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July 16, 2020

Maine's Economic Recovery Committee calls for $1.1B investment, public health priority

a headshot of a woman and one of a man Courtesy / Office of Gov. Janet Mills Laurie Lachance, president of Thomas College, and Josh Broder, CEO of Tilson, are the chairs of the state's Economic Recovery Committee, which is making recommendations on how to save the state's economy in the wake of the COVID-19 pandemic.
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Maine doesn't have the $1.1 billion it will take to help shore up the pandemic-shredded state economy, so the priority has to be public health, said Josh Broder, a co-chair of the governor's Economic Recovery Committee.

The committee, created in May and made up of 45 members from across sectors, issued its economic support and stabilization recommendations Wednesday. The group is also charged with finding long-term solutions to get the state's economy back on track, with a report due Dec. 1. The groip is chaired by Broder, CEO of Tilson, and Laurie Lachance, president of Thomas College.

Wednesday's report calls for $1.1 billion to shore up the economy, split between supporting Maine people, which includes education and housing; stabilizing businesses, which includes employer grants, workforce development and innovation capital; and building out the broadband infrastructure.

"We recognize that there is more demand than there are resources," Broder told Mainebiz this morning. "The most urgent ones, from our perspective, are the ones that address our ability to operate safely."

The recommendations are to a starting point for those who must implement them — the Maine Legislature and Gov. Janet Mills.

"It's a guide to making some choices on what gets funded now, what gets funded later and what may not get funded at all," Broder said.

The report stresses the economic damage the pandemic has caused in Maine — "it has pushed many otherwise healthy Maine businesses to the brink."

But it also recognizes the impact on individuals, highlighting the inequities of both the health aspect of the pandemic and its economic fallout for those of color and low-income. "A stable Maine economy means supporting Maine people. Many workers and families, especially those who struggled with inequity prior to COVID-19, now face immense challenges."

The recommendations break down to the following.

Stabilize Maine employers, $430 million

A year-over-year comparison of Maine sales tax data from April demonstrates 80% revenue decreases in lodging, 58% in restaurants and 45% in retail, according to the report.

"Few of Maine’s small businesses were equipped to handle this economic shock," it says, adding that federal stimulus programs are not enough to secure economic viability as the effects of the pandemic continue.

The nonprofit sector employs one in six Maine workers (98,000). "Many of these organizations are at the forefront of the COVID-19 crisis, providing essential services to Maine citizens and residents," the report says. "Right now, cities and states are relying on nonprofit partners as a buffer against the worst impacts of the outbreak, at a time when their viability is at stake."

The report also says that "the forcible adaptation to operating in a COVID-19 world" means many employers in otherwise viable industries and organizations need immediate assistance. "Quickly and efficiently administering aid will be crucial to Maine’s recovery."

Recommendations are:

  • Employer grants, $350 million. Some $300 million in grants for businesses administered largely through banks, credit unions and Community Development Financial Institutions. The Maine Department of Economic and Community Development and the Finance Authority of Maine would lead planning and implementation. The other $50 million would be used to develop a nonprofit relief fund, administered through a partnership among state agencies, philanthropic foundations and nonprofit entities. The report acknowledges that $350 million isn't enough.
  • Innovation capital, $50 million. Innovation-driven businesses and the ecosystem that supports them have allocated all available money to bottom-line survival, and they need financial lifelines to rehire employees, prioritize workplace safety and fund innovation to meet new market demand created by the pandemic, the report says. A grant program through FAME would use $30 million and the Maine Technology Institute $20 million.
  • Workforce development, $30 million. Nonfarm payroll jobs decreased 104,500 between February and April, before rebounding 14,300 in May, and state unemployment reached its highest rate on record in April (10.4%), before subsiding slightly to 9.3% in May. But the report says the estimate is understated and is actually around 18%, because of a sharp decline in labor force participation and misclassification of some temporarily unemployed persons. Maine workers also have skills gaps that existed before the pandemic and have been made worse. Short-term training is needed, and displaced workers must be matched with new employers in high demand sectors.

Support Maine people, $497 million

The committee found that COVID-19 is making inequality in Maine, already an issue, much worse. Maine has the greatest disparity of COVID-19 infections for Black people in the country — they represent 33% of the positive cases in which race is known, but are only 5.7% of the state's population.

"The economic impact is just as disproportionate," the report says. Mainers who are Black or of mixed races, young people, women, and households with children all were more likely to have felt a financial impact from pandemic disruption.

"The committee heard, and agrees, that a recovery plan that fails to address these inequities will only serve to weaken our long-term recovery," the report says.

"Child care is a critical economic component, especially for working parents, and programs run on razor-thin margins," it says. About half of Maine child care programs closed in April, while those that remained open operated with fewer children, and therefore less income. Providers must procure PPE and change practices to control potential infection.

"Child care programs are struggling to meet the demands of working families, offset revenue losses from decreased enrollment, and absorb increased costs to protect the health of children and staff," the report says. "Financial assistance for child care programs will ensure the state has child care available for working parents."

