“Capital goes where it is welcome and stays where it is appreciated,” according to a former banking chairman.
Perhaps that is the best explanation for why aviation companies have been taking off in Maine over the past two years, after the state Legislature demonstrated that they are, indeed, welcome and appreciated here. And as a result of the Legislature’s recent action, things are looking even brighter.
Late last month, the Legislature approved LD 279, “An Act to Sustain Maine’s Aviation Industry by Extending the Exemption from Sales and Use Tax for Aircraft and Parts.” In short, it extended a law the Legislature passed in 2011 that exempted aircraft and aircraft parts from Maine’s sales tax. That exemption, under the original bill, was set to expire in 2015. Now it will stay in place until 2033.
I was proud to be the lead sponsor of this bill. As legislators, we often have to wait years until we see the benefits of what we do. That has not been the case with LD 279.
Up until 2011, Maine was the only New England state to impose such a tax on the aviation industry. Lifting it has had an immediate, dramatic impact on the state’s economy.
C & L Aerospace in Bangor, for example, has quadrupled its workforce in the past couple of years because of new business coming into the state. They also have plans to build what will be the only aircraft paint facility in the Northeast. Testifying before the Legislature’s Taxation Committee in March, a company spokesman said, “If you tour our facility, you will see aircraft being worked on by Maine people that have been flown to Maine not only from North America but from Europe and Africa. They come to our facility in Bangor because of the quality of work and the competitiveness of the price. The work is there. The airport facilities are there. The quality workforce is there. All we need to do is remain cost competitive to bring the work to Maine.”
Northeast Air operates a maintenance and repair facility at Portland International Jetport. The company’s vice president, Mark Goodwin, told the Committee that after the tax exemption went into effect, they took in $732,000 in new business they would not have otherwise had. They’ve spent a half million dollars in renovations to accommodate the growth and are hiring new technicians at high-paying salaries. “Private aircraft owners no longer fear making trips to our great state. That exemption must continue. They bring business to Maine, they create jobs, and they support our growing industry in Maine,” Goodwin said.
The Owner and President of Maine Aviation Corporation, which also operates out of Portland Jetport, testified that his company recently signed contracts with five Massachusetts companies as a direct result of the tax exemption. They also recently outbid other states that do not charge sales tax for aviation services for work on a Singapore-based aircraft leasing company that will bring them nearly $600,000 in work.
Steve Levesque, the executive director of the Midcoast Regional Redevelopment Authority in Brunswick, testified that keeping the exemption in place will be crucial to attracting aviation-based companies to the former Brunswick Naval Air Station.
The state of Maine reduced the aviation industry’s cost of doing business here, and that industry has responded by expanding, creating jobs and, as a result, generating more tax revenue for the state.
One can’t help but wonder what would happen to other businesses once it is clear that they, too, are welcome and appreciated in Maine.
Sen. Andre Cushing, R-Hampden, serves on the Maine Legislature’s Labor, Commerce, Research and Economic Development Committee.