MERI and the Politics of Distortion

The Maine Economic Research Institute (MERI), an arm of the Maine State Chamber of Commerce, recently issued a scorecard which rates each legislator on his or her “supportiveness” of business. While MERI claims to be non-partisan and “scientific” in its approach, it is clearly and blatantly biased against legislative Democrats and far from scientific.

For the past five years, and again in 2003, the Maine Economic Research Institute has misrepresented legislators’ records, omitted evidence that shows legislative Democrats’ strong support for business and job growth, and used a warped rating system that includes bills having very little or nothing to do with legislative support of business and economic development.

Below is a two-page Overview. It is followed by 10 pages of detail, following the same outline as in the overview.

OVERVIEW

I. MERI twists the facts to promote its anti-Democratic agenda and sheds no light on the issues of importance to businesses and the economy

Methodology

• The scoring process is secretive and subjective. Fifty percent of every legislator’s score is based on a subjective score from an unnamed panel of judges.
• MERI used an unrepresentative sample of Maine businesses for its survey on what is important to them. While 90 percent of Maine’s businesses have 20 or fewer employees, the majority of survey respondents were from Maine’s largest businesses – almost 60 percent were from companies with more than 20 employees.

Content

• The 17 roll call votes used in the scorecard are not representative of the important business issues from the legislative session. Four of the votes were preliminary and procedural votes. MERI ignored numerous bills supported by both Democrats and Republicans that significantly improve Maine’s business climate.
• MERI did not follow the results of its own survey to choose legislation for the scorecard. For example, respondents put health care near the top of their list for issues that are important to Maine businesses, yet MERI ignores the passage of Dirigo Health, which aims to provide affordable health care to Maine’s small businesses.

Partisanship and accountability

• While MERI claims to be non-partisan, its scorecard and methodology clearly show otherwise.
• Not one of the 17 bills MERI considers important to Maine businesses is sponsored by a Republican. MERI offers no agenda or platform or even ideas for improving Maine’s business climate. Saying “no” does not bring progress.
• MERI represents the very largest Maine businesses and does not represent Maine’s small businesses, which account for the vast majority.

For more details on MERI’s survey, scorecard, and methods, see the detailed analysis.

II. Democrats and Maine’s business climate

The Maine Economic Research Institute (MERI) says its vision is “a healthy economy, strong businesses, and quality jobs.” It is a vision shared by every legislator in Augusta. The 121st Maine Legislature, with a Democratic majority, has already enacted one of the most aggressive pro-business agendas in years. From passing a budget without increasing taxes, to providing Pine Tree Zones and other business incentives, this Legislature has done much to improve the business climate.

• A fiscally reponsible budget. The Democratic-majority Legislature enatcted the General Fund Budget that addressed a $1.2 billion shortfall without a tax increase. The budget also included a cap on state spending, and the creation of a budget stabilization fund.
• Access to capital for businesses. We greatly increased the eligibility for the Seed Capital Investment Tax, which provides significant incentives to investing in young, growing companies. Several other bills – LD 918, LD 1240, LD 1480 and LD 1544 all provide businesses with easier access to capital, an issue that consistently scores high on the list of small business concerns.
• Regulations. The Legislature dealt with and passed over 10 bills that clarified, simplified, streamlined, and modernized professional license procedures and various business regulations.
• Taxation. Democrats joined with Republicans to promote a tax relief measure for Maine citizens. When the Legislature reconvenes in January, we will continue efforts at attacking Maine’s outdated taxation system. Democrats also promoted a bill to repeal the Business Equipment Tax that many small businesses object to.
• Higher Education. Higher education directly supports the needs of businesses in Maine. Maine businesses often cite the need for skilled workers; investing in higher education is the way to get them. The Legislature asked voters in June to approve a $60 million jobs bond that provides a more than $17 million investment in higher education for research and development. In November, voters approved a bond package that included nearly $20 million to boost the state’s new Maine Community College System, which is already guiding substantially more high school graduates into four-year colleges. The Legislature also passed a bill that created a loan program to provide additional affordable loans for higher education.

