NEW YORK SHARES

Business and labor groups say Maine’s latest legislative session had its ups and downs for their members, but union leaders say the downs were pretty deep.

The wrap-up of the 125th Legislature last week also marked the end of the first period in decades in which Republicans controlled the Blaine House, Senate and House of Representatives — and, so, the constitutional offices of state treasurer, attorney general and secretary of state.

Assessments of the session by organized labor and business leaders were, predictably, somewhat different.

“I think Maine people and workers were looking for policies that rebuilt the economy, [and] supported the middle class, and didn’t find that,” said Matt Schlobohm, executive director of the Maine AFL-CIO, which has about 30,000 members. “Instead, from the majority party, we got policies that squeeze the middle class harder, [and] side with insurance companies and big companies.”

Meanwhile, Dana Connors, president of Maine State Chamber of Commerce, said many of the priorities tackled by Gov. Paul LePage’s administration and the Legislature were in sync with key issues identified by a report issued by his group and the Maine Development Foundation, “Making Maine Work.”

“When you look at the two years, you can’t help but be impressed with the results,” he said. “I think it gives the business community the confidence that change is taking place, that priorities are being met.

“Maybe it means they invest in one more job, one more piece of equipment, and so much of consumer confidence is built on that investment,” he said.

Labor leaders saw setbacks when it came to bills passed in the last session that changed the workers’ compensation and unemployment insurance systems in the state.

“Workers definitely took it on the chin when it came to the rollbacks on workers’ comp, and the unemployment insurance bill,” said Chris Quint, executive director of the Maine State Employees Union, which has about 10,000 members.

Quint said cuts to the Department of Health and Human Services also hurt, noting the elimination of 91 jobs at Dorothea Dix Psychiatric Center in Bangor to deal with a decreased budget.

Schlobohm agreed, suggesting that the administration’s efforts seemed to focus largely on a trickle-down economic theory where benefits to larger businesses were seen to also benefit the middle class.

In addition to the bills Quint mentioned, Schlobohm noted passage of bills that repealed collective bargaining rights for child care workers and some farm factory workers.

There were some positives, Quint noted. Labor forces defeated bills that sought to privatize public sector functions, such as the inspection of amusement park rides, he said. And, he said, so-called “fair share” and “right to work” bills aimed directly at public- and private-sector unions were defeated.

And both Quint and Schlobohm said being forced to play defense brought memberships of both unions together — and saw greater cooperation between the two organizations, as well.

“We’re going to take that into the fall and make sure we elect those legislators who will stand up for working families in Maine, and stand against the governor’s attacks on workers which, from our estimation, won’t stop,” said Quint.

Business groups saw the changes to workers’ comp and unemployment as good things. While some in the business community have said the changes didn’t go far enough, Connors suggested the right balance was struck.

“Lasting, enduring change is based upon incremental success,” said Connors. “You can’t eat the apple with one bite.”

The latest session was the shorter one of the Legislature’s two-year term, noted Chris Hall, senior vice president for government relations at the Portland Regional Chamber. And it was right before an election season, he noted, and as such, no major policy shifts were expected.

On balance, said Hall, he saw more wins than losses in the last session. Part of LePage’s education reform package got through, said Hall, and he thought the policy changes regarding standards-based diplomas and teacher evaluations will have a positive impact on the state’s workforce skills gap.

The tax cut in LD 849 also was seen as positive by the business community at large, said Hall. Many Democrats, however, saw it as a backdoor way to pass a taxpayer bill of rights, which voters have rejected in the past.

John Porter, president and CEO of the Bangor Region Chamber of Commerce, agreed with Hall.

“It’s not much, but it’s symbolic and important to businesses that we start to work on that issue,” said Porter.

Hall said he thought advancement on reducing energy costs in Maine was “a miss” in the last session. And he was surprised there wasn’t more discussion in the State House about jobs, Hall said.

“That was a missing piece for me,” he said.

Connors and Porter said their members were disappointed with the governor’s vetoing of a $20 million research and development bond proposal. That veto was sustained by the Legislature.

“The governor had his reasons, but the truth of the matter is in a knowledge-based, technology-driven economy that we’re a part of, where 79 percent of our businesses employ fewer than 20 people, where innovation is a leading feature of any state’s gross state product, research and development is fundamental to any one of those,” said Connors.

Past investments have resulted in commercialization efforts, spinning research out into real companies in the Bangor region, Porter said.

“It’s really disappointing people didn’t have the vision to see that even if money goes to a non-profit, it’s ultimately an investment in the private sector,” Porter said.

