Governor Mills Unveils Legislation to Modernize & Strengthen Maine?s Business Incentive Program

Overhaul of twenty-year old Pine Tree Development Zone program, crafted with the input of Maine business leaders, aims to tackle Maine?s workforce shortage & attract high-value industries

Governor Janet Mills today announced legislation to modernize and strengthen the state?s business incentive program. The bill,?An Act to Modernize Maine?s Business Incentive Programs, would overhaul Maine?s 20-year-old Pine Tree Development Zone (PTDZ) program ? which is set to sunset at the end of 2023 ? and replace it with a new program,?the Dirigo Business Incentive, that better reflects the current needs of Maine?s economy.

The Pine Tree Development Zone Program was created in 2003 during a time of high unemployment, with the primary focus being to create jobs to lower unemployment. Today, however, there are two available jobs for every person seeking a job in Maine. One of the greatest difficulties facing employers, and Maine?s economy more broadly, is no longer job creation ? but, rather, the inability to fill those jobs with?appropriately skilled people and to create a pathway towards higher-wage jobs in higher-value industries. Additionally, Maine?s economy needs continued additional private sector capital investment. These significant investments in physical infrastructure, like buildings or equipment, help businesses expand and create and sustain good-paying jobs.

The new incentive program proposes to tackle these challenges through a two-pronged approach that: 1) encourages businesses to train more people to succeed in the workforce by investing in qualified worker training programs; and 2)?attracts and expands businesses?in promising, high-value sectors?through tax?credits for capital investments.

?Everywhere I go, business leaders tell me they need more workers. By incentivizing companies to make direct investments in worker training, and by targeting incentives to attract and expand promising, high value sectors, we can tackle our workforce challenges and build a stronger economy with better paying jobs for Maine people,??said Governor Janet Mills.??This legislation meets the challenges facing Maine?s economy today and will attract exciting, direct investments in Maine and our people.?

?It?s time that Maine?s financial incentives for businesses looking to invest in our state better reflect our current economic reality,??said Heather Johnson, Commissioner of the Department of Economic and Community Development. ?This proposal, which reflects the input of businesses across the state, will spur investments that meet Maine?s current and future workforce needs, and help companies invest in and upgrade infrastructure that support growth, economic diversity and?keep?Maine people employed in good-paying jobs.?

Under the proposed legislation, businesses that pay to train three or more workers in an approved employee training program ? such as an internship or community college training ? could receive a $2,000 tax credit per worker trained. Furthermore, businesses across most of Maine could receive up to a 15 percent credit for a capital investment, or a 7.5 percent credit for York, Cumberland, and Sagadahoc?counties.? This will make York and Cumberland counties entirely eligible for investment that they are generally not eligible for under the current PDTZ program. These credits are specifically targeted towards high-value sectors and industries ? includingmanufacturing, agriculture, fishing, logging/forestry, freight, software, and certainprofessional services like scientific research ? to attract and expand high growth?sectors for Maine.

Modernizing Maine?s economic development benefits to tie them directly to capital investment and workforce training, rather than new job creation, will allow Maine businesses to invest with confidence, keep Maine competitive with other states, improve the state?s workforce, and strengthen the economy.

The legislation is?sponsored by Senate President Troy Jackson and cosponsored by House Majority Leader Maureen Terry.

?The Dirigo Tax Credit continues investments in Maine?s business community, promotes quality, good-paying jobs and fuels growth in emerging and heritage industries. It?s an innovative new tax credit that reflects the current status and potential of Maine?s economy while preserving benefits for Pine Tree Development Zone beneficiaries until 2035,??said Senate President Troy Jackson. ?I?m encouraged by what this program will do for Maine.?

?The business incentive landscape has changed since the Pine Tree Development Program and the ETIF program were first established over 20 years ago, so we introduced this bill to respond to feedback from businesses and communities across the state who felt these programs should be improved,? saidHouse Majority Leader Maureen Terry. ?The Dirigo Business Incentive Program is our way of saying, ?we heard you.? Companies need simplicity and stability, and that?s what this program will deliver. The state can and should be a partner to businesses looking to establish themselves outside our bigger cities, bringing skilled, well-paid jobs to rural parts of Maine.?

?The Pine Tree Development Zone program has been successful over time in attracting investment to our state. The next iteration of this strategy, Dirigo Business Incentives, will help to position Maine?s economy for the needs of 2023 and beyond,?said Representative Jack Ducharme, R-Madison.

