AUGUSTA, Maine — A shipbuilding credit designed to benefit Bath Iron Works has contributed to a third of the state and local subsidies the shipyard has received in a 20 year period, according to a national tax subsidy tracker.
Good Jobs First shows General Dynamics received at least $203.4 million from Maine from 1997 to 2017. The company has received more subsidies than any other company in Maine since at least 1995, beating out runner-up Texas Instruments by $76.6 million. Maine also subsidizes General Dynamics more than any other state; Connecticut comes next with $42.5 million.
That total does not include money from the $45 million shipbuilding tax credit program approved in 2018. It has gained attention over the last week since news of a letter House Speaker Sara Gideon, D-Freeport, and Senate President Troy Jackson, D-Allagash, sent to BIW leadership threatening to pull BIW from the program, was reported by the Portland Press Herald.
A 2019 state report shows $2.8 million from the program was expected to be awarded in fiscal year 2021. The new shipbuilding tax program approved by the Legislature gave the company $45 million over 15 years, as long as it maintains at least 5,500 jobs and made $100 million in infrastructure investments.
That extended a previous credit that offered $60 million over 20 years to the shipyard, which argued for the new credit to compete against a better-subsidized competitor, Huntington Ingalls in Mississippi.
Other subsidies to BIW come from the state’s Business Equipment Tax Reimbursement and employment tax increment financing programs. Good Jobs First lists BIW as a participant in the state’s Pine Tree Development Zone program, but lists the value of the program as “undisclosed.” The company is also in a tax increment financing district that captured a third of the $10.8 million in annual property tax revenue the company generated, according to a Bath financial audit in 2018.
Gideon and Jackson contended in a December letter to BIW President Dirk Lesko that the shipyard hadn’t “lived up” to employment requirements of the program, saying the company’s average wage has fallen and employees were being undermined by subcontractors.
Shipyard vice president Jon Fitzgerald disagreed, saying in a response to Gideon and Jackson the company has made the $100 million in equipment and facility investments needed to start earning the tax credit. In a Monday statement, he said those investments were among the factors that helped BIW land five additional contracts for destroyers last fall.
The issue quickly became political. The largest union at BIW, the International Association of Machinists and Aerospace Workers Local S6, has been critical of the tax credit program from the get-go, and came out in support of the letter last week. Republicans have characterized the letter as an attack on the company and Maine’s economy.
The company currently employs 6,784 people and has an annual payroll of $374 million, according to Fitzgerald’s letter. It was the state’s sixth-biggest private employer in 2019, according to state financial documents.