For more information about what Democrats have done for Maine’s business and economic climate, see detailed analysis.

III. Maine’s quality of life
Maine businesses care about, and rely upon, more than just reasonable workers compensation rates and investments in business initiatives. Maine businesses need skilled workers, want to provide their workers with affordable health care, and know that safe communities and healthy people are the foundations of a healthy economy.

Maine scores well in these areas, which is part of the reason that MERI’s own survey showed Maine businesses rank Maine’s quality of life as the primary reason they chose to move here or stay here.

IV. Appendix
For a bill-by-bill analysis of MERI’s scorecard, see the Appendix.

DETAILED ANALYSIS

Below is a detailed analysis of the MERI scorecard, following the same outline as the above Overview.

I. Detailed critique of MERI’s methodology and content

Methodology
A. The scoring process that MERI uses to rate legislators is both secretive and extremely subjective. The scoring process is neither scientific nor objective – lobbyists secretly rate Legislators’ voting records.

• Only 50 percent of each Legislator’s rating is based on each Legislator’s votes on bills that MERI selects for its criteria. The other part, known as the qualitative part and comprising 50% of each Legislator’s score, is kept secret. The rating is done anonymously, and the basis of the formula used to develop a qualitative score is also a secret. There is no appeal or review process for the aggrieved legislator to pursue.

B. Rating Criteria and Process. MERI uses questionable criteria for its ratings and uses only those bills that give Republicans good ratings and Democrats bad rating. The whole process is intellectually dishonest.

• Twenty percent of the bills selected by MERI are carry-over bills that are still under consideration by the Legislature. No final action has been taken on these bills.
• According to MERI’s partisan rating of legislators, the average rating for Senate Democrats is 18.5, compared to 89.2 for Senate Republicans. The average rating for House Democrats is 20.0, compared to 84.1 for House Republicans. And in the most business-friendly legislative session in years, Democrats’ scores went down and Republicans’ scores went up. This does not pass the straight face test.

C. MERI used a skewed survey and an unrepresentative sample of Maine businesses to come up with its list of roll calls for the scorecard.

• Ninety percent of Maine’s businesses have 20 or fewer employees and yet only 43 percent of the businesses who responded to the MERI survey are that size. The initial survey was answered by a misrepresentative sample of Maine businesses.

• How the survey was used is unclear – MERI says the survey of business leaders was used to determine what businesses care about most. Then MERI staff interpret the survey and choose legislation on which to score legislators.
• Only 7 percent of the respondents were sole proprietors and 85 percent were corporations, hardly representative of Maine’s business community.
• The survey was conducted by Verne Kennedy, a pollster from Pensacola, Florida, who provides data for Republican and right-wing candidates and conservative business groups. Hardly a bipartisan approach to collecting data.

D. MERI has no consistent or reliable method for the selection of legislators’ votes on bills used for the organization’s rating criteria.

• Because they are not yet in their final form, scorecards generally wait for the final vote on a bill, rather than cherry-picking preliminary or procedural votes in a way that does not accurately reflect a legislator’s view on a bill. MERI routinely uses procedural and preliminary votes, including some votes on whether to send a bill back to committee for additional changes.

For a bill-by-bill analysis of the scorecard, see the Appendix.

Content
E. Some of the bills that MERI has used for rating legislators have little impact on business.

• LD 1549, which establishes a twenty cent fee on “architectural coatings” to enable municipalities to properly and safely dispose of hazardous waste, is designed to protect the general public from a serious toxic waste problem.
• LD 1309, which requires disclosure of arsenic in water supplies and outdoor structures, and provides that arsenic treated wood must be disposed of in lined landfills, is also a major public health and safety issue. Federal law is already phasing arsenic out, and few Maine lumberyards still carry the material, which comes from out-of-state companies.
• LD 1634, Maine Rx. The people of Maine overwhelmingly support Maine Rx. How can lowering the cost of prescription drugs, especially to the elderly and disabled, be considered anti-business? Businesses are already paying too much for health care insurance and prescription drugs.

