BETR and BETE programs promote investment, job creation and retention and position Maine to compete globally
EDITOR’S NOTE: The following testimony was delivered by Linda Caprara on behalf of the Maine State Chamber of Commerce in opposition to the report on the Business Equipment Tax Reimbursement Program (BETR) and the Business Equipment Tax Exemption (BETE) program by the Office of Program Evaluation and Government Accountability (OPEGA), at a public hearing held on Thursday, February 27, 2020, before the Government Oversight Committee. We have reprinted it here for your review.
Good morning, Sen. Chenette, Rep. Mastraccio, and members of the Government Oversight Committee (GOC): My name is Linda Caprara. I am a resident of Winthrop and represent the Maine State Chamber of Commerce. I am here to offers comments in opposition to the report on the Business Equipment Tax Reimbursement (BETR) and the Business Equipment Tax Exemption (BETE) programs by the Office of Program Evaluation and Government Accountability (OPEGA). I first would like to say that we think that the report does not accurately characterize the importance of the BETR/BETE programs to Maine.
Many behind me will testify to the importance of the BETR and BETE programs. I, however, would like to take this opportunity to talk about the history of both of these programs and how we got to where we are today. I think its important that this committee understands why the Legislature did what it did to enact both these programs, which are perhaps two of the most significant public policy initiatives Maine has ever enacted to promote investment, job creation and retention and position Maine to compete globally.
Prior to the enactment of BETR, the legislature had been talking about addressing the issue of personal property tax, and its effect on investment in this state and on Maine’s inability to compete for years. Most of the states in the northeastern United States that Maine competed with for investment did not tax personal property or had exemptions in place. In addition, there were several studies in the early 1990s, which concluded that personal property tax was a huge impediment to attracting business investment and proposed the elimination of the personal property tax on business equipment. In 1995, then-Governor Angus King made it a priority as governor to eliminate this tax. After lengthy discussions with business, legislative and municipal representatives, the Legislature finally enacted the BETR program in 1995. BETR became an annual appropriation thereafter, and because of that, made it a target every year for groups that wanted it cut to fund other state programs. However, at the time, the legislature knew BETR was a temporary fix and that pursuing an exemption was the final goal.
In years following BETR, again, there were lengthy discussions involving the above parties on the final elimination and what that might look like. While an outright exemption was favored, there was concern over potential lost property tax revenues to the municipalities. Finally, during the Baldacci Administration, BETE was determined to be the best solution. BETR would be left in place for property placed in service after April 1, 1995; BETE would begin for property placed in service after April 1, 2007 – so as BETR would ramp down, BETE would ramp up. The thought behind BETE was that municipalities would be better off under BETE – because without BETE most of the significant investments would have most likely fallen under a TIF anyway. Most TIFs are 50% or above, leaving municipalities with less than 50% property tax revenues. BETE guaranteed the municipalities 50% reimbursement with additional funding for high personal property value towns. All of the above interested parties were involved in the negotiations, and ultimately, agreed this was the best path forward.
Since the enactment of both programs, Maine has realized hundreds of millions of dollars of investment in this state, helped retain thousands of Maine jobs, and grow Maine’s economy through the direct and indirect benefits, resulting from both the BETR and BETE programs.
I hope this helps to understand the history of how these programs were enacted. In conclusion, I just want to say that the enactment of these programs did not happen overnight, and that all of the issues were thoroughly and thoughtfully vetted to arrive at the best solution for all.