Committee advances bill to spur development of employee-owned businesses
Courtesy / ReVision Energy
Employees at ReVision Energy's Portland office celebrate the announcement that the company has converted by 100% ownership by employees through an ESOP trust in this 2017 photo from the Mainebiz archives. A bill sponsored by Sen. Nate Libby, D-Lewiston, to incentivize and assist with the development of cooperatives and employee-owned businesses was unanimously approved by the Legislature’s Taxation Committee on Tuesday.
A bill sponsored by state Sen. Nate Libby, D-Lewiston, to incentivize and assist with the development of cooperatives and employee-owned businesses was unanimously approved by the Legislature’s Taxation Committee on Tuesday.
As amended, LD 1520, “An Act To Create and Sustain Jobs through Development of Cooperatives and Employee-owned Businesses,” excludes from Maine income tax the amount of gain, up to a maximum of $750,000, recognized by a business owner in transferring the business to an employee stock ownership plan, eligible worker-owned cooperative, consumer cooperative or affordable housing cooperative, as well as interest from the loans that finance these transfers.
The bill also requires the Department of Economic and Community Development to contract with an outside organization to establish a program to inform and educate Mainers about employee-owned businesses and how these transitions can happen. The program also would connect them to available resources, including financing.
“Workforce development and retention are among the greatest challenges facing Maine’s economy. By incentivizing and assisting with the conversion of businesses assets to cooperative or employee ownership, we can help preserve existing Maine businesses, even as owners transition into retirement; empower current Maine workers; and attract new working-age people to Maine,” said Libby said in a news release sent to Mainebiz by the Senate Majority Office. “The severity of this crisis is clear to legislators, and that’s reflected in [Tuesday’s] vote.”
Rob Brown of the Cooperative Development Institute spoke in favor of the bill at a recent public hearing.
“Research shows that employee ownership can help stem Maine’s ‘brain drain’ and attract and retain more young workers,” he said.
Citing recent data, Brown said that “young workers in employee-owned companies were in a much better financial situation, with 33% higher wages, 92% higher household wealth, and 53% longer job tenure.”
Among those speaking in favor of LD 1520 at the public hearing were:
- Beckie Swanson Conrad, president and CEO of the Lewiston Auburn Metropolitan Chamber of Commerce.
- Craig Saddlemire, resident and manager of Raise-Op Housing Cooperative in Lewiston.
- Nolan Gauttier, president of Charter Oaks Village Cooperative in Arundel.
- Nancy Smith, executive director of GrowSmart Maine.
- Kevin Malmstrom, general manager of Rock City Employee Cooperative in Rockland.
- Deborah Hawkins, northeast New England loan and outreach officer of Cooperative Fund of New England.
- Michael Newsom, CEO of W.J. Wheeler Insurance Agency in South Paris.
- Norma Sprague, president of Pemaquid Villas Mobile Home Cooperative in Bristol.
- Jonah Fertig-Burd, co-owner of Celebration Tree Farm in Durham.
- Ellen Stern Griswold, policy and research director at Maine Farmland Trust.
- Stephen Kosacz, president of Autoworks in Kittery.
Mark Adams, president and CEO of Sebago Technics Inc., a 100% employee-owned engineering consulting company located in South Portland, added his voice of support in written testimony submitted for the bill’s May 2 public hearing. Adams, who is past president of the New England Chapter of the National ESOP Association
and a founding participant of the Maine ESOP Group, said Sebago Technics became an ESOP in 1998 and has more than 75 employee owners.
He noted that Maine ESOP companies represent some of the state’s “best-known brands and recognizable businesses,” citing companies such as Cianbro, Sargent, Reed & Reed, Landry/French, Daigle Oil, Johnny’s Seeds, ReVision Energy, Clark Insurance, Portland Air Freight, Dennis Paper, Howell Labs, Lanco, Moody’s Collision and Sebago Technics.
“In my view, passage of LD 1520 would not only support the growth of ESOPs and cooperatives in Maine ... it would recognize, at the highest level in our state, that cooperatives and employee ownership is about redistribution of wealth,” he wrote. “It would codify that Maine businesses being owned and operated by Maine people is the best way to secure our future. It would acknowledge that employees should benefit from their work with more than just a paycheck. ln these ways it would harken back to the beginnings of business in Maine where most folks were self-employed, where their destiny and success was in proportion to their contributions.”
LD 1520 faces additional votes in the coming weeks.
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