A new report from a Washington, D.C., nonprofit ranks Maine in the middle of the pack when it comes to how well states link economic development subsidy programs to job creation goals.
Good Jobs First this week released the report “ Money for Something: Job Creation and Job Quality Standards in State Economic Development Subsidy Programs” as a sort of report card of the states. Out of the 50 states and the District of Columbia, Maine and its economic subsidy programs ranked 21st.
The report found Nevada, North Carolina and Vermont did best in applying job standards to their major subsidy programs. The District of Columbia, Alaska and Wyoming rated worst.
“With unemployment still so high, taxpayers have a right to expect that economic development investments create significant numbers of quality jobs,” said Executive Director Greg LeRoy in a Thursday release. “The days of ‘no strings attached’ are largely gone, but the fine print in many states is still full of gaps and loopholes.”
The group ranked the programs on a few major areas. One was the presence of a performance standard relating to job creation, job retention, training, investment and other factors that contribute to economic growth. Another was wage requirements, and the third was employee benefit requirements with emphasis on those that provide health care coverage and contribute to the cost of premiums.
Good Jobs First found that 222 of 238 programs measured have some quantifiable performance requirement, but only 135 relate to job creation, job retention or training of a certain number of workers. Those programs without a job-related requirement cost taxpayers more than $7 billion per year, the group said.
The group looked at five programs in Maine that give tax breaks or other forms of reimbursements to businesses: the Business Equipment Tax Reimbursement Program, the Employment Tax Increment Financing program, the Pine Tree Development Zones and the Research Expense Tax Credits and Super R&D Tax Credit.
In Maine, according to the report, the Business Equipment Tax Reimbursement Program has no “jobs” requirement. The Employment TIF program requires creation of five new full-time jobs within two years. The Pine Tree Zone program requires creation of at least one full-time job in two years.
Garrett Martin, executive director of the Maine Center for Economic Policy, a group that has worked with Good Jobs First in the past, said the new report calls attention to what makes a good economic development incentive package.
“If we provide tax breaks to businesses, we should make sure they result in good jobs and good wages,” said Martin. “That’s particularly important given our current climate.”
Many states and, increasingly, cities throw around hundreds of millions of dollars in incentives to attract or retain businesses. That hasn’t been the case, noted Martin.
“In general, we have done a good job of not getting too caught up in the race to the bottom,” he said.
Martin added, however, that when the state puts taxpayer dollars into an incentive program — either by direct contributions from the general fund or by foregoing revenues — Maine should make sure it gets the greatest benefit from those dollars. And there should be effective oversight of those programs, too, he said.
“We’ve been very quick to highlight where certain programs and services have come up short in meeting goals in budget discussions,” said Martin. “But we’ve not done that consistently against all programs.”
Martin suggested that Maine would get a better return on its investment through broad-based efforts to improve the state’s infrastructure, expand broadband access and develop its work force and initiatives.