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This is Governor John Baldacci.

Our State made significant progress during this year’s Legislative session.

Every state is dealing in its own way with the global recession that has struck our nation and the world. We are experiencing the worst economic downturn this generation has seen.

People are being forced to take pay-cuts, or worse, lose their jobs altogether. People are nervous and hesitant to spend money. That has a direct impact on our economy and the financial health of our State.

States are seeing staggering revenue shortfalls from coast to coast. And while there are glimmers of hope that we are starting to pull out of the recession, revenue shortfalls for State governments continue to increase.

In some cases, States have raised taxes on their citizens to fill their budget gap. Others have had to cut entire programs or services simply to make ends meet.

I am proud to say that Maine has bucked the national trend.

Yes, times are difficult here, and we have taken a different path toward weathering the economic storm. We prepared for difficult times and we have worked together in a bipartisan fashion to not only deal with the revenue shortfall, but to continue to invest in our people and our State.

And people are starting to take notice.

The Wall Street Journal featured an editorial this week, called the “Maine Miracle,” stating that Maine has improved its economic attractiveness more than any other State in the country.

Here’s why:

We have lowered the income tax rate from 8.5 percent to 6.5 percent. And for those earning more than $250,000 – the income tax rate is lowered to 6.85 percent.

To do this, we are expanding our sales tax on certain services that have not been taxed in the past. That will help us to export more of the taxes onto people who are tourists, or visit the State, or part-time residents, while providing tax relief to Maine residents.

And those Maine residents are also going to have an opportunity for a refundable earned income tax credit – those earning $33,000 or less – to help in some of these expanded areas.

Maine also demonstrated fiscal discipline. Working together in an overwhelmingly bipartisan fashion, we were able to reduce State spending by $500 million dollars. It’s the first time in at least 30 years that a biennial budget has been smaller than its predecessor.

And how are we doing this?

Well, we’re restructuring. We’re cutting spending. And also at the same time making sure that people know we’re open for business, and most importantly good paying jobs with benefits.

Legislation I signed this week expands the Pine Tree Zone program statewide. Pine Tree Zones create important tax incentives for businesses to locate in Maine or expand here as long as they’re bringing good paying jobs with benefits.

The Pine Tree Zone program was originally established to level the playing field throughout Maine and making sure that we had an opportunity to fairly compete with other states and other countries for jobs.

The Pine Tree Zone program is a proven success.

The program was established in 2003 and in five short years, there are at least 213 certified businesses that are Pine Tree Zones. They have reported their plans to create more than 6,500 jobs and invest almost $700 million dollars in Maine. Those jobs alone are expected to generate $203 million dollars in payroll.

And the expansion of this program is already showing results in creating jobs and attracting business.

Since the expansion legislation passed a couple of weeks ago, we have celebrated news that TD BankNorth is expanding its presence and its work force in Auburn.

And in Augusta, we are preparing to welcome Bolduc Technology. The technology company solidified their plans to expand and relocate to Augusta earlier this month, bringing 18 new high technology jobs with them to start.

Both businesses credited Maine’s Pine Tree Zone program as a critical component of the decision to choose Maine. But it’s not just Pine Tree Zones – it’s our quality of life, but most importantly it’s our people.

Our people can compete with anyone, anywhere.

We need to invest in our people as well as investing in research and development, infrastructure improvements in our roads and bridges, and higher education.

We need to continue pushing forward; continue working hard; and continue looking toward the future.

We have made the difficult choices to balance our State budget by asking for shared sacrifice.

We have boldly shown that Maine is open for business by expanding Pine Tree Zones statewide and lowering the State’s income tax rate.

And we are continuing to invest in our State and our people.

And we are Mainers – and we don’t let tough times get us down.

We’re not out of the economic woods, and as my friends in Aroostook County have often told me, “It’s a long way into the woods, it will be a long way out.” So we face many tough choices and challenges ahead.

But by working together we have made significant progress toward a successful future and a brighter tomorrow.

Thank you for listening and have a great weekend.

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