State Programs
The state offers a number of programs to assist businesses looking to locate or expand in Maine. (The following information is subject to change.)
http://www.econdevmaine.com/programs/Business.aspx
Maine’s Business Resource Guide
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Tax Increment Financing
Eligible Businesses: A municipality may choose to provide “financing” to any business that is making a significant capital investment within its borders. The source of the financing is taxes paid on new, real and personal property.
Program Summary: Tax Increment Financing (TIF) is a local financing tool that permits a municipality to use some or all of the new property taxes that result from an investment project within a designated district to assist in that project’s expenses. The municipality may disburse the tax increment directly to the investing business to help pay project costs, use it to retire bonds it issues as part of the project, or retain it for allowable economic development purposes.
TIF districts may be designated for up to 30 years. Bonds may be issued for up to 20 years. The community designation of a TIF district requires proper public notice, a public hearing, and a majority vote of the municipal legislative body.
Program Example: A business plans to invest $4,000,000 to construct a state-of-the-art manufacturing facility on land presently valued at $200,000. The municipality’s property tax mil rate is $25 per $1,000 of valuation, so the business will have a tax obligation of $105,000 per year once the investment is recorded on the tax rolls. Of this tax obligation, $100,000 is new, or “incremental,” and therefore eligible to be included within a TIF development program. Two examples exist for financing this scenario:
Credit Enhancement Agreement. Once a municipality votes to financially support a business under the TIF program, the business may enter into a binding contract with the community called a “credit enhancement agreement.” If the municipality agrees to “capture” 50% of the increased value in the TIF district for a period of ten years and return the new tax revenues to the business mentioned above to assist in financing the new building, then the business would receive $50,000 in the first year of the agreement. If all things remain constant, the business would receive approximately $500,000 in financing over the term of the TIF district.
Municipal Bond. Additionally, the municipality may float a bond to pay this cost. It could do so by issuing a 10-year general obligation bond in the amount of $150,000. If annual debt service on the bond is $20,000, the municipality could “capture” another 20% of the increased value in the TIF district for a period of ten years and pay down the debt on the TIF bond.
The remaining 30% of the new tax revenues from the increased assessed value could be deposited in the general fund for use on regular municipal expenses.
Contact: Department of Economic and Community Development
59 State House Station
Augusta, Maine 04333-0059
Phone: 207-624-7491
Fax: 207-287-5701
Employment Tax Increment Financing
Eligible Businesses: Any business that hires a minimum of 5 net new employees within a two year period, where those employees are: 1) paid an income that exceeds the average per capita income in the county of employment; 2) provided access to group health insurance, and; 3) provided access to an ERISA qualified retirement program. NOTE: The business must be able to provide written documentation that its expansion project will not go forward without Employment Tax Increment Financing (ETIF). This step must occur before the expansion takes place.
Program Summary: ETIF is available to assist in the financing of business investment projects that create at least 5 net new, high quality jobs in Maine. An ETIF-approved business would receive 30, 50 or 75 percent of the state income tax withholdings paid by qualified employees for up to ten years. (Qualifying jobs created in a labor market area where the unemployment rate is at or below the state average earn a 30 percent reimbursement, while those with a higher than average unemployment rate earns 50 percent. In areas where the unemployment rate exceeds 150 percent of the state average, the reimbursement is 75 percent.) The percentage of reimbursement is established for a five-year period based upon the unemployment rate at the time of initial application, and again at the beginning of the sixth year. The amount of annual payment is based upon the actual number of qualified employees above the company’s base level of employment. The company may not accrue ETIF benefits for any period of time when employment, wages and/or employee benefits fail to meet the minimum qualification criteria. (This credit cannot be taken in tandem with JITC.)
Business Example: A company is considering adding 30 jobs and investing $1 million in Washington County. The new jobs will be equally divided in pay at $10, $12 and $14 per hour. Group health insurance and a retirement program are available to all employees. The company is looking at other states also, and will base its location decision upon the projected return on investment. Company calculations show ETIF as a primary reason for the favorable return. Washington County’s average annual per capita income for Calendar Year 2002 is $20,541, or $9.88 per hour, and the labor market area unemployment rate is assumed to be more than 150% of the state average. In this scenario, all 30 of the 30 new employees would be considered “qualified” by virtue of their wages and benefits, entitling the company to seek ETIF approval. Assuming an average state income tax withholding rate of 4%, employment levels and wages that do not change, and the company remaining qualified, the annual reimbursement would be $29,952 for ten years — a total of $299,520.
Contact: Department of Economic & Community Development
59 State House Station
Augusta, Maine 04333-0059
Phone: 207-624-7491
Fax: 207-287-8461
Governor’s Training Initiative
Eligible Businesses: Private sector Maine employers who: 1) pay wages equal to 85% or more of the occupational average wage for the given labor market area, and 2) contribute 50% or more of the premium cost of employee health insurance (health insurance requirement exception: small companies with fewer than 25 employees, and in business less than three years are exempt).
