A new report shows Maine lost more than $31.5 million at the state level in fiscal 2018 due to government tax incentives.
The report, which was issued by Good Jobs First – a Washington policy center that works to promote corporate and government accountability in economic development – highlights three key areas in which the state of Maine provided tax breaks and how much they cost.
The disclosures have happened due to the Governmental Accounting Standards Board’s (GASB) Statement No. 77. It shows Maine lost $15.4 million to the New Market Capital Investment Tax Credit; $13.3 million to the Employment Tax Increment Financing (TIF); and $2.8 million to the Pine Tree Development Zone Tax Credit.
“The GASB 77 disclosure requirements are a good step forward for transparency,” Mario Moretto, communications director at the Maine Center for Economic Policy, said in an email to The Center Square. “These disclosures give us a clearer picture of how much revenue is being lost to tax breaks for businesses, and that's helpful for assessing those programs and for policymaking.”
Moretto added there is little hard evidence to show how the incentives are supporting business development.
“Many tax breaks are built as a tradeoff in which businesses pay lower taxes and are asked in return to meet some criteria, such as job creation or property value increases in the area where they are located,” Moretto said. “But these tax break programs almost never have solid reporting requirements to ensure those criteria are actually being met. GASB 77 didn't change that. It simply required government entities to report revenue losses.”
The programs’ effect on future economic progress or job creation is an open question.
“What we do know is that the revenue lost to these tax breaks must be made up somewhere,” Moretto added. “At the local level, that means property tax increases for homeowners and renters; less funding for investments that help communities thrive, such as road maintenance, schools, and services; or both. We’ve seen both those happen in communities across the state in recent years.”