature’s commitment to phasing down or perhaps eventually ending the state’s income tax, once and for all.” The recent estate tax exemption increase, which is reflected in the Rich States, Poor States “Recently Legislated Tax Changes” variable, helps incentivize more individuals to move in. However, because the state still levies an estate tax, it is hurt by the binary “Estate/Inheritance Tax” variable. That is perhaps one area for continued improvement, especially given recent death tax reforms around the country.

For those who see the need for limited government, free markets and federalism, noting the relationship between economic competitiveness and domestic migration patterns is vital. The free market performs better than government because it has proper signals to which many individual participants can respond. Profit and loss inform decisions. The problem with government is the insulation so many of its activities have from these signals. Rich States, Poor States creates an analog for profits and loss by treating domestic migration patterns as signals by which governments can gauge their success. As such, when a state sees individuals responding to their economic climate by moving in (or not moving out), then that can reasonably be seen as one measurable signal of success.

Admittedly, population migration is merely one signal, but it is also a good goal in and of itself. Additional residents, as noted above, improve a state’s economy. An improved economy consisting of greater population can, without increasing tax burdens on the individual, increase the amount of money in government coffers (if one is so inclined to be concerned about such a thing). It should also be noted that Maine, while enjoying an increase in domestic in-migration in 2014, has seen decreases in five of the past 10 years.

In recent decades, the Northeast has largely adopted the “tax-and-spend” playbook, and has not succeeded as a result. Northeast economies are weaker and individuals are moving out, taking their businesses and productivity with them. If Maine wishes to continue bucking the Northeast trend and become even better-suited to compete in the future, the march to eliminate the economically harmful personal income tax must continue, and reductions to the corporate income tax must be made. However, if recent legislative actions are indicative of a trend rather than an aberration, then Maine may very well be on its way to rivaling New Hampshire.