AUGUSTA, Maine — In a wide-ranging State of the State address on Tuesday, Gov. Paul LePage laid out new proposals for economic development, tax reform and combating the state’s drug addiction epidemic.

The state’s chief executive discussed most major policy areas — from energy and education to welfare reform — and reiterated his opposition to Medicaid expansion and desire to reform welfare. But the most sweeping new policy proposals focused on economic development, lowering taxes and fighting drug abuse in Maine.





As was the case in his previous two State of the State addresses, LePage built his speech around broad themes, offering few specifics on how he plans to achieve his goals. Those details will likely be presented in legislation originating in the governor’s office.

The governor summarized his achievements in office — such as solving a $2 billion pension puzzle, instituting the largest income tax cut in state history and paying off about $490 million in Medicaid debt to Maine’s hospitals — and presented himself as the medicine Maine needs to continue healing from a recession and what he described as decades of failed policies wrought by Democratic governors and “liberal” majorities in the Legislature.

“Higher energy costs have not attracted major investments to Maine. More welfare has not led to prosperity. It has not broken the cycle of generational poverty,” he said. “Having spent my career in business, I know what grows an economy, but there is a major push by many in this chamber to maintain the status quo.”

An uphill battle for LePage remains in the Legislature, where Democratic majorities in both houses undoubtedly will oppose large portions of his agenda.

Among the new proposals outlined by the governor was the creation of “Open for Business Zones,” which LePage said would provide incentives for large companies to come to Maine.

The proposal includes some elements of the Pine Tree Development zones introduced as an economic development tool by LePage’s predecessor, Democratic Gov. John Baldacci. The zones initially offered tax breaks and incentives for businesses that located in economically troubled areas, but spread to the entire state as the business climate worsened in the late 2000s.

One LePage staffer said the plan was like “Pine Tree Zones on steroids.” Another said the goal was to entice employers as large as Boeing or even the U.S. military.

Under the plan, businesses that invest at least $50 million and create 1,500 jobs in the designated areas would be eligible for discounted electricity rates, employment tax benefits, job training and increased access to capital.

Employees in the zones also would be exempt from paying union dues. LePage said this measure would help Maine compete with Southeastern “right-to-work” states, where workers covered by union contracts are not required to pay union dues.

The governor also called for a statewide referendum asking voters whether they would approve a plan to lower taxes by at least $100 million and reduce state spending by another $100 million.

“We think Mainers want tax relief,” LePage said. “Let’s give them an option to decide.”

On drug abuse, LePage delivered some sobering statistics: 927 drug-addicted babies were born last year in Maine, he said, and there were 163 drug-induced deaths in Maine in 2012.

LePage said he wants to add four new prosecutors and four new judges to special drug courts in Presque Isle, Bangor, Portland and Lewiston, as well as 14 new Maine Drug Enforcement agents across the state.

“We must hunt down drug dealers and get them off the streets,” he said. “We must protect our citizens from drug-related crimes and violence. We must save our babies from lifelong suffering.”

LePage once again reiterated his opposition to Democrats’ plan to expand Medicaid to between 70,000 and 100,000 low-income Mainers by accepting federal funds available under President Barack Obama’s Affordable Care Act. Under the plan, the federal government would pay 100 percent of costs associated with covering newly eligible Mainers for three years before ratcheting down to 90 percent after that.

Medicaid spending represents about 25 percent of Maine’s general fund expenditures. LePage said that under expansion, that amount will grow uncontrollably, crowding out other priorities.

“Adding another 100,000 people to our broken welfare system is insanity,” LePage said. “It is unaffordable. It is fiscally irresponsible. Expanding welfare is a bad deal for working Mainers who have to foot the bill.”

The governor also fleshed out proposals to put limitations on EBT card holders, including limiting card use to Maine only and banning the use of welfare dollars to buy cigarettes, tobacco or porn.

Democrats said they would seek common ground with LePage where they could — such as on initiatives to combat drug addiction — but remained steadfastly opposed to most of the

governor’s proposals.

In a news conference after LePage’s speech, leaders from the Democratic party said the governor’s proposals were “reruns” of proposals that had already been rejected by lawmakers and voters.

“There was nothing that made me feel like we were being given a blueprint to move forward,” said Senate President Justin Alfond, D-Portland. “It was his night, and he spent it talking about failed policies from the last three years.”

Speaking on the “Open for Business Zones” — arguably the most surprising new policy initiative in the speech — Senate Majority Leader Troy Jackson, D-Allagash, said the regions would be “lawless.”

“It’s more like a Twilight Zone for the governor,” Jackson said.

Democrats also said the governor was wrong to take credit for Maine’s recovering economy, saying that any gains were in spite of the governor’s policy, not because of them.

Speaker of the House Mark Eves, D-North Berwick, said the introduction of right-to-work into Maine’s economy was a nonstarter for Democrats, which killed the proposal twice last year.

“It’s a sad state of affairs when the governor’s economic vision is a failed policy that was rejected already,” he said.

The state’s unemployment rate in December was 6.2 percent, down from a peak of 8.4 percent in 2010.

Maine’s employment-to-population ratio has grown since LePage took office at a rate faster than the national average. In December, Maine’s employment-to-population ratio was 2.6 points higher than the national average. In January 2011 — when LePage took office — the state was just 1.8 percent better than the national rate, according to the Maine Department of Labor.

Democrats said income inequality is higher than ever before, and one in four children under the age of 5 lives in poverty. Beyond that, Alfond said that while Maine has recovered some jobs, the state could be doing even better. Maine has regained only one-third of the jobs lost in the recession, he said.

Republicans, perhaps predictably, offered a different assessment of LePage’s speech and vision for the state.

“We have been focused on putting the budget of Maine families ahead of the state budget by reducing taxes and making Maine a friendlier place to live and do business,” said Senate Minority Leader Michael Thibodeau, R-Winterport, in a post-address statement. “Our policies are paying off, but as the governor noted in his speech tonight, much more needs to be done.”

Assistant Senate Minority Leader Roger Katz, R-Augusta, said the governor’s proposals, if adopted, would put Maine back on a course set by Republicans during the first two years of LePage’s administration, when they controlled the Legislature.

“We’re losing out to other states and it’s nice to hear bold ideas to catch up again,” he said in an interview. “The lack of bold ideas from the other side is deafening.”

Follow Mario Moretto on Twitter at @riocarmine.