Commentary

Posik: Cost of Doing Business Is Still Too High In Maine

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If I had a dollar for every time a liberal professor of mine passed around hard copied handouts and quipped something along the lines of: “just keeping the paper industry alive in Maine!” I probably could have paid my four years of in-state tuition at the University of Maine four times over by now.The problem with that jest so commonly used by educators is that the paper industry in Maine is in decline, has been for decades, and no amount of hard copy handouts for students at the state’s flagship university could reverse that trend.

There’s no doubt that in this digital age, businesses, schools, government agencies and other entities all over the world are turning toward technology and paperless consumption, reducing the global demand for paper. But in just the last year in Maine, approximately 825 mill workers have lost their jobs, which along with the decreasing demand for paper, is the product of the high costs of doing business in our state.

In December of last year, Verso Corp. closed its Bucksport mill in a deal with an American Iron and Metal subsidiary to purchase the mill and its power generation assets for $60 million, putting 500 Mainers out of work. The company then announced on August 20 of this year that it was shutting down the No. 1 pulp dryer and No. 2 paper machine at its only remaining mill in Maine located in Jay, cutting 300 more jobs in the process. On Monday, Lincoln Paper and Tissue LLC in Lincoln announced it was shutting down one of its three tissue-making machines, laying off 20-25 more working Mainers.

In all cases, along with the declining demand of paper, the companies cited local property taxes and the cost of doing business in Maine as reasons for the layoffs and closures at their mills.

The annual Measures of Growth survey, which takes several different economic indicators into consideration, released a report in April finding that the cost of doing business in Maine is at its lowest since the 1990’s, but still above the national average. Using the most recent data available, the study determined that the overall cost of doing business in our state has “steadily declined in recent years and was 6.4% above the national average.”

While Maine has improved its national ranking in cost of business from third worst in 2000 to eleventh in 2012, the cost of doing business in Maine is still too high for some our state’s largest employers to keep their doors open. These high costs, paired with the high property taxes cited by our mills, is a recipe for economic disaster that continues to be force fed to the diligent millworkers of Maine.

Growing up in Androscoggin County, nearly every family in my community is, or at some time in their life was, associated with the paper mills in Jay and Rumford. They are their own breed of blue collar workers who do everything they can to provide for their families and give back to their communities.

However, it’s hard for the workers in Jay to stay employed when Verso is paying $8.5 million a year in property taxes, which reportedly comprises 64% of the town’s annual budget.

Verso even contested the town’s assessment of its assets in an effort to reduce its property taxes, which was valued at $720 million. The company argued a more realistic evaluation of the mill and power plants it owned in Jay would be $450 million and appealed the town’s decision, but were denied.

Given the economic condition of our state, town’s shouldn’t be grubbing money from their largest employers to expand budgets, but should rather foster a business-friendly environment that keeps companies like Verso in business and the rest of the local economy active and competitive.

I feel for friends and neighbors of my surrounding community who have been affected by the layoffs and closures at these mills, but those who survived the chopping block this time can expect more of the same in the future if Maine continues lag behind the rest of the country in business and fail in prioritizing steady industry over wasteful government spending.

About Jacob Posik

Jacob Posik, of Turner, is the director of communications at The Maine Heritage Policy Center (MHPC) and the editor of The Maine Wire. He formerly served as a policy analyst at MHPC. Posik can be reached at jposik@mainepolicy.org.

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