OTTEN JOBS PLAN

A bold plan to create economic growth and fix Maine’s economy.
• Overhaul Maine’s Tax System to Stimulate Business Growth • Reform Welfare • Lower Health Insurance Costs • Cut Government Spending & Eliminate Regulatory Barriers • Energy Independence • Educate & Train Our Kids for the Jobs of Tomorrow

“Jobs are essential to sustaining and growing our economy and communities in Maine. When I took over Sunday River we had four full–time employees. We put Maine on the map for winter recreational tourism. We created over 1,200 direct jobs as well as residual jobs from the businesses that sprouted up as Sunday River grew and the tourism economy expanded on the Route 26 corridor from Gray to the Oxford Hills. In the process, we transformed the western Maine economy. I’ve spent the last 38 years creating jobs and opportunities in Maine and I know how hard it is for businesses to survive with high taxes; energy costs out of our control; uncompetitive insurance laws; a deteriorating education system; excessive regulations; and a government that gets in the way instead of paving the way for the success of its citizens. Let us not forget for one minute how strong Maine is and how resilient we are as a people. We built the nation’s first totally privately funded turnpike north to south and we can do it in a privately funded effort east to west. We were the first place that steel ships were built in America and we can grow our ship building industry back. We have the best slow–growing soft wood in the world and we barely scratched the surface of its 21st century uses. We can heat our homes from the forests; make our plastics from the oceans; raise and sell vegetables to the world; and regain our title as the number one potato producer in America. We can become energy independent. We can teach our children to be ready for the jobs of the future and we can attract small and large companies to Maine with the best recreation and outdoor environment in America. We have all the key ingredients necessary to rebuild our economy. We need to adopt a bold vision and elect a strong leader. This is my vision. I am that leader.” – Les

My top priority as governor will be creating private sector jobs. The OTTEN JOBS PLAN contains six bold moves to generate the business environment that will make Maine competitive again.
1. Overhaul Maine’s Tax System to Stimulate Business Growth Maine’s high–taxes approach isn’t working. It is killing our jobs. High taxes don’t attract jobs and high taxes don’t create opportunity. As governor, I pledge to oppose any tax increases on the working people and businesses of this state. Mainers have one of the highest tax burdens in the country. Maine ranks 1st in the United States with the highest combined tax burden from capital gains and estate taxes. We’ve doubled state spending in the last 15 years and have made no progress in raising the incomes of Maine people. We cannot afford the size of the government we tax for and we cannot tax and spend our way to prosperity. Our tax policies must be overhauled and targeted to encourage investment in the state’s businesses and attract the capital and talent that Maine needs to create jobs and the economy of the 21st century. We need to ratchet down our income, capital gains and inheritance taxes while scaling back the size of state government so that we don’t force an increase in our property taxes. ple hold on to their assets. Money that could become part of the investment pool for keeping capital modern and productive is locked in, stalling our entrepreneurial efforts. Maine’s capital gains taxes drive investment away to states with low or no capital gains taxes. If Maine reduces and eliminates its capital gains tax over time, it will free locked in capital and create jobs and opportunities throughout the state.

Estate Tax Maine is one of a rapidly decreasing number of states that continues to have an estate tax.
The older the household, the more likely they are to face a choice: liquidate and expatriate, or stay and pay. Maine provides a very strong incentive for households to move assets away before they die. This capital flight takes large private businesses out of Maine and it lowers the pool of investable funds in Maine. Estate taxes are an impediment to the survival of private business and that keeps new businesses from locating in Maine. As Maine becomes more isolated as one of the most expensive places to try to pass on business and investment capital to the next generation, valuable capital is fleeing the state. If Maine is to create an environment for business creation and job growth, it needs to include, as a part of a policy for jobs and growth,

Income tax Lowering the state income tax will result in increased disposable income for Mainers and will attract businesses and families to the state.
Maine needs to be known as a place where people come to work. Maine’s working families and small businesses must be allowed to keep more of their hard–earned tax dollars.

