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Cutler Lambastes LePage Administration Over GNP Tax Deal

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PORTLAND, Maine - Independent gubernatorial candidate Eliot Cutler lashed out today at the LePage administration for encouraging a tax credit scheme two years ago for the Great Northern Paper Company. With the company's recent bankruptcy filing, Cutler says Maine taxpayers are now on the hook for $16 million, and have no jobs in Millinocket to show for it.

 

Eliot Cutler says Gov. Paul LePage and Maine lawmakers were so anxious to make a deal to save jobs at Great Northern Paper Co. two years ago, that they never gave a second thought to a plan to provide Great Northern with $16 million in tax credits through the Finance Authority of Maine, or FAME. Cate Street Capital bought GNP mills in East Millinocket and Millinocket for $1, and then found investors in Louisiana to put up $40 million.  

"The story of Cate Street Capital, its investors, and Maine's governor is a massive scandal, corporate welfare and crony capitalism at its worst," Cutler said.

Cutler said LePage must explain to voters how he could not only approve, but actively encourage, support for the plan - a plan Cutler said should never have been proposed in the first place.

"They'll get checks for nearly $16 million of Maine taxpayers' money over the next five years, despite the fact that the project in which they invested is gone," Cutler said. "It's another case where Wall Street wins and Main Street loses - where the people can't win and the investors can't lose."

The two Louisiana investors that put up the money for Cate Street are scheduled to begin receiving their first tax credit checks in the current fiscal year, as three Maine-based creditors push to move the Great Northern Paper Co. bankruptcy case from Delaware to Maine.

Great Northern, which is managed by Cate Street, a private equity firm based in New Hampshire, filed for Chapter 7 bankruptcy last week. Cutler says had he been governor in 2012, he would not have signed off on a deal with an investor that was clearly not able to deliver on the promise of hundreds of jobs.

"There were red flags all over the place, but no one paid any attention to them. It is impossible to believe that hard questions were ever asked, or that basic due diligence was ever done," Cutler said. "Otherwise, how in the world could an outfit like Cate Street have made it past first base?"

At FAME, general counsel Chris Roney said it is possible that the state might yet recover some of those payments.

"One of tjhe requirements of the program is that the investment has to stay in the qualified business for seven years, so if the investors got their money back inside that seven-year period, there could be a recapture of the tax credits - but only if they didn't reinvest those proceeds in another Maine qualified deal," Roney says.

Cutler said it would be nice if Maine's taxpayers could rely on Roney's recapture option.

"Do I wish we could get away from it? Do I wish there was some alternative? Of course we all should," Cutler said. "But absent some miracle that I'm not expecting or aware of, we're going to have to just keep writing those checks. With all due respect to Mr. Roney, if he knows a way to get away from this, I'd love to hear it."

Alex Willette, a spokesman for the LePage campaign, accused Cutler of trying to politicize the economic misfortunes of the Katahdin region."The governor led the charge and worked with the Legislature in a bipartisan manner to pass legislation to try and get these mills going again," Willette says.

Cutler says the administration should have provided real leadership to find a qualified investor for the mills, which would then be providing jobs in the area today - instead of going bankrupt.