AUGUSTA — A state law that’s created hundreds of reduced-tax havens for business and industry across Maine is facing scrutiny in the Legislature, but a bipartisan group of lawmakers has offered a bill to keep Pine Tree Development Zones in place for at least the next five years.
The Labor, Commerce, Research and Economic Development Committee on Tuesday will review a recent report by the Legislature’s Office of Program Evaluation and Government Accountability that calls into question the effectiveness of the tax-break program, for which 200 businesses statewide qualify.
The law provides qualifying businesses with tax benefits, including income tax credits and sales tax exemptions on the purchase of business equipment, in exchange for the promise of new jobs. It is set to expire at the end of 2018.
In August, OPEGA told lawmakers it could not determine exactly how many jobs, if any, the 13-year-old tax-break program had created. The breaks cost the state about $12 million a year in lost tax revenue.
“But we can tell you, unequivocally, that the design does not guarantee that a vast number of jobs will be created,” Jennifer Henderson, a senior analyst with OPEGA,told lawmakers at the time.
On Thursday, the legislative committee will take testimony on a bill that would extend the life of the program to 2023. Pine Tree Zones were first established under former Democratic Gov. John Baldacci as a way to spur economic development.
Senate Minority Leader Troy Jackson, D-Allagash, is the sponsor of the bill, which was requested by Department of Economic and Community Development Commissioner George Gervais, an appointee of Republican Gov. Paul LePage. Other lawmakers on the bill include Republicans and Democrats in both the House and the Senate.
Jackson said Monday he’s seen the tax-credit program work the way it was intended to in his district in Aroostook County. He said the program was used effectively by a paper mill in Madawaska that is now being operated by Twin Rivers but was previously owned by Fraser Paper Co.
“I want to see more accountability, but some businesses have used it the way it was intended, so I’m not wanting to throw it away,” Jackson said.
He said Pine Tree Zones were one of the few incentives the state could offer businesses to draw them to Maine or to keep them here. He said the tax breaks helped the Twin Rivers mill restructure in a way that it was able to avoid closure and it now appears to be on a more solid financial footing. The loss of the mill, which Jackson described as an “anchor” for the community, would be devastating to the region, he said.
“This is a major, major employer and one of the top jobs for our region that you can get,” Jackson said, noting that keeping the mill open also saves the jobs of loggers. Some have called the program just another form of “corporate welfare,” but Jackson said he doesn’t see it that way.
“People look at me as a union and labor guy and I want to be one, but at the same time the businesses that are doing right by our community I want to help,” Jackson said.
Although there are no provisions in the bill to stiffen accountability for job retention or creation, Jackson said he expected there would be amendments to that effect.
Pine Tree Zones were originally set up to benefit economically depressed parts of the state that were facing high unemployment levels, but the law has been changed over time to allow them in nearly every county in Maine.
Jackson said he wasn’t interested in trying to again limit where Pine Tree Zones could be located, but he did hope to bring more accountability to the program.
Among its other recommendations in August, OPEGA suggested that more data be collected on Pine Tree Zones in order to determine if those promising to retain and grow jobs in exchange for the tax breaks were doing so.
Scott Thistle can be contacted at 713-6720 or at:
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