Capital Gains Tax We must lower and eventually eliminate Maine’s state capital gains tax. Good wages and jobs are directly related to capital investment. As the global economy grows and modernizes, investment in new capital is required if we are to be competitive.
Investments in research and development to generate new and better ways of using physical capital and labor are essential to providing opportunities for jobs that pay competitive wages. Investments in new physical capital are necessary to replace what is aging and outdated. That means that old assets must be liquidated and the money released and reinvested in new assets. Capital gets locked in when there is a tax on capital gains and peo-

“As Governor, I’ll be Job Creator in Chief” – Les Otten
the elimination of the estate tax. 2. Reform Welfare We must deal with our welfare system – Maine cannot be known as a sanctuary state. When people think of Maine they must think of it as a place to come and work. Maine’s Medicaid enrollment, now at 23% of the state’s population, is unsustainable. Maine is a low income state. Incomes are further reduced by high taxes collected largely to support spending on state welfare programs. If this does not change, Maine will not have the business investment and growth in private–sector incomes that are necessary to create jobs and opportunities. We cannot afford to continue allowing benefits beyond the federal 60–month limit. Nor can we afford to continue without residency requirements. We must develop a system where people on welfare aren’t punished for trying to get back to work. People who return to work on a part–time basis should be able to collect a pro–rated share of benefits to provide incentives for people to re–enter the full–time workforce. I believe that the best welfare program Maine can offer is the opportunity for a good paying job. 3. Lower Health Insurance Costs Maine can act on its own to lower insurance premiums and increase access to the health insurance system. We essentially have only one major carrier of individual health insurance left in Maine, Anthem. The individual insurance market in Maine is not a profitable market for insurers for a number of reasons, including: • Regulations requiring insurance carriers to accept all applicants, regardless of health status. • Regulations limiting the amount of price variance between applicants. • Younger, healthier people dropping coverage because it is unaffordable, leaving a more expensive group in the insurance pool which creates higher insurance rates. We need to examine Maine’s requirement that insurers adhere to community rating and guaranteed issue – which requires that insurers cover anyone who applies, regardless of their health condition and at a uniform premium. According to The Maine Heritage Policy Center, a healthy male in Maine who is 30 and single pays a monthly premium of $762 in the individual market. Next door in New Hampshire, he pays $222 a month. One big reason: New Hampshire doesn’t have community rating and guaranteed issue. Mainers also need better options for financing their own health care expenses, such as Health Savings Accounts so that people can be intelligent consumers of health care services. We must also, finally, bring comprehensive tort reform to Maine. In a Les Otten administration, reducing health care costs will also focus on encouraging Mainers to take personal responsibility for their health. It is estimated that preventable illnesses make up 60% of medical costs in the United States. We need to eat better; exercise; get our children outside; and promote wellness programs through our schools and partner with organizations such as the YMCAs to encourage good habits from childhood on. 4. Cut Government Spending and Eliminate Regulatory Barriers Augusta hasn’t made a real commitment to cutting expenses. We must reduce government spending and stop hurting Maine taxpayers.

DID YOU KNOW?
In 2009, Maine experienced a net out–migration. Maine is one of only three states in the nation to lose population last year.

We must also face the reality of Maine’s growing debt burden, specifically the $5 billion in unfunded obligations for health insurance premiums for retired state employees and retired teachers. This issue continues to be ignored in Augusta. Wasteful spending can be eliminated at all levels of government. It is time to conduct a comprehensive audit at how Maine tax dollars are being spent to encourage the areas that are working and eliminate what isn’t working. Programs that waste taxpayer dollars, such as Dirigo Health and the Maine Clean Election Act program, must be eliminated. We must identify and implement opportunities to privatize as many government functions as possible. There is an opportunity in the near term to achieve savings through attrition; nearly 40% of our state employees are eligible for retirement within the next 5 years. We can be strategic in replacing these departing employees if we make a serious effort to follow the lean government principles, such as the Bend The Curve program, that are already being utilized by many departments within state government. Increasing the productivity of our state departments will be the highest priority when I am governor and that ethic will be reflected from the commissioners on down. State agencies have added to the problem by the creation and implementation of unnecessarily burdensome and often nonsensical rules and regulations. Over–regulation of Maine businesses and industries has stood in the way of economic progress. Along with a commitment to cut expenses, we must commit to reforming the power held by state agencies and the types of regulations that they create. High taxes are killing jobs and opportunity in Maine. Businesses consider Maine a hostile environment and they look elsewhere to expand. The businesses in Maine are constantly being enticed to leave for states with better tax situations. Rather than raising revenues, we need to do what it takes to increase the job base which will increase receipts to assist in funding government. In a Les Otten administration, state government will be committed to ensuring that we are creating Maine jobs and promoting opportunities in Maine. The days of a Maine government that gets in the way instead of paving the way for the success of its citizens will be over.

5. Energy Independence When it comes to energy we must think big and act boldly. Mainers are addicted to foreign oil, sending billions of dollars every year to foreign countries, mostly to people who don’t like us. I want Maine to become the first energy independent state in America. We don’t need to be at the end of the old oil pipeline anymore. Maine can be at the beginning of a renewable energy future.

DID YOU KNOW?
Recreational tourism contributes about one in five dollars of sales to Maine’s economy and supports the equivalent of about one in six Maine jobs.

