Pine Tree Growth

Posted June 24, 2009, at 5:48 p.m.

After the Baldacci administration rolled out its Pine Tree Zone business incentive program in 2003, an interesting question emerged — why not make the entire state a Pine Tree Zone? This week, the governor signed into law a plan that does just that for the rest of 2009. If ever there were a year that needed such an incentive, 2009 is it.

The original Pine Tree Zone targeted economically challenged areas. The law identified Aroostook County, the Androscoggin Valley, the Penobscot Valley and the Washington County-Downeast region as four eligible zones. Four more — the Kennebec Valley, Midcoast, Penquis and southern Maine — were added by application. Local committees identified parcels within the districts that made sense, such as dormant mill areas. Up to 5,000 acres could be allocated within each zone.

The tax breaks were substantial. For eligible new and expanded businesses, they included a 100 percent income tax credit for five years, followed by a 50 percent credit for another five years. Sales tax was waived or reimbursed for equipment and building materials. And after five or more new “quality jobs” were created, the businesses were eligible for 80 percent reimbursement on state withholding tax. A quality job is defined as paying at or above the county average wage and including access to group health insurance and a retirement plan.

Businesses in Pine Tree zones also are eligible for reduced electric rates through the cooperation of utility companies.

The law targeted nine business sectors: manufacturing, financial services, bio-technology, advanced forestry and agricultural technology, aquaculture and marine technology, composite materials, environmental technology, information technology and precision manufacturing.

Brian Hodges, Maine’s director of tax incentive programs, says an analysis of the program shows it created 2,418 jobs for 66 businesses. With reimbursements, the state has invested $1,029 per job created, he said. Unlike other programs, the Pine Tree Zone is performance based, Mr. Hodges said, meaning no benefits are given to businesses until they create new, quality jobs. “It’s not corporate welfare,” he said. In fact, recipients must sign public documents attesting that they would not have relocated or expanded without the program.

The expansion of the Pine Tree program statewide is designed to nudge businesses to come to Mane or expand in Maine.

“Here’s your chance,” is the overture the one-year extension offers, Mr. Hodges said. “If you’re going to come in, we’re going to give you these incentives.” The incentives will be in place for 10 years for any business taking advantage of the 2009 expansion.

Next year, the program reverts to the original geographic areas plus military redevelopment zones and municipalities in Cumberland or York counties with unemployment rates 15 percent or more higher than the county rate, and limits benefits to five years.

The one-time window for the entire state is designed as Maine’s own economic stimulus plan. For the next six months, statewide business booster groups and others should pull out all the stops promoting this program in the New England region and beyond.

http://bangordailynews.com/2009/06/24/opinion/pine-tree-growth/ printed on November 27, 2014