Gov. LePage has shown himself to be a pretty tough guy over the last four years. Whether he is dealing with the Legislature, municipal governments or the media, he plays the game on his terms and he doesn’t let custom, the law or conventional ideas about civility get in his way.
Maine needs that tough governor right now, as we are reeling from the news that $16 million in state money that was supposed to be used to help mill workers keep their jobs at the Great Northern Paper Co. will instead be sent to wealthy out-of-state investors.
The money is in the form of fully refundable tax credits that are paid out even if the investor owes no Maine taxes. It was supposed to leverage $40 million in investment, but because of an accounting trick, the investors were able to put up only $8 million, none of which went to upgrade or modernize the Great Northern mill.
The case for punishing this behavior is laid out in a Maine Sunday Telegram investigation by business writer Whit Richardson, (“Payday at the mill” April 19 and 26).
Maine created the New Markets Tax Credit program in 2011 to steer investment into economically depressed areas. The complex piece of legislation was written with the help of private equity operators, who clearly understood it better than the lawmakers who voted it through. Two Louisiana financial firms helped draft the legislation, recruited the investors and collected million of dollars in fees for the Great Northern deal.
LePage should hold a news conference today to say that Maine has written its last check to these financiers. The value of the Great Northern deal, along with some others, was inflated through the use of one-day loans in order to draw a bigger commitment from the state. The governor should say that the money that was supposed to be used to refund the tax credits for these on-paper-only investments will instead go to fund infrastructure improvements and economic development in the communities that it was intended to help.
And if these investors don’t like it, they can go to court and tell a judge and the world why they think they deserve this money more than the men and women who lost their jobs and way of life when the plant shut down for good.
Unfortunately, the combative governor has become passive. Even though he lobbied for this program and worked to get the state to lend millions more to Cate Street Capital, the now-bankrupt mill’s owner, he has not shown any fight when it comes to these tax credits. Since complaints about LePage’s support for Cate Street were raised by challenger Eliot Cutler during the 2014 gubernatorial campaign, all LePage has offered is a limp rationalization that the financial maneuvers kept the mill open for two years, allowing employees to take home paychecks for a little while longer.
He also suggests that it would be a bad business practice to renege on an agreement with investors, saying last week, “When you make the deal, you make the deal.”
Those excuses are not good enough. It wasn’t financial shenanigans that produced those paychecks – it was the hard work of mill employees. No one gave them anything. They earned every cent they took home by making paper, which the company sold until the global market collapsed.
And the governor’s claim that deals can’t be broken is laughable. Is that what the chief executive said when he was asked to issue voter-approved Land for Maine’s Future bonds? Is that what he said when he unilaterally ended a nearly 30-year arrangement with Portland regarding state funding for the municipal homeless shelter? Is that what he said when he pulled the plug on Statoil, just as the energy giant was prepared to spend $120 million on an experimental ocean wind power platform?
This governor has shown that he considers no deal to be done until he says it’s done. We have been critical of his high-handed behavior in the past, but it’s just what we need now.
If the governor is as tough as he says he is, he should prove it by pushing back, not against immigrant families and the homeless this time, but against these “investors” who have been treating Maine as their piggy bank.
Send questions/comments to the editors.
