EDITORIALS

The cost of luring business to Maine

Posted March 02, 2012, at 5:20 p.m.
Gov. Paul LePage administers the oath Friday, June 3, 2011, to George Gervais as Commissioner of the Department of Economic and Community Development.
Governor's Office
Gov. Paul LePage administers the oath Friday, June 3, 2011, to George Gervais as Commissioner of the Department of Economic and Community Development.

The Pine Tree Watchdog, as the Maine Center for Public Interest calls itself for the purpose, has turned up pertinent information about how the Pine Tree Development Zones program is working in luring businesses to Maine.

Part one of its investigative series, published in the Bangor Daily News and other Maine newspapers, raised questions but provided no overall answer as to whether the program is worth what it costs. The journalism center says it never editorializes.

It reported in the fifth paragraph that the program has cost “as much as $46 million in lost taxes since 2003, according to Maine Revenue Service estimates.” The Ellsworth American used that figure in its headline, “$46 Million in Tax Breaks.” The headline in the Bangor Daily News read: “Are Pine Tree Zones corporate welfare?” with a sub-headline, “Some experts believe there’s no evidence the taxpayer-funded program is needed to create jobs in Maine.”

The article caught the attention of Commissioner George Gervais of the Department of Economic and Community Development. He questioned the emphasis on the $46 million cost, saying in a brief telephone interview that the figure was only one side of the ledger. On the other side are the jobs produced, sales taxes and other items. He said he had already realized the program “probably could use some tweaking.”

He seemed to question the criticism of the so-called “but for” letters by applicants for Pine Tree Zone tax concessions. The law establishing the program says an applicant must demonstrate that but for the tax break it could not expand or start a new business. Several applicants ignored the requirement, saying they didn’t have the necessary information to base an opinion.

Clearly, some new jobs have been produced. The report said that proponents of the program say that without the tax breaks about 8,000 new jobs would not have been created. But balancing the cost of the program against the dollar value of jobs produced is elusive, and so is the question of what would have happened without the program.

Commissioner Gervais wants to know as much as anybody how the benefits balance against the costs. But he said he is waiting on a pending bill in the legislature that would correct errors in existing law that prevent funding of a biennial evaluation of a half-dozen government programs including the Pine Tree Development Zones.

But simple costs versus benefits is not enough. Companies sometimes take incentive benefits and, when the lures taper off or disappear, gallop off to greener pastures in China or elsewhere. That leaves Maine taxpayers as the losers.

So it is up to the Legislature to produce the money to fund an assessing group to tell us whether the $46 million tax breaks to bring jobs to Maine are really worth it. And broader scrutiny should tell whether the program should continue or end.

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