Economic role of service centers in Maine

February 3, 2010

Maine has almost five hundred municipalities but most of them are places where people live, not places where people work. The vast majority of goods and services transactions are concentrated in 77 municipalities called Service Centers. These are towns and cities where most Mainers work and where Mainers do most of their shopping. Service Centers also host almost all of our hospitals, institutions of higher learning, and cultural and social institutions. The State Planning Office is required to update the list of service center towns every ten years according to a specific methodology (PDF) and set of criteria.

Classic large Service Centers include Ellsworth, which has been the center of commerce for Hancock County for decades, and Bangor, which is the third largest city in Maine and attracts shoppers from all over Eastern and Northern Maine. Smaller service center towns include Calais, Ashland, and the twin towns of Rumford and Mexico.

Service Centers contain 78% of retail sales, 76% of all payroll jobs, and 79% of all payroll wages. In addition, 79% of income taxes and 78% of sales taxes originate in service centers. Service centers are also positive net contributors to the state’s system of municipal revenue sharing: they pay in more than they get out. These statistics demonstrate that service centers are critical to Maine’s economy. They supply well over three quarters of the horsepower needed to drive Maine’s economy while receiving less than 51% of all property tax revenue when revenue sharing is accounted for.

In Maine, as in most areas of the nation, the capacity of municipalities to provide services to local residents has been strained by sprawling low-density development since the transition into the post-WWII era. The per-person cost of providing services increases as people spread out within a municipality’s boundaries. Service Centers whose populations move out of town and into the suburbs face the additional challenges of maintaining underused infrastructure with reduced residential property tax growth and providing services for people who work in town but pay property taxes in another community.

Download the PDF for the full report.

Maine has almost five hundred municipalities, but most of them are places where people live, not places where people work. The vast majority of goods and services transactions are concentrated in 77 municipalities defined as Service Centers by the Maine State Planning Office. This Economics team briefing compares Service Center municipalities to other municipalities in Maine.

Supporting documents

SPO Service Center Brief, 2010 (PDF)