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July 2, 2020

Recovery committee urges immediate action to save Maine's economy

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.
Visitors from Connecticut, New York and New Jersey don't have to quarantine for 14 days or get a negative COVID-19 test before staying overnight in Maine; face coverings are now required in a large part of the state.
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Maine is teetering on an economic cliff, and it's urgent that the state take action as soon as possible, a preliminary report from the Economic Recovery Committee said.

Three immediate issues to address are education support, a $300 million immediate direct economic relief program and broadband investment, committee chairs Josh Broder and Laurie Lachance said in a letter to Gov. Janet Mills accompanying the report.

The committee was established by Mills in early May, with Broder, CEO of Tilson, and Lachance, president of Thomas College, as chairs. It must submit "quick start" recommendations to help Maine's economy by July 15, and long-term recommendations by Dec. 1. The prelimary report, published today, was in anticipation of a more detailed July 15 report.

The end this week of the federal Payroll Protection Program and other economic support, "Represents an economic cliff for our state, and nation, for which there is no modern precedent or forecast," Lachance and Broder said. "Unless further stimulus emerges at the federal level the effect on our state’s people and businesses will be devastating."

They said that the $1.25 billion the state has been awarded under the federal CARES Act is not enough to save Maine's economy, which means tough decisions for the state..

The letter comes as the state prepares for Fourth of July weekend, normally the official kickoff to the state's summer season. As restaurants can only allow limited capacity, bars can't offer indoor service, there are no gatherings of more than 50 people and lodging establishments are restricted, a variety of sectors have said that many businesses won't recover from the impact.

The committee also offered more than a dozen "quick start" suggestions. To read the full letter and see details of the suggestions, visit the Governor's Economic Recovery Committee webpage.

The committee, made up of 47 business and government leaders from around the state, has held seven full meetings and more than 50 subcommittee meetings

"Amidst all this work, one sobering truth has become clear: COVID-19’s impact on Maine’s economy is severe and ongoing," the letter said. "It also falls on some groups disproportionately. Many Maine workers, particularly in service industries and in communities of color, who were struggling with inequity prior to COVID-19 are now at even greater risk. They should be a foremost consideration for public support.

"All of this means that time is of the essence in this unprecedented crisis," Broder and Lachance said. "It is urgent that the state of Maine implement vital, equitable measures to support the health, safety and economic security of Maine people and businesses, as soon as possible."

The three major recommedations are:

Direct economic relief

This has the most urgent timeline, and is a "matter of survival" for child care, agriculture, tourism, hospitality, fisheries and forest products, among many others, the report said.

The committee recommends a $300 million economic relief grant program through the Maine Department of Economic & Community Development and Finance Authority of Maine, similar to one in New Hampshire. The program would start this month and distribute most of the money by Aug. 31. It would be administered largely through Maine’s banks, credit unions and community development financial institutions.

"The impact is felt by seasonal small businesses for which traditional financing is challenging, and larger established businesses with decreased revenues due to declines in consumer spending or declining global markets," it said. "Many are businesses otherwise sustainable when the pandemic subsides – if they can make it that long."

Additional debt support is not the right solution, which could have a negative impact on an organization’s existing bank covenants and reduce access to credit from financial institutions when they need it most, the report said.

Education support

Education is a pre-condition to economic stability and the safe resumption of in-person instruction in Maine’s pre-kindergarten through grade 12 schools "is foundational for the safety and well-being of all children in Maine," according to the report.

It's also essential to allow people to get back to work. "This is further magnified by feedback to the committee from communities that reveal inequities in the system are harming too many young students working in remote learning settings."

The committee recommends prioritizing save opening by allocating between $40.5 million and the $328 million suggesed by the state Department of Eductation to allow Maine's 180,000 students to go back to school; strengthening support for childcare providers; and supporting safe reopening for higher education by providing clear guidelines.

Broadband investment

The state's $600 million broadband investment deficit has had a big impact on Mainers' ability to adapt to the pandemic, limiting their access to distance education, telemedicine and remote work, the committee said.

Broadband investment was a cross-cutting issue across all subcommittees.

