With several changes, the House has approved a tax break for Bath Iron Works that will provide the shipbuilder with $45 million worth of tax relief over 15 years. But there’s a catch — in return, the company will be expected to make investments in the facility and keep the workforce at minimum levels.
The Bath shipyard’s current tax break, worth $60 million, is due to expire next year, two decades after it was first approved. But this time around, the Legislature’s Taxation Committee wanted BIW to give something in return.
Lawmakers have asked for a $200 million investment in order to qualify for the package. They’ve also reduced its scope from $60 million to $45 million.
“In this bill the Taxation Committee worked to get tighter controls on job numbers, tagging the amount the company can get directly to the amount of jobs they keep in the state, with a system of rewards and punishment,” says Democratic state Rep. Ryan Tipping of Orono, who co-chairs the Taxation Committee.
Tipping says the panel’s work can serve as a model for all tax breaks designed to attract companies to Maine or to retain businesses already here. Members of the House appear to agree — they approved the package as amended by a wide margin, 117-31.
In voting for the package, Republican state Rep. Bruce Bickford of Auburn argued that Maine is competing against Mississippi, which is providing significant subsidies to the Ingalls shipyard in that state.
“In 2016 they received $45 million, 2015 they received $20 million, 2008 they received $56 million,” he says.
Several other lawmakers argued that a long-term tax break is necessary because of the way the Navy awards contracts for ships and the fact that they take years to be built. They also pointed to BIW’s role as an economic engine for the state, noting its payroll of about $350 million a year.
But there was also opposition. Democratic state Rep. Janice Cooper of Yarmouth says neither BIW nor its owner, General Dynamics, has proven a need for state financial aid.
“They have not made a case, other than fear, that BIW will somehow be crippled if we don’t give them this paltry sum, by their standards, that they will be crippled and possibly closed,” she says.
Other opponents also questioned why the shipyard’s tax break should take precedence over other projects. Independent state Rep. Denise Harlow of Portland says the state has many requests for funding for worthy programs that are rejected because of a lack of resources.
“We also hear that we cannot afford to do certain things an awful lot and here we are sitting with a bill before us that gives a large break to a very successful corporation,” she says.
The measure now goes to the Senate where supporters say they expect strong support.