Patrick Woodcock is president and CEO of the Maine State Chamber of Commerce.

Maine businesses and households are desperate for economic leadership.

Persistently high inflation, primarily driven by rapidly increased housing and energy costs, is undermining our household budgets and a lack of workforce is constraining our businesses’ ability to grow. Maine needs a bipartisan pro-growth agenda that unlocks housing production, a pragmatic energy agenda that lowers bills and investments in research and development to keep our next generation here in Maine.  

Regrettably, instead of advancing an agenda to grow the economy, the Maine Legislature is close to enacting a budget that would catapult Maine’s marginal income tax to 9.15%, the highest level in New England, with a new surtax on incomes over $1 million, and would also raid our state’s Budget Stabilization Fund. This is fiscally irresponsible and would represent a major step backward for our state’s competitiveness.  

The surtax, in particular, will affect more people than many expect — including small business owners. Earlier this week, I spoke with Brian Langley, a board member of the Maine Chamber and longtime owner of the Union River Lobster Pot in Ellsworth. He had just finalized the sale of his restaurant after nearly 30 years of ownership.

After congratulating him on this milestone, we realized that the sale — his retirement — would now be subject to the new surtax, as it would apply retroactively to the start of this year. Like many small business owners, he never earned close to $1 million annually, but a one-time transaction would push him into the surtax. This is not an isolated case! Our state is full of small businesses for whom one transaction would trigger this new surtax.  

Not only is this a hit on a small business owner like Brian, but we should recognize that we have actually been attracting people to Maine who have been migrating away from this very policy. The experts agree. Maine’s own associate commissioner for tax policy opposed a surtax last year and warned the Legislature in testimony that these taxpayers often have flexibility in where and when they realize income. States like New Hampshire and Florida, with no income tax, remain alternatives. Maine should not create new incentives for Maine residents to leave.

At a time when Maine has little margin for error in attracting investment, growing jobs and population, and strengthening our economic trajectory, these policies discourage investment in our state and erode our business climate. CNBC ranked Maine’s business climate 44th last year — we cannot afford additional policies that move us further in the wrong direction.  

The budget also includes the use of nearly $300 million from Maine’s Budget Stabilization Fund, which has a current balance of $1.08 billion, to finance one-time payments, including $300 checks for some households. This approach raises serious fiscal concerns. It will reduce the state’s ability to respond to future economic downturns while doing little to address underlying challenges. For example, Maine households continue to face some of the fastest-growing energy costs in the country. One-time checks do not solve that problem. Long-term policy solutions — that cut mandates on our bills open our state to all energy sources, including natural gas, nuclear and renewables — are the way to reduce our monthly bills.    

Economic growth depends on predictability, stability and a competitive environment. This budget in Augusta undermines each of those principles and fails to invest in research and development and our long-term energy challenges. There is still time for policymakers to change course and pursue a more forward-looking approach that supports Maine’s long-term economic strength.  Let’s create a bipartisan pro-growth agenda for the Maine people.  

The stakes are high. Maine’s economic future is not predetermined — but it is being shaped right now. Lawmakers still have time to change course and pursue policies that attract investment, support businesses and keep the next generation of Mainers here.