F. There are no Republican-sponsored bills used in the scorecard. Of the 17 bills, 16 are sponsored by Democrats and one by an Independent. In almost all cases MERI considers a vote in favor of these bills to be a vote against business. Apparently MERI could not find one Republican-sponsored bill of importance to Maine businesses. While the organization complains about legislation that was proposed, it offers no agenda of its own, nor a single proposal it would support to improve the business climate.

G. The legislation used to rate Legislators is extremely small in volume and narrow in scope. The legislation reflects a very limited range of issues that affect the business community.

• Of the more than 350 bills in the First Regular Session of the 121st Legislature that impacted business, MERI selected 17 or 4.5% of the total number of these bills.
• Of the broad range of issues affecting business, MERI selected eight issues, and 13 of the 17 bills related to four topics: workers compensation, unemployment insurance, business regulation, and the environment.
• Omitted from MERI criteria are access to capital, small business incentives, education and training of the workforce, research and development, taxes [Only 1 tax bill is used in the criteria], assistance to large businesses, state investment in economic development, state contracts with business, and several other issues. For more detail, see H below.

H. MERI did not follow the results of its own survey!
Marketing Research Institute, a Republican polling group out of Pensacola, Florida, conducted a survey of Maine business executives for MERI. Aside from the problems with the way the survey was conducted (see item C above), MERI did not even match the bills it chose for the scorecard to the issues deemed most important in its own survey.

• Healthcare costs. According to the survey, the most important issue to businesses when it comes to their legislators was healthcare cost containment.

  - The scorecard includes two relevant bills, but gives points to legislators for voting against containing costs! The two bills – Maine Rx and another bill that would require drug companies to reveal how much they spend on marketing – both aim to reduce the cost of prescription drugs for individuals and businesses, but MERI took away points from legislators who supported these two bills.
  - The scorecard ignores Dirigo Health, the most ambitious effort yet in the state of Maine to control healthcare costs. This plan aims to provide affordable access to healthcare coverage for all Mainers, and to provide an affordable plan for Maine’s small businesses. Other bills that were proposed during the session would require pharmacists to use less expensive generic medicines in some circumstances as a way of reducing healthcare costs. Why did MERI not rate legislators on these bills?

• Workers’ Compensation Issues. While this is clearly an important issue to Maine businesses (it ranks second), it plays a disproportional role in the scorecard, accounting for eight out of the 17 roll calls in the scorecard. Several of the roll calls used by MERI are on minor changes to workers’ compensation law.

  Meanwhile, Maine has progressively improved its workers’ compensation rates, moving from the bottom of the list as one of the most expensive states in the nation for workers compensation to the point that we now rank just above the middle. Of the Maine businesses in MERI’s survey that also do business in other states, 40 percent said workers’ compensation rates in Maine are lower than in other states, and 23 percent said they are higher. Maine needs to continue its vigilance in reducing the cost of workers’ compensation, but we also need to focus on other important issues affecting Maine’s businesses, especially its small businesses.

• State and local tax reform and taxes and fees on businesses. These issues ranked third and fifth most important on the MERI survey. Yet MERI ignored:

  - Passage of the state budget. The budget includes tax credits for businesses that locate in Pine Tree Zones, tax credits for those who invest in growing young businesses, other seed capital tax incentives, a budget stabilization fund, and a cap on state spending, among other significant tax and business issues.
  - Tax relief. The Legislature put to the voters a referendum question that would significantly boost state spending on local education and provide more tax relief through the Homestead Exemption and an increased Circuit Breaker program. Following November’s inconclusive election results, the Legislature is pursuing further efforts to reform the state’s outdated tax system in the session that starts in January.
  - Repeal of the personal property tax. Businesses have lobbied for repeal of the personal property tax for years, and several Democratic legislators sponsored legislation this session to do that.
  - Maine held the line on taxes – no increases – at a time when more than 40 other states nationwide raised taxes to balance their budgets.