?This is the kind of innovative, futuristic thinking that keeps Maine companies competitive in today?s global marketplace. We know Maine employers are investing in training their workers, and this initiative rewards those businesses which will make their company ? and our state and people ? strong and resilient in changing times,?said David Daigler, President of the Maine Community College System. ?At Maine?s community colleges, we are proud to partner with more than one thousand employers across Maine to develop tailored skills training so that workers can get the skills they need to move ahead and stay on top of their industry needs.???

?From its inception, Maine's land grant university has been focused on the research, innovation, and workforce development industries need to evolve, succeed, and thrive. Today, as an R1 research university, UMaine students collaborate with faculty mentors and external partners to not only problem-solve for industry, but to ensure that those students are well-prepared to take on leadership roles in these respective sectors,??said Joan Ferrini-Mundy, President of the University of Maine and Vice Chancellor for Research & Innovation for the University of Maine System.? ?We are committed to working with our business partners to provide education and training that helps them be competitive, and this legislation will help companies make investments in the state's workforce. Modernizing business incentives and encouraging worker training are key to fostering good jobs and connecting people to them.???

?The Maine State Chamber of Commerce sees the modernization of the Pine Tree Zone incentive program as key to future growth,??said Julia Munsey, President and CEO of the Maine State Chamber of Commerce. ?The Governor?s Dirigo Incentive Program will focus on capital investment and workforce, two key issues for Maine businesses.?

?The modernization of the Pine Tree Development Zone program represents a pivotal mechanism for economic development, imbuing the state with the capacity to retain, expand, and attract businesses, ensuring Maine's competitiveness in the regional, national, and global arenas,??said Garvan Donegan, Director of Planning, Innovation, & Economic Development at Central Maine Growth Council. ?Its benefits extend beyond business growth, overlaying locally to support human capital and workforces, drive innovation, and stimulate new construction to equipment purchases. It is truly the most important tool in our economic development toolbox, enabling Maine to thrive in an ever-evolving economy.?

?These incentives would meaningfully support the innovation economy here in Maine,??said Trevor Kenkel, Founder and CEO of Springworks Farm. ?Training and infrastructure development will foster entrepreneurship and help growing businesses reach their next milestone.????

?FocusMaine supports the State of Maine's efforts to modernize its business incentive program as it is in strong alignment with FocusMaine's mission to accelerate the growth of Maine's food and biotech industries and create quality jobs to build a thriving, future-ready economy,??said Dana O?Brien, President of FocusMaine. ?The Dirigo Incentive program helps realize this goal by attracting and supporting businesses in key sectors of the economy and connecting talent to sustainable career opportunities.?

?The administration?s new plan is exciting.? While the original Pine Tree Zone was very effective and appropriate given the time it was written, it was time for a program that recognizes the economic realities of the current day,??said Peter Delgreco, President & CEO of Maine & Co.??Efforts to stimulate capital investment and workforce training aligns with the Governor?s 10-year economic development strategy and is the right way to build and grow an economy.??

The PTDZ program was initially set to expire at the end of 2021 but was extended by the Legislature and the Governor through the end of 2023. As part of the extension, the Legislature asked the Department of Economic and Community Development (DECD) to evaluate how the program could be updated to better serve Maine?s investment needs.

To that end, over the last two years, DECD has convened listening sessions and conversations with a wide variety of stakeholders, including current program beneficiaries, business leaders, economic development experts, and lawmakers. The proposal aligns with Maine?s 10-Year Economic Development Strategy, unveiled by Governor Mills in 2019, which called for adding 75,000 new workers to the Maine economy by the end of the decade and for increasing capital investment as part of a comprehensive effort to increase the value of Maine?s products sold.

If passed, the new program?would take effect in 2025. To ensure a smooth transition period, the legislation would provide a final, one-year extension of the current PTDZ program. The Dirigo Business Incentive would also replace the Employment Tax Increment Financing and the Maine Capital Investment Credit, which would terminate with the PTDZ Program on December 31, 2024, streamlining the two incentives into one.

Under current law, businesses that receive certification to receive PDTZ benefits before the legislation sunsets may keep them through the duration of their 10-year eligibility period. The proposed legislation would allow companies to keep those benefits in lieu of participation in the new program.

Since Governor Mills took office in 2019, Maine?s Gross Domestic Product, a key measure of economic growth, has grown by 10.1 percent ? the 9th best rate of growth in the nation and the best in New England. Maine has experienced more economic growth over the last four years than it did in the preceding fifteen.?

A copy of the bill is expected to be released in the coming days.