Preference is given to applications that exhibit:
Formation of a local project partnership
Provision of matching funds
Investment in lifelong learning
Increase in local training capacity
Provision of quality employment
Location in a depressed labor market
Willingness to hire targeted populations
Provision of registered apprenticeship
Program Summary: Partial reimbursement for the cost of non-routine training that contributes to workforce expansion, and/or the retooling of current workers for new technologies, processes or markets. Services eligible for reimbursement include assessment, job task analysis, workplace literacy, high performance skills, technical training, higher education, and on-the-job training.
Business Example: An Aroostook County firm needed to retrain 20 maintenance workers for industrial/electrical skill requirements. The regional Community College developed a customized Master Electrician course specific to the company’s industrial requirements. The Governor’s Training Initiative (GTI) provided the company with partial reimbursement for the cost of upgrading maintenance workers to Licensed Master Electricians.
Contact: Maine Department of Labor
Bureau of Employment Services
55 State House Station
Augusta, ME 04333-0055
Phone: 207-624-6390
Fax: 207-624-6499
Maine Quality Centers
Eligible Businesses: New or expanding firms creating a minimum of eight (8) new full-time jobs with benefits in the state of Maine. Consortia of businesses creating a minimum of eight new, full-time jobs are also eligible.
Program Summary: This program provides state-financed education and training in support of job creation, as well as customized recruitment and guaranteed fast-track training designed to employer specifications. This program is offered at no cost to the company or trainees, and is delivered by the state’s seven community colleges. Training can be for either pre-hire or post-hire trainees.
Business Example: Faced with a scarcity of skilled workers to fill the growing demand, a group of seven metal manufacturers in York County formed a coalition to promote careers in metals manufacturing. By forming a partnership with York County Community College, Biddeford Regional Center of Technology and the Maine Quality Centers, customized training to meet the groups’ common need of projected new positions was made available to the coalition. Applications were reviewed and a math and reading assessment was conducted, leading to a group of selected trainees. After successful completion of the 170-hour program, trainees received interviews with at least one of the seven companies participating in the coalition. When training was completed, 123 new jobs had been filled.
Contact: Maine Quality Centers
Center for Career Development
2 Fort Road
South Portland, ME 04106
Phone: 207-767-5210 ext. 107; 1-800-491-3121
Fax: 207-767-2542
www.mccs.me.edu
Maine Technology Institute
Eligible Businesses: Maine Technology Institute (MTI) will provide research & development money to companies and non-profit research organizations in the State of Maine to support the commercialization of new technology-related products and services that will create and support sustainable, high-quality jobs for Maine people. Awards are made on a competitive basis and support efforts in any of the state’s seven targeted technology areas: Advanced Technologies for Forestry and Agriculture, Aquaculture and Marine Technology, Biotechnology, Composite Materials Technology, Environmental Technology, Information Technology, and Precision Manufacturing Technology.
Program Summary: MTI meets its purpose through direct investments in promising technologies. All MTI programs require a 1:1 cash match, and are awarded based on scientific or technical merit, commercial feasibility, and potential for economic impact to the State. MTI offers three awards programs:
Development Awards are competitive awards of up to $500,000 per project and are awarded twice a year.
Seed Grants, awarded four times per year, are competitive grants of up to $10,000 per project to support very early activities for product development, commercialization, or business planning and development.
Cluster Enhancement Awards are competitive grants for up to $100,000 for collaborative projects that will stimulate and support the formation and growth of technology businesses and their infrastructure. These awards are considered on an on-going basis.
Program Results:Through 2002, 70 Development Award projects have been approved for funding totaling over $11 million and are matched by nearly $16 million in commitments from the recipients; 199 Seed Grants totaling over $1.6 million, matched by over $2.7 million in investments by the grant recipients; and MTI has approved funding for 11 Cluster Enhancement Awards totaling over $1 million, and matched by over $4 million.
Contact: Maine Technology Institute
2E Mechanic Street
Gardiner, ME 04345
Phone: 207-582-4790
Fax: 207-582-4772
www.mainetechnology.org
Manufacturing Sales Tax Exemptions
Eligible Business: Any manufacturing company.
Program Summary: Sales of machinery and equipment used by the purchaser directly and primarily in the production of tangible personal property for later sale or use is eligible for a sales tax exemption. In addition, items consumed or destroyed directly or primarily in production, and repair and replacement parts for qualified production equipment are exempt from sales tax.
Also, any manufacturer is exempt from paying 95% of the sales tax on fuel and/or electricity used in the manufacturing facility.
Business Example: Giordano & Co. purchased a piece of string winding equipment for $50,000. In addition, the company also purchased $2,000,000 of inventory. The company is exempt from paying Maine’s 5% sales tax on the machinery and inventory — a value of $102,500.
During the month of July, Giordano & Co. also purchased $20,000 in electricity. The company is exempt from paying Maine’s 5% sales tax on $19,000 ($20,000 x 95%) of the electricity cost — a $950 value. Instead the company will only need to pay $50 in sales tax (5% x $1,000).
Contact: Sales, Fuel and Special Tax Division
Maine Revenue Services
24 State House Station
Augusta, ME 04333-0024
Phone: 207-287-2336
Fax: 207-287-6628