• Improved management of state government. This ranked fourth most important on the business survey. The Legislature created a budget stabilization fund, a spending cap, and funded for the first time the Office of Program Evaluation and Government Accountability, which will review state programs for efficiencies and savings. None of these were factored into MERI’s scorecard ratings.

Partisanship and accountability
I. For its so-called non-partisan survey of business leaders, MERI hired Verne Kennedy of Pensacola, Florida. Kennedy is a noted Republican pollster who works for right-wing and Republican candidates and conservative business groups. This is neither a bipartisan nor non-partisan attempt at a balanced view.

J. What is MERI’s plan? The group says its mission is to improve Maine’s business environment, but what does it support? On almost every one of the 17 bills chosen by MERI, they advocate a “no” vote as being better for business. If these bills are not good for Maine’s business climate, then what is? Not one of the 17 bills chosen by MERI is sponsored by a Republican, and MERI offers no agenda or platform or even ideas for improving Maine’s business climate. Saying “no” does not bring progress. MERI has a responsibility, if it is going to complain about the Legislature, to offer solutions.

K. With a handful of exceptions, the list of MERI’s members is a “who’s who” of the state’s very largest corporations. While 100 employees might be called small business in other parts of the country, less than two percent of Maine’s businesses have that many employees.

II. Democrats and Maine’s business climate

MERI chose to ignore numerous important business-friendly initiatives in its scorecard of legislators. Of the 17 roll calls chosen by MERI for the scorecard, four were preliminary or procedural votes. Thirteen of the 17 are related to four topics: workers compensation, unemployment insurance, business regulation, and the environment.

There are many more pertinent bills and Legislative actions relating to business and economic development that MERI did not use in its ratings of legislators. For example: the following bills, issues, and budget provisions are not considered at all in the MERI criteria:

• Enactment of the General Fund Budget that addressed a $1.2 billion shortfall without a tax increase;
• The recently enacted cap on state spending that was part of the General Fund Budget;
• The creation of the Budget Stabilization Fund in the General Fund Budget;
• Enactment of Pine Tree Opportunity Zones that serve as incentives for businesses to locate in specific areas of Maine, by providing significant tax breaks, among other benefits:
• Privatization of the retail and wholesale sectors of the liquor industry provided in the Budget;
• State funding of property taxes due to Millinocket and East Millinocket for the Great Northern Mill, which helped, in part, to keep the paper industry alive in Northern Maine;
• State purchase of the landfill for the paper company in Old Town, which intended to close down. Closure of the Old Town mill would have wrecked the economies of Old Town and surrounding municipalities;
• Providing for an immediate increase in the Seed Capital Investment Tax Credit, which uses tax breaks to encourage investment in young growing businesses;
• Several bills proposing the elimination of the Business Equipment Tax, a tax that businesses hate;
• LD 607 proposed that the Department of Economic and Community Development [DECD], in conjunction with the State Planning Office study the impact of the North American Foreign Trade Agreement on business sectors in Maine and on small businesses;
• LD 918, LD 1240, LD 1408, and LD 1554 that provide businesses with easier access to capital, and provide information and services to businesses during an economic crisis that requires a rapid response.

III. Businesses and the state’s social health

It is abundantly clear that Maine businesses care about, and rely upon, more than just reasonable workers compensation rates and investments in business initiatives. Maine businesses know, and have told us, that

• they need skilled workers,
• want to provide their workers with affordable health care, and
• that safe communities and healthy people are the foundations of a healthy economy.

Maine scores highly in these areas. The recently-released “Social Health of the States – 2003” report ranks Maine fourth in the nation for social health.

Maine has the

• lowest infant mortality rate in the nation, and
• the highest rate of high school completion.
• We are fifth-best for our homicide rate,
• fourth-best for alcohol traffic deaths, and
• eighth-best for the number of elderly in poverty.
• And in the past six years we have cut our teen smoking rate nearly in half.

Too often we speak about the tensions between social interests and business or economic interests. But, they are not mutually exclusive. It is becoming increasingly clear they are one and the same. Healthy Maine people make for a healthy Maine economy.

IV. Appendix: Click here for a bill-by-bill analysis of MERI scorecard