Pine Tree Watch Dog Goes Half Way in Reporting The Untold Story Of Maine State Inc.

 

This is a very Informative article about what I call Maine State Inc published by Pine Tree Watchdog in February of 2012:

Tax break deals studied … and studied, but questions remain unresolved

Quote:

What does that cost?

How about $602,181,397 from 2003 to 2005.

On an annual basis, that’s about the size of the hole in the state budget that Gov. Paul LePage and the legislature have spent the last few months trying to fill.

And those numbers, which come from a 2006 study by the stateOffice of Program Evaluation & Government Accountability (OPEGA), don’t include the administrative costs. That adds another $22 million, according to OPEGA.

While this article openly states that the programs allows fraud to go undetected and admits that its losers are the taxpayers, its also reports the justifications that are used to perpetuate these programs without presenting an alternative view.

 For instance there is this:

Another skeptic has been Peter Mills, the former Republican legislator from Cornville and currently the executive director of the Maine Turnpike Authority.

Maine, he said, may have to keep programs like PTDZ not because they can be proven to work, but because most other states have them, and Maine has to compete.

“The arbitrary public giveaways created by the patchwork competition among the states seems unhealthy for our economic future,” he said. “At the very least, it breeds cynicism.

However when the legislature was passing the "Expanded and Improved Seed Capital Tax Credit", the Democrats promoted it on the basis that Maine receives the least investment capital in New England, while New Hampshire receives the most- but New Hampshire isn't competing in the same political game. This is how New Hampshire promotes itself to businesses:

Other states in the Northeast offer financial incentives in the form of cash payments for new employment, tax reimbursement programs, tax credits and/or temporary reduction in corporate income taxes. This draws attention away from the true bottom line: These states are simply trying to temporarily defer the pain of their high taxes. At some point your business will have to pay for the incentive programs they offer you.
Consider this fact: The more people and businesses that rely on government subsidies, the larger government grows; and the larger government grows, the more taxes needed to sustain this growth—and it's the business community that usually ends up paying for a higher proportional share of new or higher taxes.
There is also a temptation during these difficult economic times for states to increase taxes as a way to cover the cost of state deficits. New Hampshire has not fallen into this trap. Instead of creating new taxes or increasing taxes or subsidies, New Hampshire has cut spending to balance the budget.

So attracting capital with Taxpayer money give-aways is NOT the only game in the field and NOT even the most successful one!

I contacted Pine Tree Watchdog at the time when the windowof opportunity was still open for the taxpayers to repeal the "Expanded and Improved Seed Capital Tax Credit" and suggested that it would be timely to write about that program. In response I received the usual stone cold silence from this non-profit organization.

Another quote from the Watchdog article says:

"In the end, programs such as PDTZ may be questioned, problems may be identified, but they live on because changing them, experts say, poses political and financial risks."

The quote overlooks that these programs are constantly being changed by expanding them- The Expanded and Improved Seed Capital Tax Credit 2013 is a case in point- and a story Pine Tree Watchdog chose to ignore. Even Beth Bordowitz, the Chief Executive Officer of The Financial Authority of Maine testified before the congressional committee that she believed expanding the cap for the tax credit by eight fold was going too far and suggested that perhaps it should only be doubled. This went unreported by the Maine media, including Pine Tree Watchdog.

Despite the huge increases in expenditures for economic development programs that were shown to have a  questionable effect at a huge expense to the taxpayer in the year 2006. our legislature has determined such reports to be too expensive to conduct, even as they radically escalate the transfer of the people's wealth into the hands of their selectively chosen new owners of the means of production  in the legislature's  policy of "targeted sector economics"!

"Section D of the Seed Capital Tax Credit changes the aggregate limit for a private venture capital fund from $500,000 to $4,000,000 and strikes out the individual limit within the aggregate for entities treated as a flow-through entity for tax purposes."

"OPEGA said the Department of Economic and Community Development (DECD), which administers PTDZ, should make an annual report to the legislature that assesses the program against criteria in the state law called, “Evaluation of Economic Development Programs.”
The Center asked DECD for those reports. A report was only done once, in 2008, because money was never appropriated to do it again, according to the current DECD commissioner, George Gervais, who took over less than a year ago.
That report -- the Maine Comprehensive Economic Development Evaluation (MCEDE) -- cost the state $150,000".  quoted from Pine Tree Watchdog article

So our legislature , for ever working for the "public benefit" can multiply the rate by which they transfer the public's money to private capitalists by eight fold, but can't afford to spend a small fraction of that cost for an accountability report on the effectiveness of such programs for the "public benefit".

 It's a good thing the Maine people have such conscientious public servants- always looking to be frugal with the public's money, with an exception for when they are transferring that money to "the targeted sector" !  As The Pine Tree Watchdog article reports, the legislature goes to the beneficiaries of the transfers of wealth to get an idea about how effective their economic development programs are - just as the title the seed capital tax credit bill includes the words "Expanded and Improved" because it is expanded and improved for the private corporations and capitalists. In the lexicon of our state legislature "public" is  code for the "targeted sector".

So while I applaud the Pine Tree Watchdog for partially telling what is largely an untold story, I am disappointed that Pine Tree Watchdog did not present an alternative view when publishing the rhetoric used for an ongoing entrenchment of these programs and in so doing gives support to the status quo.

Is it possible that Pine Tree Watchdog is prohibited in reporting on current legislation in a timely manner because of it's non-profit status? I don't think so. All it would have to do was to report of what is actually in the bill in a "non-partisan" way, which none of the media did. Obediently the Maine Media reported the Seed Capital Tax Credit as something Maine couldn't live without- with testimonies from business owners who had benefited from the program. None of the media told the public what the "improvements" were- which can only said to be "improvements" from the perspective of private corporations and capitalists- as it is fundamentally an increase in the rate of transfer of the public's wealth to the "targeted sector" at the general taxpayers expense and a further loosening of any restrictions imposed upon capitalists.

So why does changing those programs to decrease the cost to the taxpayer pose  a "political and financial risks"  while changing those programs to increase the cost to the tax payer does NOT pose a "political and financial risk"?

Pine Tree Watchdog did not ask this question- either in this article or when the "Expanded and Improved Seed Capital Tax Credit" was being passed.

I think the key word here is "political".