AUGUSTA — The nonpartisan Office of Program Evaluation and Government Accountability recently released its comprehensive report on the New Markets Capital Investment Program. The report showed what many of us in the economic development business know first-hand to be true: When government and the private sector work together, Maine wins.
Maine’s New Markets Capital Investment Program is modeled on a federal program first introduced in 2001. The goal of the program is to bring job-creating development into economically depressed areas that would otherwise be unattractive to investors. The program has been used to spur tens of billions of dollars in investment across the country, and has been lauded by politicians from both sides of the aisle.
Last year, the Maine Legislature directed OPEGA to dig into the New Markets to make sure it was a worthwhile investment for state taxpayers. The report was commissioned after the Portland Press Herald/Maine Sunday Telegram gave attention to one New Markets-facilitated investment in the Great Northern Paper mill in East Millinocket. The tax credit had been used as part of an effort to revive the ailing mill and save hundreds of jobs. Tragically, the mill didn’t survive, causing some to speculate that New Markets was not living up to its purpose, and the program became a political football.
Thankfully, OPEGA stepped in to bring facts and clarity about the New Markets Capital Investment Program. OPEGA’s report now provides the Legislature with a foundational understanding of the program’s track record, as well as a framework for making improvements to the program over time.
What OPEGA discovered, in short, is that Maine’s New Markets Capital Investment Program has been a successful economic development tool. While some projects have been more successful than others, OPEGA found that New Markets has provided an overall positive fiscal impact of $15.8 million for Maine’s budget.
It’s clear from the report that this program is benefiting Maine’s economy.
Consider this: For every dollar Maine taxpayers invest in the New Markets Capital Investment Program, we get $1.19 back in new, in-state economic activity. That’s nearly a 20 percent rate of return. As Sen. Tom Saviello, a member of the Government Oversight Committee, recently said, “I’d make that investment every day.”
The report also found that New Markets created or retained 764 permanent jobs directly, and over 1,000 jobs throughout the supply chain of the various projects funded by the program. That’s a positive result by any standard.
And one of the most positive impacts OPEGA reported on was that most of the funding for New Markets projects was from investors who had never made investments in Maine before. Attracting out-of-state investment is the key to getting Maine’s economy moving forward, and successful projects like those supported by New Markets make it that much easier to attract future capital to the state.
OPEGA’s report also identified ways we can improve the New Markets program. Primarily, OPEGA found that the state needs to do a better job evaluating the projects funded through the program. With additional metrics and better data collection procedures, Maine taxpayers can keep tabs on New Markets’ investments without having to rely on government oversight investigations in the future. OPEGA also suggested ways to make the administration of the program more cost-effective, and to tighten some of the safeguards within the program to ensure taxpayer funding is invested as wisely as possible.
It’s been said many times, but the work of OPEGA, led by Executive Director Beth Ashcroft, is invaluable to our state. As they have done over and over again, OPEGA has cut through the political rhetoric and brought much-needed reality to the policy making process. The grandstanding that took place in the past about New Markets has been replaced by the facts, and now the Legislature can make the adjustments it needs to the program without mitigating the positive impact it has had on our state.
As the OPEGA report made clear, the New Markets Capital Investment Program has been a good investment. Maine’s economy is at a crossroads right now, and it’s going to take a concerted effort by both policymakers and the private sector to ensure our state is positioned as well as possible to attract outside investment and create new jobs. New Markets has been a great example of that positive collaboration, and we look forward to seeing this program continue its positive track record for years to come.
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