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V O L . X X I I N O. I JA N UA R Y 1 1 , 2 0 1 6 12 regulatory compliance are increasing banking costs. Again, this puts a premium on developing relation- ships with lenders. Going in cold, saying "I need a loan," won't be eff ective. Martin: Maine has a good record meeting the borrow- ing needs of businesses. Equity and venture invest- ments have been harder to come by, particularly for early-stage companies. is may have less to do with the quality of investment opportunities in Maine and more to do with the fact that investment opportunities tend to be fewer and smaller and therefore less appeal- ing to investors from outside the state. Are there any new laws that you think will have a major impact on businesses? Moody: e economic fallout from Obamacare [the Aff ordable Care Act] is far from over. It has taken years just to get clarity from the Supreme Court on major structural components of the law. From an economic perspective, each ruling had the impact of new law and, at the same time, regulations are constantly being written and rewritten. Regardless of the direct impact on health care, the indirect impact on every business in America has been and will continue to be stifl ing. Reisman: e continued implementation of the Aff ordable Care Act is costing jobs and weaken- ing the economy. Watch the Maine health care cooperative Community Health Options carefully. Lauded as one of the few, if not only, success stories of Obamacare, the CO-OP has thrown up some recent fi nancial red fl ags. e Paris Climate Change Agreement to reduce carbon emissions will raise our energy costs, redistribute wealth and income from Americans to the developing world and give a big progressive boost to green crony capitalism. Rector: Some of the tax changes that are taking eff ect will help lower the tax burden on Mainers, allowing business owners to invest more in their companies and encouraging people to move to Maine. e military pension income tax exemption in particular will help attract veterans to the state, many of whom have excel- lent skill sets and are looking for second (or third) careers. Workforce availability will be more and more of an issue for businesses in the coming years, making it critical to pass laws that will attract workers to the state. On the other side of tax changes, the lodging tax increases to 9% this year, but this should have a limited impact on the lodging industry, as this rate is in line with other parts of New England. Lawton: Dodd-Frank banking regulations are not new, but will have continuing eff ects on smaller community banks. Environmental regulations will aff ect electricity prices — tax credits, renewable power source require- ments, pipeline construction limits. Future FCC regu- lations on telecommunications and the Internet will aff ect Internet and entertainment off erings. Martin: ere's not much major impact at the state level. e state budget deal did include additional funding for education and workforce development, which are important pillars of a strong economy. In 2016, Maine must submit its plan for using resources available through the federal Workforce Innovation and Opportunity Act. is has the potential to reshape workforce development, adult education, and vocational rehabilitation programs in the state, which are vital concerns for many businesses. With the presidential election, what kind of impact might that have on the economy? Moody: Unlike previous presidential cycles, this one has the potential to take political uncertainty to new heights. In both political parties, insurgent candidates — Donald Trump on the right and Bernie Sanders on the left — could topple the more "mainstream" candidates. is uncertainty will have a negative impact on the economy as businesses grapple with this reality. Reisman: e economy is likely to have more eff ect on the presidential election than vice versa, but a little on both: e rest of the world and the United States are teetering on the edge of an economic slowdown. Both fi scal and monetary policy remain expansionary, but the Fed is coming off the gas pedal. Cheaper oil and energy helps everyone's bottom line except for the oil/energy sector, which is now shedding jobs in the United States. Fracking doesn't make economic sense with the price of oil below $70/barrel, and it's half that as this is written. If the U.S. economy slows down or is perceived as slowing down in the fi rst two quarters, the party in power is not likely to be returned to power in the fall elections. at doesn't bode well for the Democratic presidential nominee, whoever she might be. Elections can be an economic boon for media and communication companies, especially if large amounts of independent expenditures come in. e progressive victory on so-called clean election reform will also put some additional dollars into legislative races. But the overall macro eff ect is not signifi cant. Rector: Maine's economy is tied very closely to the economy of the nation as a whole. e policies enacted by the next president will certainly have an impact here in Maine, both directly and indi- rectly, but it will likely be at least 2017 before we see any real impacts on the economy. e information sector will be the biggest direct winner in 2016 as advertising buys ramp up ahead of the election. Lawton: Uncertain expectations — about interna- tional terror policies, immigration, tax reform, inter- est rates, business location policies — all will limit investment and thus job growth. Martin: In the near term, the presidential election will have minimal impact on Maine. Of greater consequence is whether or not Gov. Paul LePage's administration continues to forgo opportunities to leverage federal funds for the benefi t of Maine peo- ple. Not only could these resources improve health care access and aff ordability, food security and edu- cational opportunity, they could also help stimulate signifi cant economic activity throughout the state. What are the biggest challenges ahead? Moody: e biggest challenge facing Maine is demographic winter. e latest Census Bureau data released in December shows that Maine's net natural population growth — births minus deaths — in 2015 was negative again. In fact, four of the last fi ve years were negative for a total defi cit of 1,990 more deaths than births. Additionally, the burden on Maine's shrinking younger generations will intensify. For example, the majority of Maine's long-term care industry for the elderly is fi nanced by Medicaid. As the demand for long-term care explodes, so will the cost of Medicaid. If this forces taxes to go up, this will slow the economy even more. Reisman: Restoring economic freedom to Maine and the United States. Once one of the top three nations in this requisite for economic growth and prosperity, the United States has fallen out of the top tier and is now behind Canada. e eff ort to ignore or restrict economic freedom in Maine is led by the progres- sive left, labor and environmental groups. Both of our senators and U.S. Rep. [Chellie] Pingree are on board for reducing, as opposed to restoring, economic freedom. Restoring the First Amendment guarantees of freedom of speech and religion. Progressives are attacking free speech via campaign fi nance reform, political correctness, internet regulation and eff orts to punish climate "deniers." Progressives are attack- ing religious liberty through health care and marriage mandates and regulation. Progressives are eff ectively establishing environmentalism as our state religion (it's called sustainability). Progressives have applied a climate change religious test to candidates for offi ce. Recognize the wisdom from Sun Tzu's " e Art of War." Know your enemy. If you can't name them for what they are, you cannot even begin to defeat them. Rector: Maine's demographics are the single largest challenge facing the state, but there are other issues in play as well. Energy costs remain high, especially for industrial customers, and while consumers have had a break from low oil prices, continuing to increase the diversity of energy sources in the state is important for future economic stability. Adjusting to continu- ing technological advancements is both a challenge and an opportunity for the state — existing businesses will need to adapt, but there are places where Maine is stepping up and becoming a leader in new technolo- gies and emerging industries. 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