2018-03-22 / Editorial

Corporate welfare is a drain on taxpayers

Beyond the Headlines
by Sen. Justin Chenette

As a small business owner and entrepreneur, I understand some of the challenges people face when being your own boss in Maine. As a member of the Old Orchard Beach and Biddeford/Saco Chambers of Commerce, I hear from business leaders about what works and what doesn’t. As president of Saco’s downtown development organization, I work to promote our amazing downtown area businesses. Throughout my time in the Legislature I have consistently supported efforts to cut red tape, limit bureaucracy and strengthen support programs for our small business community. All that being said, I have seen firsthand multi-national corporations abusing our good faith effort to stimulate growth and economic opportunity.

Corporate tax breaks, give-a-ways, handouts, welfare – however you want to define it – have become a real problem in state government. When corporations say jump, we say how high. If you follow the donations from these corporate lobbyists to legislators I guess it starts to make sense. Public policy decision making centers around lobbyists presenting bills that are drafted directly by the corporate interests themselves who would benefit directly from it. Legislation is written so that only that particular corporation can benefit, no other company would be able to take advantage or compete for the break.

The most recent example of this is the one involving Bath Iron Works, a subsidiary of General Dynamics. As a member of the Taxation Committee, this issue came straight to me.

I asked repeatedly, at least five times publicly, for basic financial information about the company and they refused. I’m not sure how you are supposed to discern the financial need or make any decisions without baseline facts. I really think they thought they could just walk in and get $60 million, no questions asked. There was a level of expectation from their lobbyist, a smug approach to his tone and rhetoric. Pressure was put on legislators on my committee to support the bill. Fear tactics were employed to try and prevent anyone from questioning the bill or the intent of the company.

When your parent company is making nearly $3 billion in profits, in one year, you are not the one who needs a break. You can spend some of those billions to invest in your own company to make it more competitive. It’s offensive to even suggest you need $60 million from Maine people when you can clearly afford it. That $60 million could be better spent elsewhere like investing in public education, expanding health care, fixing our structurally deficient bridges or any of the laundry list of priorities we can never seem to find the resources to pay for.

There is a big difference between incentivizing new fulltime employment, new jobs for Maine people and abusing the legislative process to benefit your bottom line. There is an entire book that is provided to members of the Taxation Committee that details literally hundreds of millions of dollars in corporate handouts. It’s described as “tax expenditures.” They are high risk, with very little reward. They are often ignored in the budget writing process because it’s money that simply isn’t coming into the state coffers, so why count it? But like the title suggests, it is an expenditure. We are spending taxpayers’ hard earned money that has little to no accountability. These tax breaks are on the books for decades unless it’s specifically spelled out in the law that it would expire. Many just stay on the books and no one dares question them. It’s much harder to take it away then to add them.

But the lack of true accountability is the piece that really gets me. Up until this point, most of our previous tax breaks have had no “claw back” provisions. Meaning no ability to hold the corporation’s feet to the fire and get taxpayers money back if that corporation doesn’t meet their end of the bargain. For instance, if they promise as part of the deal to create 1,000 new jobs, and they don’t, what recourse do we have? None unless we craft the law with strict perimeters for oversight and recovery of funding. There should be legislative oversight, checking in with the corporation every few years to ensure things are running smoothly, economic activity is being boosted, and that taxpayers are being protected. Luckily, my committee has taken a leadership to ensure any future tax breaks have strong accountability measures. Particularly, claw back provisions and reporting requirements on corporations.

Let me be clear, I am not opposed to investment or incentivizing new job creation or helping attract new business to our area, but I am not going to rubber stamp initiatives without crossing the T’s and dotting the I’s. I would be remiss in my position as a legislator if I didn’t ask tough questions, obtain baseline information to demonstrate financial need and impact, and make decisions that weigh all factors not simply just take the word of corporate lobbyists at face value.

Justin Chenette is serving his first term as the youngest senator in the Maine Senate representing Saco, Old Orchard Beach, Hollis, Limington and Buxton. He previously served two terms in the Maine House of Representatives. Outside the Legislature, he is the owner of Chenette Media LLC, a marketing & public relations firm, works as the marketing coordinator of Saco Sport & Fitness, and is the president of Saco Main Street. Sign up for legislative updates at www.justinchenette.com or follow updates at www.Facebook.com/JustinChenette.

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