AUGUSTA, Maine — Maine has dozens of assistance programs for businesses and provides more than $180 million a year in tax breaks. Now leaders of the business community are worried that with state revenues below estimates, those programs may be targeted for cuts.
“They should be worried,” said Sen. Bill Diamond, D-Windham, co-chairman of the Legislature’s Appropriations Committee. “We have to look at everything; there are no sacred cows anymore around here.”
The budget panel has briefly discussed the scores of assistance programs and tax breaks at two meetings this summer. Business leaders including Dana Connors, president of the Maine State Chamber of Commerce, were listening and are worried that what they consider to be important economic development programs will be cut to help meet the state budget shortfall.
“It is not surprising that everything is on the table,” he said. “It would be surprising if everything wasn’t on the table.”
Connors said the business community wants to make sure the programs that are retained by the state look at the “bottom line.” He said that means making sure programs are helping to create jobs or retain jobs and allow the state to compete in the global economy.
“At the end of the day, we have to look to programs that help keep and create jobs,” he said.
Chris Hall, vice president of the Greater Portland Chamber of Commerce, said lawmakers are sending a clear message that everything must be considered to keep the budget within revenues, and that most in the business community agree. He said the Legislature is facing two competing goals.
“One is to be fair, and politically to be fair, you cut everything,” he said. “But the other issue is positioning ourselves to come out of the recession. To do that, you have to focus on job creation, and that can be opposite of being fair. That’s why these legislators have such a difficult task before them.”
Hall said there are programs that can be combined, merged or eliminated, and that should be done, the same way companies are changing the way they do business to compete during the recession.
“What works is also what costs money, like the BETR [Business Equipment Tax Reimbursement] program,” he said. “Cutting there saves the state money but hurts the ability of business to recover from this recession.”
Rep. Sawin Millett, R-Waterford, the lead GOP member on the Appropriations Committee, said the political reality facing the committee is the need to craft a package that can pass the full Legislature with lots of competing priorities.
“We need to look at everything,” he said, “but we need also to realize that we have to sell it once we get the package together next January.”
There is no consensus in the business community on what works — with small businesses having a different view from the larger companies. David Clough, state director of the National Federation of Independent Businesses, said his members say the only time they get help from government is when they “stay off our backs and out of our pockets.” He said most business assistance programs, including tax breaks, are aimed at larger companies.
“The programs are not generally designed for small business,” he said. “Sometimes they are politically designed to help a specific industry and sometimes a dying industry.”
Clough said the state does not do a good job of helping small businesses, even though the data show it is small businesses that are creating most of the jobs.
The state has scores of programs identified as economic development programs — from low-interest loans to a telephone help line at the Department of Economic and Community Development. In addition, many communities use grants from the state to augment local funds to hire development staff for local efforts.
But the largest — and most difficult to measure for effectiveness — are the tax breaks both by the state and communities. At the state level, tax expenditures for economic development range from more than $65 million a year for the BETR program to $300,000 a year for the sales tax exemption for machinery and equipment used for research.
“They are huge,” Sen. Deborah Simpson, D-Auburn, co-chairman of the Legislature’s Government Oversight Committee, said of the tax breaks. “They are, without a doubt, the largest expense we are making as a state to invest in helping businesses [by saying] we won’t tax you in this way that otherwise you would have to pay a tax.”
She said the Legislature’s Office of Program Evaluation and Government Accountability, which her committee oversees, is struggling with how to accurately assess whether a tax break is meeting the goal of creating or maintaining jobs.
“It’s very difficult [to] get the information,” she said. “A company does not have to answer our questions and many don’t.”
Diamond acknowledges his committee faces difficulties in reviewing economic development programs, but said it will be done. He expects the panel will ask the Business, Research and Economic Development Committee to review programs and make some recommendations.