AUGUSTA, Maine — The Senate on Thursday voted to save a program that provides tax credits to people who invest in Maine startup companies.
The Maine Seed Capital Tax Credit program, which is said to have attracted roughly $70 million in investments in Maine companies, reached its lifetime cap of $30 million in tax credits in January.
The Legislature this session approved a bill, LD 734, that would extend and expand the program, but it didn’t make it into the state budget. It includes what’s known as a fiscal note, essentially what the tax credits would cost the state over the course of its two-year budget, and it was placed on the special appropriations table, where bills often die for lack of funding.
The Maine Seed Capital Tax Credit program allows people who invest no more than $500,000 in a Maine business with less than $3 million in gross sales to receive tax credits equal to 60 percent of the investment. It also provides tax credits to venture capital firms.
The credits, spread over four years, help defray the risk of investing in local companies, which is important, proponents say, because Maine trails its neighbors in New England when tracking venture capital per capita.
The program, created in 1989, is estimated to have created more than 1,800 jobs in Maine since 2003 and helped retain another 5,000, according to testimony from Elizabeth L. Bordowitz, CEO of the Finance Authority of Maine, submitted in support of LD 734.
“We know this program helps Maine businesses,” Sen. Linda Valentino of Saco, the bill’s sponsor, said in a statement released Thursday. “Expanding the program will help small businesses grow, and hire more Maine workers.”
Valentino told the Bangor Daily News in mid-June that the bill’s fiscal note was $1.8 million at the time. Because there was only slightly more than $1 million available to fund the dozens of bills on the special appropriations table, the fiscal note had to be reduced.
The bill’s current fiscal note is only $145,000, according to Ericka Dodge, who handles communications in the Senate Democrats office. To reduce the fiscal note, the bill provides no credit in 2013, then raises the cap over the next few years: to $675,000 in 2014, $4 million in 2015 and $5 million in 2016.
After 2016, the program will maintain an annual cap of $5 million, which will attract an estimated $5.3 million in investment every year that wouldn’t otherwise have been made without the enticing tax credits, Dodge said.
“This is a proven, highly effective program that continues to generate new revenue and sustain job growth in Maine,” Sen. Anne Haskell of Portland, chair of the Joint Standing Committee on Taxation, said in a statement released Thursday. “We need to keep these investment dollars in Maine.”
The House was considering the amendment on Thursday afternoon. If approved by the House, it will be sent to Gov. Paul LePage for his signature.
The governor has voiced support for the measure in the past. As his press secretary, Adrienne Bennett, told the BDN recently, “It’s a tool to attract capital and the governor is supportive of that approach.”