6. Educate & Train Our Kids for the Jobs of Tomorrow Maine spends 32% more per student than the national average. Teacher salaries have increased by 400% since 1970 and test scores have declined. Our school superintendents have all the responsibility for the success of our schools but not nearly enough authority to ensure that result. Maine must give towns, school superintendents and principals the authority to hire and fire staff, so long as it is based on demonstrated fair criteria such as clear performance, test results and use of technology. Tenure is the biggest detriment to public education. We need to link promotion with performance in a fair manner and take on the Maine Educational Association on this issue.

Maine needs a long–term energy policy targeted at encouraging fuel switching for heating Maine homes to create jobs and industries in the state. We need to create opportunities and let private enterprise lead the way out of Maine’s energy crisis to build a model that will be emulated throughout the nation.

Maine needs a stated goal of energy independence. Ultimately, if Maine declares energy independence, and takes meaningful steps in that direction, the industry will follow. $9.6 billion has been spent on heating Maine homes in the last decade. Maine has the highest proportion of oil heated homes in the nation with 80% of its housing stock dependent upon foreign oil for heat in the fall and winter months. A couple of years ago, as oil was skyrocketing to $4.70 per gallon, Mainers were bracing for hard choices as they thought about heating their homes. Oil prices are temporarily lower but they will rise again to unacceptable levels. The only way to keep oil prices down is if we don’t use it. Maine has the natural resources and technologies available today to make renewable energy to heat our homes. Conservation coupled with energy system replacement in Maine homes that are heating with fossil fuels could be staggeringly positive to Maine’s economy. At $2.75 per gallon of oil, $1.1 billion per year is spent heating the 440,000 of Maine’s 550,000 homes that use heating oil. 78% of this money is leaving the state. If we could capture that 78% – $780 million – the economic affect of that recaptured money (billions per year) could generate gigantic tax revenues (hundreds of million per year) and economic activity for Maine. For example, every 100,000 tons of wood pellets produced and consumed in Maine will create 500 jobs that pay $45,000 per year. The Governor’s Wood–To–Energy Task Force, which I chaired, concluded that switching from oil to wood to heat just 10% of Maine homes would create 9,600 jobs. No jobs would be lost because oil companies could retrain workers to install pellet–fired boilers and deliver wood pellets as well as install oil burners and deliver oil, as Heutz Oil in Lewiston is doing today. Maine has a world class portfolio of potential renewable energy resources. Maine’s offshore wind resource is amongst the best in the world. But the region also has a world class solar battery that is ready to use. We have an abundance of energy options – wood, LNG, the Canadian power corridor, wind, solar and geothermal – but we need to link these together in a long–term strategy so that they are all part of the solution for Maine’s energy future. In a Les Otten administration, we won’t just be talking about energy independence. We will be doing it.

A priority for me as governor will be putting Maine in a position where we can explore the opportunities provided by alternative education options such as charter schools and home schooling. Maine could be in the running for as much as $75 million from the federal "Race to the Top" program that favors innovative schools. We’ve known about it for a year, and we’ve done nothing. Maine is one of only 11 states without charter schools. The so-called "innovative schools" being proposed in the Legislature barely meet the criteria defined by the "Race to the Top" application. They are not autonomous, as they are run exclusively by existing school districts, and have no statutory authority over their own budgets. (See Testimony regarding L.D.’s 1799, 1800, and 1801, The Maine Heritage Policy Center http://www.mainepolicy.org/resources/media/237_1507417858.pdf) Maine is building multi–million dollar school buildings, putting money in bricks and mortar – we must address especially that part of the state funding formula immediately. We need to develop a process for assessing student achievement so that our children will be competitive upon leaving the system. And we must put the decision–making power for our children’s education back where it belongs – in our local communities. We should use new technology and innovation in our schools to make effective and efficient use of our resources. Jobs are directly affected by education. Our schools must produce young people who are competitive in the global marketplace. And businesses will come to Maine if we can promote an excellent education system.
We are constantly adding to and improving the OTTEN JOBS PLAN at every level of the economy as we travel through the state and talk to Maine people about what needs to be done to create jobs and ensure our prosperity for future generations. If we unify around these six areas, we will bring jobs to Maine. The Governor of Maine has the power to make things happen and create the jobs we need. I will use the powers of the budget; building consensus; the bully pulpit; and the veto to ensure that Maine is open for business in the next eight years. In a Les Otten administration the first thing that people will think about when they think about Maine will be jobs.
Paid for and authorized by Les Otten for Governor, Bruce Chalmers, Treasurer.

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