Testimony in Opposition to LD 1977


Senator Curry, Representative Roberts, and the distinguished members of the Committee on Innovation, Development, Economic Advancement and Business, my name is Nick Murray and I serve as policy analyst for Maine Policy Institute, a nonpartisan, non-profit organization that advocates for individual liberty and economic freedom in Maine. Thank you for the opportunity to testify in opposition to LD 1977.

Recent stories of less-than-scrupulous contractors have been highlighted by Maine media outlets, but would requiring them to register with the state really prevent these issues? For a legislature looking to tackle the problem of limited housing, bills like LD 1977 do not meet the moment. It will do much more to raise costs on homebuilders and homeowners than protect them from deception and fraud.

The fact is, the state already sufficiently regulates this profession. Per MRSA 10 §1487, written home improvement contracts are required for any job more than $3,000, the contract must include a warranty statement, and initial down payments are limited to one-third of the total cost.

Numerous mechanisms exist by which consumers can be made whole in the event of potential fraudulent business practices. They may enter arbitration or mediation, in order to avoid a potential suit in civil court. Verifying a contractors’ insurance policy is up-to-date and accompanying them to purchase materials can go a long way for a buyer to control other potential risks.

Under this bill, Mainers would not be able to act as their own general contractor to work on a property they own but is not their residence. Why does state licensing need to be further involved in this situation?

Home builders and general contractors oftentimes will directly contribute work to a project themselves, but many times, they will act more like a project manager, subcontracting different tradespeople for a particular project for which they are the main contractor. The vast majority of the subcontracted electricians, plumbers, etc. are already licensed. This bill would require those contractors merely operating as supervisors to pay a fee and register with the state, even though they would not perform work themselves and their subcontractors are all similarly licensed or registered. 

Occupational licensing has been shown to raise all sorts of costs in the economy overall. A 2017 study published in the Journal of Regulatory Economics found that Maine’s licensing programs had resulted in a misallocation of resources of approximately $2.6 billion, about $4,700 per Maine household.

A new regulatory regime for home improvement will not stop all potential fraud, but it will raise building costs for everyone. The average Mainer likely won’t even know about the proposed registry and will go to their friends and neighbors for recommendations on general contractors, much like they do today. In an economy where the price of construction materials has risen significantly, the last thing prospective Maine homebuyers and builders need is more regulation.

Please deem LD 1977 “Ought Not To Pass” and save hard-working Mainers the costs of another unnecessary and onerous occupational regulatory regime. Thank you for your time and consideration.