By Carol Coultas,Business Writer

AUBURN – The Hilton grand ballroom looked like it was full of bobble head dolls.

As USM professor Charlie Colgan laid out his state economic forecast for Chamber of Commerce members Thursday morning, dozens of local businesspeople nodded in agreement.

Colgan was showing how the distribution of Mainers’ income has shifted from wages to benefits over the last five years. In real terms, money earmarked for wages has declined slightly while money earmarked for benefits has risen.

“That’s being driven primarily by health insurance costs,” said Colgan, an economist. “It’s a real strong shift in compensation away from salaries to benefits.”

Chamber President Chip Morrison wasn’t surprised. For the last four years, concern during the rising cost of health insurance has been the No. 1 issue identified in the chamber’s annual survey of its 1,200 members.

“The costs just continue to rise, both to the businesses and the premiums they pay, and to the employee, who picks up a higher share (of that cost),” he said.

That’s not expected to change. In fact, there are few changes predicted for 2006 in Colgan’s annual analysis of where Maine’s economy is headed. Overall, he expects there will be slight changes in job growth, population gains, energy costs, inflation and unemployment – a logistics landscape he describes as “boring.”

But there are some potential economic bombs. Among them is the projected closure date for Brunswick Navy Air Station. The Department of Defense initially predicted 2011, but that could be moved up to 2008.

If that happens, the Lewiston-Auburn area will feel “the negative effects much sooner,” said Colgan. The effect would mostly be in jobs, and to a lesser extent, housing. He said Portland would feel a greater impact in its services and retail sectors. The Department of Defense is expected to make an announcement this month.

Another possible economic curve ball: what happens to Maine’s forestlands.

Historically, Maine’s 10 million acres of woods have supplied the forest products industry; now development pressures from companies like Plum Creek challenge that traditional use. Plum Creek wants to build vacation homes around Moosehead Lake; others want to conserve the land and others want to continue to harvest it.

Colgan said 2006 should be the year where sorting out the future of forestlands will begin, initiated primarily by the private sector.

“The problem is how we combine those (different uses),” said Colgan.

He said another variable will be the November elections. Noting the recent swings in majority parties in the State House, Colgan said it seems who controls the Legislature depends on what people had for breakfast.

“It’s very odd,” he said referring to three party switches that occurred at the beginning of this legislative session.

Despite the outcome of the 2006 elections, he thinks taxes, education and health care will continue to dominate the Legislature’s time. But that’s just a guess.

“A year from now, we may wish the events of 2006 were as boring as the statistics,” he quipped.