I'm sure Bruce Gagnon will post this today on his excellent blog Organizing Notes, but in the meantime I'll repost it here from my email.
Report on LD 1781 Taxation Committee Work Session in Augusta
Rep. Jennifer DeChant (D-Bath), along with a coterie of other Democrat legislators and BIW executives, appeared before the Taxation Committee today with her ‘amendments’ to LD 1781 – the bill to give General Dynamics $60 million in corporate welfare over the next 20 years.
Earlier in the day I had received an email from a fellow Bath resident that had originated from Rep. DeChant in response to my friend’s request that she not vote in favor of the controversial bill. In the email DeChant told my friend: “I will recommend changing the amount for half in half the time and require review (of data collected) before renewing it again.”
Rep. DeChant’s amendments called for ‘improvements in BIW reporting’ on how they spend the proposed funds from the state. During the previous $200 million tax credit that BIW/GD got back in 1997 there was no reporting by the company on how they spent the funds or how many workers were hired.
The committee had some questions like the one from Rep. Denise Teplar (D-Topsham) who asked, “What is the state’s interest in providing a 90% tax credit in years when jobs are reduced?”
The best exchanges of the day though were between BIW V-P John Fitzgerald and a couple committee members.
Rep. Ryan Tipping (D-Bangor) asked, “Is this credit going to make a difference? Is there a smaller amount the state can invest? Can we audit BIW’s books?”
Fitzgerald responded to Rep. Tipping, “It would be a challenge to answer that question. What would you ask the auditor to find?”
Sen. Justin Chenette (D-Saco) then asked, “I’m not understanding why the investment of $60 million can’t come from your parent company? In order for me to make decisions I need a commitment from you [BIW] to disclose the profits of the company.”
Fitzgerald responded emphatically: “The answer is no.”
At one point during the meeting Fitzgerald cried out, “For us to be punished because our owner has capital seems unjust!”
DeChant’s amendment to “changing the amount for half in half the time” is actually no more than a legislative smoke and mirrors gambit. In the end the amendment calls for BIW to spend $100 million per year in ‘qualified investments’ and if done, then after the first 10 years the second round of $30 million more in corporate subsidies would automatically kick-in for the next 10 years. So in the end GD would still get their $60 million.
In the amended bill ‘qualified investments’ is defined as virtually any cost that BIW has except for salaries or other compensation paid to employees. So all other expenses on Aegis destroyers that cost $1.5 billion each and Zumwalt destroyers that cost between $4-7 billion each would count toward the required annual BIW investment of $100 million per year. Easy as pie – no tough nut to crack there.
Recognizing that BIW is currently building two Zumwalt and four Aegis destroyers with at least 1-2 being ‘christened’ per year there is virtually no way in the world that BIW/GD would not meet that meager criteria to qualify for state support. Under questioning Fitzgerald admitted that currently GD is bidding on 10 more destroyers and anticipates likely getting half of those contracts from the Navy.
Training of a new generation of BIW workers is still GD’s key talking point to sell the bill even though their Navy contracts include funds for all their costs – including training and reimbursement for their taxes to the state of Maine.
Currently BIW is receiving an $81 million property-tax break from the City of Bath that runs out in 2022. In addition BIW got another $3.7 million from Bath in 2013.
Fitzgerald reluctantly admitted that BIW/GD also receive an unknown about of money via Maine’s Pine Tree Development Zone program. The Press Herald reported late last year that “BIW is a participant in the Pine Tree Zone program and believes it has been an important incentive for businesses to locate in Maine or stay here while continuing to invest in operations that provide jobs and economic activity,” Fitzgerald wrote. The amount that any individual company benefits from the program is usually not disclosed under state laws that protect the confidentiality of tax returns and shield proprietary information from competitors.
In the end the Taxation Committee tabled LD 1781 but it appears that most members of the committee are prepared to support the bill once all the new amendments are fully added and understood by those on the committee.
It is ever more clear to me that GD not only runs Bath but also runs the State of Maine – as any colonizer controls the land and people where they have set up operations.
It will be up to the people of Maine to wrest back control of its own state treasury from this mega-corporation that bought back $12.9 billion of its own stocks between 2009-2016.
We’ll let you know when the next Taxation Committee Work Session will be held. Despite what some might want you to think this show ain’t yet over.
Bruce
The fact that Bath Iron Works (BIW) is playing the victim in a legislative work session where the public isn't allowed to speak but their CEO is would be laughable if we were not already living in Kafka-esque times almost impossible to parody.
Just for reference, last year BIW's parent company General Dynamics paid its CEO $21 million.
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