Recommendations are:

  • Public heath, $20 million, Response to the virus is inconsistent across communities — the money would support "a true, robust public health system to keep our entire population informed and safe"; the state would buy PPE, cleaning supplies, and more for communities.
  • Child care, $45 million. This would support stabilizing child care providers, allowing them to operate safely, so they can care for children of working parents. It would also support schools and out-of-school programs to address gaps in child care for working parents as a result of part-time classroom instruction.
  • PreK-12, $300 million. To support school openings and "send a strong message that signals the safe resumption of schools as a top health, social and economic recovery priority, so long as it is safe for students, teachers and staff." Money would go to PPE, engineered controls, cleaning and sanitation supplies, additional staffing, additional classroom space and transportation, and programs to support teachers and staff who are vulnerable to COVID-19 and financially fair alternatives for at-risk teachers.
  • Higher education, $75 million. The disruption to learning that postsecondary students face may have long-term impact on lifetime earnings, particularly for low-income students; the shutdown also will hurt the economic viability of the state's public and private colleges "our best tools to prepare Maine’s workforce for a new economy."
  • Housing, $50 million. Statewide rental assistance, rapid rehousing and eviction prevention. More than 12,000 households applied for one-time $500 rental assistance through MaineHousing, but more assistance is needed. "Low income and Mainers of color, who have been disproportionately affected by the pandemic, are in need of immediate support," the report says. Before the pandemic, 25,472 very low-income households in the state paid rent exceeding 50% of their income, leaving them at risk of homelessness; pandemic-driven unemployment has made it worse.
  • Immigrant workers, $7 million. This would help provide equal access for immigrant workers and families to state-funded assistance until 90 days after the public health emergency ends. The money is an annual cost estimate by the state Department of Health and Human Services for a similar proposal that's before the Legislature.

Invest in Maine's infrastructure, $165 million

Infrastructure investment is needed for economic support and stabilization, laying a foundation for future sustainability and growth, the report says. "These investments will also improve the efficiency of Maine’s economy and be targeted to provide equitable access to important resources for all Mainers."

The importance of broadband internet access has been highlighted by the pandemic, as Mainers adapt to remote working, education, medical services and more. The pandemic also underscored the deficits that limit access to broadband in Maine. ConnectME, the state's broadband authority, estimates it will cost $600 million to deliver broadband service to 95% of Maine.

Broadband issues were a topic across several of the sector subcommittees. "It is crucial that Maine make broadband and other technology and training investments to support partial remote education, telehealth, and remote work for flexibility to adapt for a rapidly changing pandemic," the report says.

Immediate investment will also help Maine capitalize on its attractiveness as a remote work destination and put Maine in a better position to get federal matching money, the report said.

Transportation investment is also needed to provide jobs and economic stimulus in the short-term and provide opportunities for long-term growth, the report says. The state Department of Transportation faces steep revenue declines over the next 18 months as a result of decreased receipts from fuel taxes and motor vehicle fees.

"Given historically low rates for borrowing, and the economic benefit of continuing infrastructure proj-ects, the committee supports further bonding for infrastructure that could be approved as soon as November," it says.

Broder said today that while the bond issue is more a piece of the long-term recovery, if it's to be on the Nov. 3 ballot, the Legislature has to take it up this summer.

The recommendations are:

  • Broadband planning and buildout, $65 million. This includes $60 million from the federal CARES Act to connect unserved or underserved homes and businesses with broadband access, as well as provide equipment and training and $5 million over five years for mapping gaps.
  • Connections bond, $100 million. An $85 million general obligation bond to support statewide transportation projects and $15 million to further expand broadband access to increase capacity for remote work, health care, education and entrepreneurship. the bond could be considered in the summer special session of the Legislature and be on the November ballot. 

What happens next

The committee will meet at the end of the month to look at specifics that weren't addressed in Wednesday's report, Broder said. The report was based on urgency "and we didn't spend a lot of time making structural recommendations to support specific sectors."

Some of those, which were also in the committee's "quick start" recommendations earlier this month, will be addressed before the committee makes the pivot to the long-term focus of its work beginning Aug. 14.

The committee was charged by Mills with using the state's 10-year economic plan, which was unveiled in December, as an outline for the recovery, which Broder said represented some really good work by the state.

"How do we go from this terrible low that no one expected to getting back on track?" he said. Making the task more difficult is the fact the pandemic is still evolving, and though, health-wise, Maine has fared better than most of the country, that could change. Just as importantly, the state is part of a national economy, so the effect of the pandemic on other states has an impact on Maine.

"The biggest challenge is that the pandemic is still raging," Broder said.

He said, though, that a huge positive is that the 45 members of the committee, who were from across sectors, regions and political affiliation, were able to come to a consensus on the Wednesday report. 

He gives a lot of the credit to Mills for putting together a solid team. 

"While individuals may not feel exactly the same, we as a committee got it right," he said. "I was really impressed with the level of consensus."

He said the long-term issues will be more challenging, but, "I think we'll try to build on that strong level of consensus."

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