THE BLOG
12/04/2012 05:07 pm ET Updated Feb 03, 2013

A Good Incentive to End Corporate Welfare: Maine's Kids

alamy

When more than one fifth of Maine's kids are living in poverty, why are its taxpayers handing out nearly one-fifth of their money to companies such as Verso Paper, Bath Iron Works, Katahdin Paper, S.D. Warren and Nestle?

Maine's projected $100 million shortfall in the state's Medicaid program, $35 million revenue shortfall in the budget that ends June 30, and a projected $880 million gap in the next two-year budget is going to require every stone be unturned to balance the books.

What appears to be a "crisis" might be an opportunity to start anew. It's time to take a fresh approach to budgeting instead of the usual demand that every school board pony up its music program, and every town lay off its fire fighters.

One obvious place to begin are business subsidies and "incentives" not tied to job creation or elevating the quality of life for Maine families. Maine taxpayers donate 17 cents of every dollar in the state budget to corporations. That's $379 per person, according to a recent investigation by Louise Story of The New York Times.

"BETR" is Maine's business equipment tax reimbursement program that "refunds" property taxes paid by some businesses on equipment purchases, and costs Maine taxpayers $55 to $60 million per year. Interestingly, companies don't have to create or retain even one job to qualify.

Maine can do BETR.

Take for example the case of Katahdin Paper Company, LLC. Between 2008 and 2011, Maine paid $9.8 million back in property tax abatements, corporate income tax credits, rebates and reductions according to the Times story. Piling on, Brookfield Asset Management, the parent company of Katahdin Paper, left state officials with a predicament in 2011: either assume ownership of the nearby polluted Dolby landfill, thereby enabling the mills to be sold, or the corporation would permanently dismantle the mills in order to pay for the costs of closing and cleaning up the landfill.

The State of Maine assumed ownership of a polluted landfill on top of writing checks to a private multinational corporation for millions of dollars to "save" about 220 jobs in East Millinocket. Are these jobs important? Absolutely. Is this the best we can do for future economic prosperity in the region? Absolutely not.

There may be good reason to provide economic incentives to companies that want to invest in Maine people, add value to communities and create jobs. But cutting deals with corporations without built-in protections, while cutting budgets to early childhood education programs, public safety, and schools that will train the future workforce is something we no longer can afford.