Should the state ensure health of employers but not employees?

By David Farmer,
Posted Jan. 18, 2012, at 11:43 a.m.

For all of the talk about getting government out of the way as a means to create jobs, it’s direct government intervention — and the use of taxpayer dollars — that are getting results, even in Maine with tea party Gov. Paul LePage.

The idea that government is the problem quickly loses out when it comes to reality.

Last week, the Finance Authority of Maine announced a $5.3 million loan guarantee for Twin Rivers Paper Co. in Madawaska.

The guarantee reduces the risk that other lenders are exposed to when they loan Twin Rivers money. To protect more than 600 jobs at the mill, FAME, which is a quasi-state agency, takes on that risk. Twin Rivers, which used to be Fraser Paper, emerged from bankruptcy in April 2010. Without the FAME guarantee, the new private-sector financing to further stabilize the company probably isn’t possible.

FAME is a government success story. Run by professional managers with a board appointed by the governor, the organization has helped many Maine companies to survive and thrive.

In November, FAME made a $1 million direct loan to Great Northern Paper Company, which has mills in Millinocket and East Millinocket. Again, the financial support is helping to retain 215 jobs that might otherwise have been lost.

And, as Gov. LePage pointed out last week, FAME was a significant player in the efforts to get Kestrel Aircraft, an aviation company with a facility in Brunswick at the former Naval Air Station, to expand there instead of Wisconsin. The deal could have meant as many as 600 jobs.

While those efforts haven’t succeeded and it looks like Kestrel is headed west, the financial package outlined by the governor is significant.

According to the governor’s office, the deal included a $300,000 Community Development Block Grant, lease write-down worth $250,000, a $105,000 local property tax exemption, $750,000 in building improvements, a $10 million tax revenue bond, deferred rent payments and perhaps a FAME loan guarantee of $4.75 million.

The Midcoast Regional Redevelopment Authority was also prepared to provide a $3 million guarantee or letter of credit.

It’s was a rich deal. But Maine got outbid.

Such financial incentives are only the beginning. Other direct government involvement also helps businesses to succeed. The state had to accept the Dolby landfill to get an agreement to reopen Great Northern Paper in East Millinocket.

Other direct government intervention during the Baldacci administration, of which I was a part, has played important roles in keeping jobs in Lincoln and Old Town.

Such economic support is often controversial. Some Democrats are critical of spending money to support corporations, many with significant resources. Some Republicans are critical — at least when it’s Democrats doing the work — about the state monkeying with the marketplace. They seem strangely silent as Gov. LePage has continued direct government intervention on behalf of employers.

Beyond the great work done by FAME, Maine also has a long list of programs that provide financial assistance to companies. For example, the Jobs and Investment Tax Credit costs the state between $1 million and $2 million a year and benefits about 10 companies. The Shipbuilding Facility Credit, which is capped at $3.5 million a year, benefits Bath Iron Works, one of the state’s most important employers. And the Employment Tax Increment Financing Program, which benefits about 100 companies, costs between $6 million and $7 million a year.

That’s just the beginning. There are many, many of these programs.

While the effectiveness of some of these programs is in question, the government has an obligation to protect jobs and help to create new ones. And it can be very effective with direct involvement.

The problem is that many lawmakers, including Gov. LePage and particularly his Republican allies in the Legislature, are willing to turn the other cheek when it comes to economic Darwinism and big business, but they work tirelessly to undermine and destroy many of the programs that provide financial support to working families, the poor and the near-poor.

If we can throw millions of dollars at a company that’s shopping around for a better deal in Wisconsin, can’t we also find the resources to make sure older Mainers can afford their medicine and more than 65,000 people continue to have access to health insurance?

Government can be a successful partner, helping the private sector to grow, expand and prosper. But its obligation goes beyond paper companies, shipbuilders and big businesses. Government also has an obligation to help the elderly, the disabled, children and working families.

David Farmer is a political and media consultant. He was formerly deputy chief of staff and communications director for Gov. John E. Baldacci and a longtime journalist. His clients include Maine Equal Justice Partners and EngageMaine. You can reach him at dfarmer14@hotmail.com. Follow him on Twitter @dfarmer14.

http://bangordailynews.com/2012/01/18/opinion/contributors/should-the-state-ensure-health-of-employers-but-not-employees/ printed on September 23, 2014