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By PAUL CARRIER, Staff Writer Sunday, February 25, 2007

AUGUSTA - From school reform to tax relief, Maine businesses are focusing on a wide range of issues as their priorities begin to emerge in the 2007 legislative session.

The agendas vary from group to group, but business interests that lobby the Legislature share a commitment to easing the cost of doing business in Maine, in part by controlling government spending to relieve the stateÕs tax burden.

At the Maine State Chamber of Commerce, for example, officials support Gov. John BaldacciÕs determination to streamline the administration of MaineÕs schools. But the chamber is taking a different approach that would give local districts more control over the process.

Other business groups are fighting efforts to mandate health-insurance coverage for all Mainers, and working to preserve tax breaks for retail developments.

On the education front, Baldacci wants the Legislature to merge the stateÕs 290 school districts into 26 districts, each with its own superintendent. Working with several other groups, the chamber is backing a competing plan that could lead to consolidation, but not necessarily from the top down, according to Chris Hall of the chamber.

Under that plan, local school districts, either individually or in self-selected groups, would be expected to trim their administrative costs by 10 percent, or face state-imposed cuts.

The chamber also is closely monitoring BaldacciÕs tax-relief plans. They include a proposed constitutional amendment that would freeze the valuation of MainersÕ homes until they change hands, to protect homeowners from market-driven tax hikes.

Hall said the chamber opposes that idea for a variety of reasons, including the belief that it would shift the property-tax burden from homeowners to businesses. He said Baldacci, in seeking passage of the plan, has Òa tremendous burden,Ó because the Senate and the House must approve a constitutional amendment by two-thirds votes before it can be sent to voters for final action.

Also high on the chamberÕs list of priorities, Hall said, is a push to have Maine reduce its emissions of greenhouse gases without hiking energy costs.

Maine has joined eight other states in the Northeast in signing a Regional Greenhouse Gas Initiative, to fight global warming by requiring power plants to cut their carbon dioxide emissions by 10 percent over the next 12 years.

The plan should be implemented, Hall said, but not at the expense of Òadditional upward pressure on the cost of energy in Maine.Ó

DIFFERENCES OVER DIRIGO

Health-care initiatives are a major concern for at least two business groups, including the chamber. Hall said the chamber is committed to eliminating a so-called Òsavings offset paymentÓ that the state is using to get commercial insurers to help finance the governorÕs Dirigo Choice insurance program.

The payment assumes that state-sanctioned reforms have reduced the cost of health care in Maine, so commercial insurers are saving money that they can invest in Dirigo Choice. But business groups and insurers have challenged the stateÕs savings calculations in court, saying they are inflated.

A study commissioned by Baldacci recommended recently that the state tax snacks, soft drinks and other non-essential items to replace the offset payment, but the governor has yet to take a position on that idea.

ÒThe current system penalizes the people who buy insuranceÓ from commercial carriers, so the offset payment should be eliminated, Hall said. As far as tax hikes are concerned, he said, Òthere would be a large number of people in the business community who would be resistant to seeing their ox being goredÓ to pay for Dirigo Choice.

The Blue Ribbon Commission on Dirigo Health Reform also recommended that the state force employers and some individuals to provide health insurance for workers or buy it for themselves. That idea is under attack from the Maine chapter of the National Federation of Independent Business.

Under such a system, said lobbyist David Clough of the federation, the state would penalize Mainers for failing to buy health insurance, even if they cannot afford to do so because Òhealth insurance is so expensive in Maine.Ó

Clough said he would like the Legislature to make the insurance market more competitive, so small businesses can find affordable policies, but he said he is not optimistic that will happen.

His group also wants the Legislature to liberalize the rules governing depreciation of equipment purchased by small businesses, to match more generous federal tax write-offs.

RETAILERS WANT BREAKS

On other fronts, the Maine Merchants Association is opposing a bill that would prevent retailers from getting tax increment financing, a tax break local governments use to encourage various types of development. Lobbyist Jim McGregor said retailers ÒdonÕt think we deserve to be treated like second-class corporate citizens.Ó

The merchants group also opposes a bill that would prevent retailers from creating banks, and supports the repeal of a property tax on equipment purchased by retailers.

The organization opposes attempts to raise the tax on lodging. And it wants the Legislature to make it clear that retail contractors, such as carpet and flooring companies, can use installation subcontractors without having to hire them as employees.

It is too early to predict how key business initiatives will fare in the legislative session, which began in earnest last month and is expected to continue until June.

Staff Writer Paul Carrier can be contacted at 622-7511 or at: pcarrier@pressherald.com