New Markets tax credit program needs higher cap
Lawmakers are considering a measure that would raise the cap for the New Markets Capital Investment Program from $250 million to $500 million in order for the program to continue operating. Otherwise, with roughly 74% of $195 million of investment in six counties already being claimed, the cap could be reached by the end of the year or early next year based on the current pace of use.
Established by the state Legislature in 2011, the New Markets program is used to attract private investment to businesses operating in economically distressed areas in Maine. Eligible investors can claim a credit against their state taxes, up to 39% of a project's total cost. The credit can be claimed for up to $250 million in aggregate statewide investment.
The state's Labor, Commerce, Research and Development Committee will hold a work session on the bill, LD 297, “An Act to Increase Allowed Investments under the Maine New Markets Capital Investment Program,” in the coming weeks. Sponsored by state Sen. Nate Libby, D-Lewiston, the bill received strong support from business owners and leaders, financial lenders and municipal leaders during a March 3 public hearing.
Among the supporters was Jim Oliver, controller for St. Croix Tissue and Woodland Pulp in Baileyville, where two new tissue machines are being installed as a result of the New Markets program. “This investment would not have happened without Maine's New Markets program,” he said in a release issued by the Senate Democratic Office. “When the owners were investigating where to site this new facility, one of the key selling points was ... our ability to demonstrate that the state of Maine's economic development incentives were competitive to other states being considered.”
The project to install new tissue machines received up to $15.6 million in New Markets tax credits as part of an overall financing package that included a $7.5 million taxable bond approved by the Finance Authority of Maine last March through its Major Business Expansion Program. At that time, the St. Croix Tissue expansion was described as a $120 million project that would preserve 320 jobs currently at the pulp facility, bring 80 direct jobs to the St. Croix Valley and Washington County and create an additional 80 jobs in the trucking industry and more than 200 indirect support jobs.
An impact statement prepared by CEI Capital Management LLC and based on a December 2014 report compiled by economist Charles Colgan concludes that for every $1 million of New Markets credits claimed, an estimated $1.56 million will be returned to the state's General Fund. Additional data shows that for every $1 million in credits claimed, an additional $3.43 million in private capital investment was brought to Maine.
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