Job committee supports three year extension of Maine's job creating Pine Tree Development Zone Program

Maine Pine Tree Zones helped coastal businesses as well as inland communities. Photo of Portland, Maine's harbor by Ramona du Houx 

By Ramona du Houx

Lawmakers on the Labor, Commerce, Research and Economic Development (LCRED) Committee gave initial support to LD 1654, An Act To Protect Economic Competitiveness in Maine by Extending the End Date for Pine Tree Development Zone Benefits. The committee increased accountability by requiring annual reports and amended the program to expire in 2021. The amendment also accepted other recommendations made by the OPEGA report to assess its true capacity to create jobs.

 Close to 400 companies have been certified under the Pine Tree Zone program, bringing good jobs and benefits to the state. The PTZ model helped grow Maine's economy until the great recession. Without PTZ's the state would be suffering economically worse than it is. Governor LePage has not managed to raise Maine out of the recession, even though every other state in New England is doing better since the great recession. LePage has held back important research and development bonds, which helped grow the economy as well as helped companies that set up here as PTZ businesses. Much of their R&D was conducted at the University of Maine, using voter approved bonds.

Shucks Lobster of Richmond show off their operations to Gov. John Baldacci. The CEO, Former State Rep. John Hathaway said the PTDZ status helped them start up their unique lobsters processing business. photo by Ramona du Houx

“Whenever the Legislature directs taxpayer dollars towards incentives for businesses to create jobs, it’s incredibly important we demand transparency, accountability and benchmarks to make sure the tax breaks are doing what they’re supposed to do,” said Rep. Ryan Fecteau (D-Biddeford), chair of the LCRED Committee. “Pine Tree Development Zones are important for many rural Maine communities and I’m proud of committee members for working together to strengthen accountability before voting to renew the program.” 

LD 1654 as originally drafted extended the Pine Tree Development Zone Program for five years with no additional accountability measures. The committee changed it to three years.

The Pine Tree Development Zone Program (PTZ), established by the Maine Legislature in 2003 under the Baldacci administration, allows eligible businesses the chance to significantly reduce or eliminate state taxes for up to ten years while creating quality jobs in certain professions or by moving existing jobs in qualifying industries to Maine. Quality jobs are defined as those that meet certain income thresholds, offer healthcare coverage and access to retirement plans among other provisions.

Pine Tree Development Zones (PTDZ) have attracted companies to Maine that would never have considered comming here, thereby advertising Maine workers to the global economy. Prior to locating here many of these PTDZ-certified businesses conducted state-by-state analysis — some did global studies — looking for the best tax benefits, workforce, and quality of life. PTDZs bring businesses here — Maine’s workforce proves to them how great Maine’s workers are.

“I’m very proud about this program and what its impact has been. It levels the playing field in Maine. It’s not about taxes, it’s not about regulations— it’s about being able to compete in the global marketplace,” said Governor John Baldacci during an interview with Maine Insights in 2010.

The PTDZ tax incentive initiative was introduced by Baldacci in 2003 to stimulate growth in economically challenged areas. The program now covers the entire state, so local businesses can expand — like National Semiconductor did in South Portland, which saved the company from outsourcing.

Gov. John E. Baldacci with workers at a lumber company celebrating the company's Pine Tree Development status in 2007. Photo by Ramona du Houx

PTDZ rural businesses make the difference between workers having a paycheck or not —

In 2008 Kennebec Lumber in Somerset County became PTDZ certified, which made their growth plans possible. Kennebec Lumber is now Solon’s largest employer. The town’s other major manufacturer, a toothpick factory, closed because of outsourcing. In the rural areas, the effects of a major employer leaving town are amplified, because many other businesses rely on those workers as customers.

Part of Baldacci’s plan to help rural areas with PTDZs was to diversify the employer base, so if one company closes, the town wouldn’t be devastated. It’s better to invest in people having jobs than have to pay for the consequences of job losses.

PTDZs help Maine’s manufacturers —

“There are two reasons why the PTDZ program is so important for the continued economic growth of the state,” said Jack Cashman, who was Gov. Baldacci’s advisor, commissioner of the Department of Economic and Community Development, and PUC commissioner in 2008. “It has an aggressive tax-incentive package, which has attracted a lot businesses that have good paying jobs to the state. For Maine businesses, it has helped them expand. The best example of that is with our boat builders. Almost all Maine’s major boat builders have been certified as PTDZ companies.”

Hodgdon Yachts celebrate their PTDZ status with Gov. Baldacci cutting the ribbion with CEO Hodgdon. Photo by Ramona du Houx

Many of these boat builders have diversified into other growth areas like composites, because they were able to expand. Hodgdon Yachts opened a new business in Hamden, after expanding with another branch to Richmond.