The committee recommends:

  • Building on ConnectME's broadband mapping data by adding students who have been identified as being unconnected, as well as other gaps identified by the state, and prioritizing those areas for broadband support.
  • Funding ConnectME's Broadband Action Plan with $60 million, which is 30% of the state's proposed share under the plan, to lay the groundwork for potential federal matching funds. More details, including initiatives around work priorities, data collection and quality, and funding, will be in the July 15 report.

Debt and equity relief

Not part of the three recommendations, but noted by the committee, is the affect the pandemic has had on debt and equity markets, which have "seized up, effectively stopping large projects and significant capital investment in Maine’s most innovative and productive sectors."

There is support among the committee's subcommittees for significant funding to the Maine Technology Institute to support and enhance the Maine Technology Access Fund. The committee said it expects to have a a recommendation in the July 15 report.  

'Quick Start' recommendations, quarantine response

The preliminary report includes quick start recommendations from subcommittees, including one that the report acknowledges doesn't come under the committee's authority — adjusting the state's quarantine for out-of-state visitors.

"To honor the hard work of our Hospitality, Tourism and Retail Subcommittee, we pass along its call for regional quarantine parity even as we acknowledge this topic is not in our charge and belongs in the realm of public health experts," the report said.

It said the majority of committee members supported the recommendation, but it also got the highest number of strongly unfavorable responses.

"Even as we submit this report, conditions in the pandemic nationally as a whole have degraded significantly leading many states to slow reopening and implement more stringent controls," the report said.

Recommendations from the five subcommittees are:

  • Safe in-person return for pre-kindergarten to grade 12 schools.
  • Encouraging higher education to safely reopen for in-person instruction.
  • A medical care campaign to educate the public about the safety of health care settings and the importance of getting health care.
  • Department of Education encouragement of school districts to connect with parents to better understand the need for child care as a result of part-time classroom instruction.
  • Aligning tourism policy with neighboring states, including quarantine restrictions.
  • Supporting a mechanism to provide relief for the tourism industry.
  • Saving unspent money from the fiscal year 2020 Maine Office of Tourism budget rather than sweeping it into the general fund.
  • Forming a team to inventory broadband challenges and support ConnectME grants with CARES Act money.
  • Emphaize the importance of the transportation and broadband bonds on the July 14 ballot for investment in Maine’s infrastructure and future. 
  • Streamline and expedite Department of Environmental Protection permits and inspections.
  • Ramp up promotion of Maine as a great place to live and to work remotely, including diversity as a key metric.  
  • Reliable, affordable high-speed internet to collaborative workspaces.
  • Tap federal tax dollars from the Workforce Innovation and Opportunity Act and r-focus the state’s Rapid Response team to identify and reach business owners on the verge of closing and support employee buyout of the businesses where feasible. 
  • Allow laid-off workers who are getting unemployment to work on starting or buying a business as an allowable form of the job search requirement.
  • Support and provide assistance to the Department of Marine Resources to move public hearings to a virtual format to allow them to proceed with the aquaculture lease application approval process. 
  • Re-establish trade flow with Canada.
  • Direct assistance money to Maine food producers and help connect the supply of products to the local demand through community food programs and food banks. 

Federal money is not enough

The committee said that the PPP and other programs "which have delivered billions of dollars to Maine workers and businesses, helped carry them through the historic economic shutdown to preserve public health."

It urged the administration to quickly deploy the remainder of the $1.25 billion in federal money it's received, to help the largest number of Maine people. It also acknowledged that money won't be enough, which is what spurred the top three recommendations.

"Based on what our committee has learned over the past weeks it is a mere fraction of what’s required for our economy," the report said. "There is no avoiding that difficult choices lie ahead."

Of that money, $270 million is committed to stabilizing the state’s unemployment trust fund. "We endorse this action," Broder and Lachance said. "Had it not already been taken, we would have made it one of our urgent recommendations."

The report said that all the recommendations recognize that COVID-19 public health, education and prevention efforts are the underpinnings of any economic recovery.

"To that end, we call for continued support measures for businesses, organizations and people to procure personal protective equipment to protect their employees, customers and themselves, which has been a significant, unplanned burden."

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