The 124th Maine Legislature reviewed nearly 1,500 bills this session. The one that may have the most significant economic impact passed with barely a whisper. With no speeches, no headlines and no rallies, a bill to expand substantial tax benefits and job-creation incentives to companies all over the state received unanimous approval. This is one of the landmark achievements of the session.
I’m referring to LD 1473, “An Act to Reaffirm Maine’s Commitment to Business by Amending the Pine Tree Development Zone Laws.”
Pine Tree Zones were established in 2003 to attract more businesses to Washington County. The initial legislation was designed to draw companies to areas of high unemployment and low wages, primarily in rural Maine. The legislation is targeted to companies with fewer than 500 employees, and benefits are extended only if a company creates new jobs or makes new investments.
The benefits are considerable. They include a 100 percent income and corporate tax credit for the first five years and 50 percent for the next five years. Other major benefits include an 80 percent refund of employee withholding taxes, a sales tax exemption and access to reduced utility rates.
By the end of 2008, there were 213 Pine Tree Zone companies in Maine creating 6,700 new jobs, with anticipated new payrolls of $202 million and nearly $700 million in new investment, according to the Department of Economic and Community Development. Moreover, studies show that PTZ-company jobs typically offer higher wages and benefits to their employees.
The Business Research and Economic Development, or BRED, Committee reviewed many new business bills in this legislative session. However, none offered serious solutions to move Maine out of the current recession and set the stage for a strong recovery. In fact, other new legislation seemed destined to hinder economic progress. Besides huge cuts in state spending, we now have a new tax overhaul that shifts sales taxes to thousands of small companies and, indeed, actually increases the tax burden for 85,000 Maine families. Increased business regulation only made things worse.
The committee charged with economic development clearly had to take action. Thus, the Pine Tree Zones discussion began over a bill for the town of Baldwin, in Cumberland County. Under existing law the town was excluded, because Pine Tree Zone legislation was designed to encourage growth in rural Maine. Cumberland and York counties were not eligible.
The town of Baldwin presented a compelling case to become a Pine Tree Zone community. A wood pellet manufacturer was interested in moving to Baldwin. The company could put an empty mill back into production and create between 25 and 40 new jobs. This seemed like a golden opportunity for a small town that had lost its manufacturing base and certainly worthy of tax incentives to make it happen.
As BRED members examined this issue, we decided the best solution was to expand Pine Tree Zone legislation to include all Maine municipalities. The new statewide expansion creates two tiers of PTZ companies — one urban and one rural. The rural area benefits extend for 10 years and the new urban areas are limited to five years. The legislation brings Cumberland and York county communities into the fold.
Maine is now more competitive than ever to attract new businesses and increase jobs with statewide Pine Tree Zone benefits. Maine has lost an estimated 15,000 jobs and is expected to lose 17,000 more before the recession ends. Statewide unemployment is now 8.3 percent, and in my town of Belfast it has reached 9.3 percent.
Statewide Pine Tree Zones will benefit all Maine businesses and workers by reversing these trends. New companies will invest in Maine. New jobs will boost our economy and keep our young people in Maine. Better-paid workers will be able to afford more for their families. The economic benefits of stronger southern Maine economies will spill over to the rest of the state. As just one example, an out-of-state company has proposed building a new seafood processing facility on the Portland waterfront that will buy Maine lobsters from Eastport to Kittery.
LD 1473 moved almost silently through the Legislature. While other bills attracted the headlines and the fanfare, the statewide Pine Tree Zone bill moved quietly forward, swept along by its economic logic and common sense. For me, the crack of the House speaker’s gavel passing the law was one of the loudest and best sounds we have heard in Augusta.
Rep. Jayne Crosby Giles, R-Belfast, is the ranking House member on the Business, Research and Economic Development Committee. She also serves on the Committee on Maine’s Energy Future.