The family-run boat builder has been building quality ships for over a hundred years in Maine, and the owner, Hodgdon, publicly stated that PTDZ certification helped him diversify and expand his company.

Businesses return to Maine because of PTDZs —

Bolduc Technology Group began in Auburn, Maine, twenty years ago to help people with disabilities. But they relocated to Louisiana, because the “business climate wasn’t friendly.” In January of 2010 the company returned to take advantage of the PTDZ program and for Maine’s skilled workforce.

PTDZs brand Maine for having great workers—

In 2010 Johnson Outdoors closed its manufacturing facility in Washington State and consolidated its plastic boat manufacturing in Old Town because of the workforce and PTDZ's. In 2008 Barclays, a UK-based banking institution, after doing a nationwide search, opened a call center in rural Wilton, following a host of other call centers to the state, for the same reasons.

PTDZs turned job loses into job gains —

Thaxter Trafton, former DECD Commissioner and Lance Broucher, former Baldacci aid, listen to Gov. John Baldacci as he announced how the state would help workers that were displaced from the closure of the Brunswick Navy Base. One measure to help businesses and the local economy was to designate the Navy Base region as a PTD zone. This helped the area transition and created the successful Brunswick Landing where the base had been. Photo by Ramona du Houx

Call centers can set up anywhere in the world. Finding a workforce with great communication skills to handle those calls has become a priority for many companies. PTDZs made Maine a major player in this market.

In 2007 when Bank of America Corp. shut down four Maine call centers as part of its $34.2 billion acquisition of credit card giant MBNA Corp., communities were devastated. Headline news predicted heavy, unrecoverable job losses. The situation was turned around within a year because of PTDZs, as new companies in Portland, Farmington, Fort Kent, and Presque Isle took over the vacated call centers.

A year later, when the last MBNA Maine call center left, Belfast Athenahealth took its place. Athenahealth initially wanted to expand to another location near Boston. It considered other sites in Vermont, Massachusetts, upstate New York, and Rhode Island. According to Chief Operating Officer James MacDonald, Maine’s PTDZ economic incentive packages were better than what other states offered. “The state really has put out the welcome mat for companies like us, and we’re responding,” said MacDonald.

According to Cashman, turning this situation of job losses into one of job growth represented approximately 3,000 jobs. “That’s a job equivalent of three mills, at least,” said Cashman in an interview in 2008 with Maine Insights.

Not only were all the former MBNA call centers filled with new companies, one of those businesses, NotifyMD, expanded and opened a new call center in Winthrop in 2009.

NotifyMD initially chose Maine after an extensive nationwide search. “We struck lightning in a bottle here,” said NotifyMD, Inc. CEO Dr. Garry Ferguson.

“Pine Tree Zone tax incentives got them here,” said Mat Jacobson of Maine & Company, the nonprofit firm specializing in bringing business to Maine, that invited NotifyMD to visit the state. PTDZs help

Maine’s agriculture —

Backyard Farms greenhouses in Madison came to Maine for the PTDZ benefits and workforce. Photo by Ramona du Houx

When Backyard Farms came to Maine, Paul Sellew, the company’s cofounder, stated that he wanted to help Maine become the “breadbasket of New England” by starting a greenhouse business in Madison. “Frankly the PTDZ benefits made Maine the most attractive place to start this business,” said Sellew, when they broke ground on the first greenhouse.

Growing and selling tomatoes regionally gives customers a local, fresh product and has proven to be successful. In 2008 Backyard Farms’ second state-of-the-art greenhouse was completed. Now the company has been sold to a Canadian business and plans to expand.

“We’re definitely putting the neon sign out there that says, ‘Maine is open for business,’” said Baldacci in an interview with Maine Insights in December of 2010 when Gov. Baldacci was asked why it was important to make the entire state a PTD Zone.

“As of September (2010), 309 companies have located to Maine or expanded their businesses here because of PTDZ incentives. They represent a total investment of $873 million, with an annual payroll of $341 million. That’s 8,206 jobs. Over 200 of these companies are in manufacturing,” concluded the former governor.

In all 16 counties, there are PTDZ-designated companies, businesses engaged in all of Maine’s identified economic growth sectors.

Were it not for PTDZs, Maine’s current economic position would be far worse. As the state is still working its way out of the Great Recession, a program that attracts companies to Maine, giving thousands a chance to work, should not be held in contempt.

With the Legislature reviewing the effectiveness of PTDZs, lawmakers should ask how many businesses in their district have been helped with this program? and how else is Maine going to let the world know the workers here are second to none?

Eligible industries include biotechnology, aquaculture and marine technology, composite materials technology, environmental technology, advanced technologies for forestry and agriculture, manufacturing and precision manufacturing, information technology and financial services. Approximately 200 businesses statewide currently qualify.

LD 1654 faces further votes in the full House and Senate.