Department-store pioneer John Wanamaker is credited with one of the business world’s favorite sayings:
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
The same could be said about Pine Tree Development Zones, an economic development program that has bipartisan support going back two administrations. The program, popular with business groups, was extended for three years by the Legislature and allowed to become law by Gov. LePage. It’s a rare moment of bipartisan cooperation that would be something to celebrate if the program’s results haven’t been so murky. Unlike Wanamaker, we don’t know how much is wasted.
About 200 companies receive some level of benefits through the program, at the cost of $6.2 million a year for a payroll tax rebate for new employees and about $11.4 million for other tax credits and refunds. All of those companies have employees, and some have grown while receiving services, but no one can say how many of the jobs resulting from the subsidies would not otherwise have been created, or how much the state has paid out per job.
But lawmakers got behind extending the program for one very bad reason: It’s all we’ve got.
When it comes to offering incentives to attract or retain jobs in rural areas, Pine Tree Zones are the most impressive trinket the state can dangle in front of a business that is considering moving to Maine or leaving for greener pastures. Without it, an employer like the Twin Rivers paper mill in Madawaska might have shut down a decade ago, when it was bought by Fraser Paper of Canada. Other employers who have spoken out in favor of the program include Bath Iron Works and Sea Bags, a tote bag and accessories manufacturer that has grown to more than 100 employees while receiving help from the state.
But without any real data about how many jobs are actually attributable to the program, these anecdotes don’t mean much.
In the latest version of Pine Tree Zones legislation, there will be more reporting obligations for the companies that receive help from the state. But the program’s design still won’t guarantee that state dollars will be converted into private-sector jobs.
Maine can’t afford to waste any of the Pine Tree Zone budget, and it doesn’t make sense to cling to an ineffective program just because it’s all we’ve got. That’s especially true when there are better ways to approach economic development. Independent gubernatorial candidate Alan Caron put out a policy paper Monday that proposed targeting state aid to startups and existing small businesses that are looking to expand rather than getting into a bidding war for big employers with other states. Defeated Democratic primary candidate Adam Cote proposed creating a state fund that would help Maine companies recruit and train workers, guaranteeing that the use of public funds would go directly into job creation.
Maine doesn’t need to cling to outmoded programs that may or may not work. If the state is going to get into the business of job creation, it should try to ensure that none of the public’s money is wasted.
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