LEWISTON – Gerard Gagnon was more than happy to tell a legislative committee what small businesses are up against.

The owner of Ace Insulation in Buckfield, Gagnon installs insulation and employs 10 people. And he’s a flat tire away from turning a profit, he said.

“Taxes and insurance are killing me,” said Gagnon to members of the state Business, Research and Economic Development Committee who convened a public hearing in Lewiston to solicit ideas from the area’s small business owners.

“Insurance companies look at me as a cash cow,” he continued. “Why am I paying workers’ compensation rates the same as companies that remove asbestos?”

And to make matters worse, there are so many illicit contractors who do similar work under the table, they are pushing legitimate contractors out of business.

“I’ve been pushed out of the Bethel market completely,” said Gagnon, who added that suspect subcontractors are not paying payroll taxes or other costs of doing business. “I’m doing everything on the up and up and I have to wonder … do I have ‘sucker’ on my forehead?”

Gagnon was one of about 30 people who attended the hearing, initiated by the committee to solicit specific examples of how Maine’s business climate can improve for small business. Rep. Nancy Smith, D-Monmouth, chaired the meeting and asked specifically for examples of cumbersome regulations and the impact of financial incentives like TIFs and tax credits. The committee is looking for input before the next legislative session begins in January.

Rebecca Laliberte owns The Meadows, an assisted-living center in Greene. To comply with a safe drinking-water regulation, she had to install an $8,000 arsenic-remediation system to lower her reading by 2 parts per billion.

“Where’s the common sense?” she asked committee members, especially since the water safety benchmarks keep changing. She said her 12-year-old business is at the point where she could expand, but with a business climate that has so much uncertainty and arbitrary regulations, “I’m afraid.”

The input wasn’t limited to just small business owners. Peter Geiger took the opportunity to point out the lunacy of having to pay income tax for out-of-state employees who come to Maine for training. In response, his promotional products company now simply moves training to Geiger sites outside of Maine.

“They fixate at the state level on how to collect more income … that’s the type of thing that drives people nuts,” he said.

He also said the lack of clarity and unity between state and federal definitions of things like “disability,” and interpretations of the Family and Medical Leave Act leave business owners tearing out their hair.

“It really is onerous how Maine goes above and beyond the federal guidelines,” he said.

Other frustrations were also aired, among them, the lack of a building code specific to rehabbing old buildings. Chip Morrison, Androscoggin County Chamber of Commerce president, said the cost to rehabilitate the buildings in the Bates Mill complex to modern code ran about 25 to 50 percent above what they could have been if there had been reasonable building codes for historic rehabs that still met life/safety standards.

Richard Vail, president of Mechanics Savings Bank, added that most of Portland’s Old Port rehabilitation couldn’t take place today because the cost to bring those buildings up to code would be prohibitive.

He also took the committee to task for approving predatory lending laws in Maine that force compliance from state-chartered financial institutions, but don’t touch the federally chartered banks. It’s especially galling since Maine’s community banks didn’t use the predatory lending tactics that led to the subprime fallout, Vail said.

“We’ve been saddled with these new regulations that put state-chartered institutions at a competitive disadvantage with national competitors,” he said. “You’re hurting state-chartered companies who employ state people.”

Others spoke of conflicting environmental regulations such as vernal pool laws that are not uniform at all levels of government, and which stymie development. Others wondered why newcomers to the state get incentives such as TIFs while established businesses go without a break of any kind.

One committee member pointed out that the state Department of Economic and Community Development has a budget that represents 1 percent of the state budget – an anemic effort to foster economic development in Maine.

And the rising costs of health care and increasing taxes were mentioned as the elephants in the room that are stifling economic growth everywhere.

Gagnon said he wished he could provide health care for his employees, but it would amount to a $2-per-hour increase in wages for each of his crew.

“I can’t afford a $2-per-hour raise on my margin,” he said. “I’m just hanging on.”