What's wrong with Augusta?

By AL DIAMON  |  January 29, 2009

There was every indication the emergency money would never be needed. According to the experts, the economy was positioned to keep expanding indefinitely. The unemployment rate stayed south of four percent all year, the lowest numbers since World War II. Workers were in such short supply that some employers were offering signing bonuses. A State Planning Office report projected big increases in employment and income through at least 2010. Newspaper stories touted companies such as MBNA and EnvisioNet (remember them?) as the first wave of modern employers who'd soon remodel our economic landscape. Charles Colgan, a former state economist who headed the Maine Economic Forecasting Commission, predicted the paper industry was poised for a new round of growth. Then-state economist Laurie Lachance said a possible shortage of skilled workers would actually have a positive result, because employers would offer higher wages to keep employees from moving elsewhere. (Yeah, Lachance and Colgan are the same people who are still giving the state economic advice today.)

July 1, 1999 marked the beginning of fiscal year 2000. Within two months, revenues were running 11 percent ahead of the already inflated budget estimates, so more upward projections were in order.

"The reality is we have once again underestimated," Lachance told the AP.

As 1999 came to an close, the state was running $10 million ahead of even the most optimistic figures.

"The question is," King told the AP, "can the level of growth we're seeing be sustained."

Nope.

In six months, the state would be headed into a recession.

Let's party like it's — hey, what happened?
There were a few warning signs, but they were easy to ignore. Colgan had disagreed with Lachance about the shortage of potential employees driving up wages. He predicted that by 2010, Maine would be incapable of generating new jobs because of a lack of skilled workers. "People have to start coming in droves to have growth," he told the Bangor Daily News.

No problem there, Charlie. Within two years, the state would lose 9000 jobs, freeing up plenty of workers for any growth that happened to wander by.

There had been reports from business groups criticizing state efforts to attract new development, but King and the Legislature pointed to the $10 million they'd set aside for research and development funding (yeah, the same kind of R&D funding that a recent report showed couldn't be connected to the creation of new jobs), as well as the extra money they'd allocated to the University of Maine System and what was then called the Maine Technical College System (yeah, that's what's now called the Maine Community College System, which can't accept all the qualified applicants it's getting because it just had its budget cut) as the answers to that problem.

And there was a little uneasiness about Maine's excessive taxes. Even King admitted to the Maine Sunday Telegram that the tax burden "is ultimately going to hold us back."

"Ultimately" arrived a lot sooner than any of these boobs expected.

By 2001, the state had a structural deficit (the difference between expected revenues and the amount of money needed to maintain current services) of $300 million. The state's income appeared to have been overestimated by as much as $100 million, according to the experts (yeah, the same ones who did the overestimating — and are still doing it today).

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Related: Cutler for Governor, As gas prices go up, a public transit bill gains speed, Maine Democrats try to put the past behind them, More more >
  Topics: News Features , U.S. Government, U.S. State Government, Charlie Colgan,  More more >
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