The Legislature’s top Democrats have threatened to roll back a $45 million tax credit for Bath Iron Works, saying in a letter that the shipyard has not lived up to its “end of the bargain.”
House Speaker Sara Gideon and Senate President Troy Jackson, in a Dec. 20 letter to the shipyard’s president, Dirk Lesko, said they supported the tax credit “based on the promise of continued good-paying jobs” at the Bath shipyard.
They pointed to the shipyard’s plans to hire out-of-state contractors, a decline in its average wage and the hiring of low-wage workers as “ever-growing evidence that BIW has not lived up to their end of the bargain.”
News of the letter was first reported by the Portland Press Herald.
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The Shipbuilders Tax Credit, tailor-made for Bath Iron Works, was launched in 1997 to promote investment and hiring at the facility. It sheltered up to $3 million a year before reaching a $60 million cap in the fiscal year ending June 30, 2018, and a December 2018 expiration date.
In April 2018, then-Gov. Paul LePage, a Republican, signed into law an extension of the tax credit, which offers the shipyard $45 million in tax credits over 15 years in exchange for it maintaining at least 5,500 jobs and making at least $200 million in infrastructure investments. That was reduced from $60 million in tax credits over 20 years.
Jon Fitzgerald, the shipyard’s vice president and general counsel, wrote in a reply to Gideon and Jackson that the shipyard has “lived up to the bargain it struck with the Maine Legislature almost 2 years ago,” according to the Press Herald.
Fitzgerald said that the shipyard currently employs 6,700 people, up from 5,600 before the tax credit was signed into law, and has a payroll of more than $374 million, the Press Herald reports. He said in the letter that the shipyard has hired 2,000 since the law’s passage and another 1,000 will be hired in the coming year.
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Fitzgerald acknowledged in the letter that the average annual wage for production workers was $49,379, down from $53,000. That drop came amid the voluntary retirement of 700 skilled workers and an influx of low-skilled labor, which Fitzgerald said “simply reflects what the market has to offer,” according to the Press Herald.
But, he added, the average annual wage across the company is $58,178.
The letter from the top Democrats drew sharp rebukes from their Republican colleagues. Jeff Timberlake, the Senate Republican’s assistant leader, called the Democrats’ letter “mindboggling,” while Sen. Dana Dow, a Republican from Waldoboro, told the Press Herald that Bath Iron Works has “more than met their obligations” under the tax credit approved by the Legislature.
“I am disappointed that this major employer of Maine workers was forced to respond to unfounded allegations and threats from Democratic leadership,” he told the Portland newspaper.