Has the Maine Legislature abandoned Maine manufacturing?

In 1996, Maine’s governor and the Legislature passed a bill that created the Business Equipment Tax Reimbursement program, to encourage private investment in Maine’s manufacturing sector. The program now reimburses businesses for taxes paid to municipalities on investments in equipment made between April 1995 and April 2007. BETR merely levels the playing field so that Maine businesses can compete with other states and countries that do not impose property taxes on business equipment. Before BETR, Maine’s property tax actually penalized businesses for investing in Maine.

In 2006, the governor and the legislature passed the Business Equipment Tax Exemption program, which largely replaced BETR and helps businesses avoid paying assessed taxes up front, instead of waiting and filing for a reimbursement. The state also increased the length of the BETR program to encourage investment in Maine’s manufacturing sector. Again, the idea was to create a level playing with other states for economic development, especially to encourage investment by companies already operating in Maine. It is far easier to keep what you already have then to convince a new business to move to Maine.

Over the past few sessions, the Maine Legislature, in passing a budget, has cut BETR; it cut 10 percent this year and 20 percent next year. A business needs stable tax policy in order to budget and make investment decisions. Maine’s tax policy toward taxes on business equipment seems to change almost every year. How can a company plan ahead when the rules keep changing?

On top of the cuts to the BETR program enacted last year, the Legislature is now considering cutting the program further by eliminating older equipment from the program. This amounts to a substantial tax increase aimed at companies that have already made very substantial investments and employ thousands of hardworking Mainers. These companies have done just what Maine has wanted them to do: They have invested hundreds of millions of dollars in equipment that supports many thousands of jobs — and now they will be punished for making those investments.

At what point will government stop attacking the very foundation of the Maine economy? Should the real question be, when will the Maine Legislature invest in Maine’s existing manufacturing sector?

Bill Cohen is manager of mill communications and regional governmental affairs at Verso Paper Corp.