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

Governor Janet Mills 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 â” which is set to sunset at the end of 2023 â” 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 â” 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.

Under the proposed legislation, businesses that pay to train three or more workers in an approved employee training program â” such as an internship or community college training â” 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 ” including manufacturing, agriculture, fishing, logging/forestry, freight, software, and certain professional services like scientific research â” 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 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 â” 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.