Connors said a new law allowing employees to keep firearms in their vehicles at their workplaces was a negative for the chamber. And he said he was surprised the state didn’t do more with setting up a health exchange. Even if the U.S. Supreme Court strikes down the federal Affordable Care Act, it would have made sense for Maine to set up an exchange with the provision that it would die if the federal law died, he suggested.

On the whole, Hall said, continued efforts on regulatory reform, lowering taxes, reforming education are all positives.

“Now we have to start harvesting those things, and we also need to talk more about the investment climate, the demographic challenges facing the state, making sure we’re really freeing up the private sector as much as it needs to be,” said Hall.

French business confidence and Italian output declined as recessions in at least six European countries weighed on demand and risked causing a quarterly contraction in France for the first time in three years.

Sentiment among French factory executives fell in May to 93 from a revised 94 in April, the Bank of France said today in an e-mailed statement. Italian industrial production dropped 1.9 percent in April from March, when it rose a revised 0.6 percent, Rome-based statistics office Istat said.

Confidence has stagnated all year, last showing an increase in December, and today’s reading suggests that France, Europe’s second-largest economy, will shrink 0.1 percent in the second quarter, the central bank said. With neighbors such as Spain and Italy already in recession and unemployment crimping demand at home, French executives are restraining costs and may hold off on investment.

Companies are in “a cautious mood given the weakening order books,” said Pierre-Olivier Beffy, chief economist at Exane BNP Paribas in London. “The rebound we initially expected in the second quarter” may not materialize and the possibility of a “negative quarter is increasingly likely.”

Stocks fell, the euro declined and oil headed for the longest weekly losing streak in 13 years after Federal Reserve Chairman Ben S. Bernanke damped expectations for monetary stimulus and German exports dropped. U.S. Treasuries and the yen rallied.

Stocks Drop

The MSCI All-Country World Index (MXWD) dropped 0.7 percent at 9:46 a.m. in Paris, paring its weekly gain to 2.4 percent. The Stoxx Europe 600 Index sank 1 percent, while Standard & Poor’s 500 Index futures lost 0.7 percent. The euro fell 0.6 percent while the yen gained versus all its major counterparts. Oil slumped 2.5 percent, poised for a sixth week of declines. The S&P GSCI gage of commodities tumbled 1.8 percent and gold fell 1.1 percent.

Italy’s economy, the euro area’s third-biggest, fell into a recession in the fourth quarter of last year just as Prime Minister Mario Monti pushed through 20 billion euros ($25 billion) in austerity measures to tackle the debt crisis. The nation’s joblessness rate of 10.2 percent is the highest in more than a decade and consumer confidence is at the lowest in more than 15 years amid Italy’s fourth slump since 2001.

Bracing for Impact

Policy makers across the globe are girding for a deeper impact from Europe’s debt crisis, with China cutting borrowing costs yesterday for the first time since 2008 and loosening controls on bank lending and deposit rate. Australia and Brazil have also lowered rates in the past eight days.

Gross domestic product in the 17-nation euro-area economy stalled in the first quarter as companies cut spending to weather the sovereign debt crisis, offsetting a gain in exports, the European Union statistics office in Luxembourg said June 6.

The European economy is struggling to gather strength after the need for new Greek elections and Spain’s worsening banking crisis heightened concerns that the single currency could splinter.

For French President Francois Hollande, the stalled economy presents a challenge after winning this year’s election on a promise to revive growth. After less than a month in office, he’s facing rising unemployment as companies from Air France-KLM Group (AF) to PSA Peugeot Citroen contemplate job cuts.

Order Books

“Industrial output fell back in May, notably in the car and metal sectors,” the Bank of France said today. “Factory use contracted and weakening demand has led to an erosion of order books.”

The Bank of France also said today that its gauge of service-sector demand fell to 92 from 93, its lowest since 2010.

Any drop in France’s growth rate would force the government to make deeper-than-expected cuts to meet its target of reducing the budget deficit to 4.5 percent of GDP this year and 3 percent next year.

“Hollande’s honeymoon will be brief,” said Joost Beaumont, an economist at ABN Amro in Amsterdam. “His biggest domestic challenge will be to restore order in public finances. It’s likely there will be fiscal slippage, given his optimistic growth assumptions and tendency to lean more toward raising revenues than cutting spending.”

Hollande, whose Socialist Party faces legislative elections on June 10 and 17, has promised to introduce a new budget to meet those targets in late June or early July.

To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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