An Act To Encourage New Major Investments in Shipbuilding Facilities and the Preservation of Jobs
Maine Legislature, Session 128, LD 1781
Committee Amendment CA_A_H685 (House)
Amends: 36 MRSA §191, 36 MRSA §5219-R

COMMITTEE AMENDMENT "A·,, to H.P. 1227, L.D. 1781, Bill, "An Act To 
Encourage New Major Investments in Shipbuilding Facilities and the Preservation of 
Jobs" 
Amend the bill by striking out everything after the enacting clause and before the 
summary and inserting the following: 
1Sec. 1. 36 MRSA §191, sub-§2, 1fEEE and FFF are enacted to read: 
EBE. 
The disclosure to the joint standing committee of the Legislature having 
jurisdiction over taxation matters pursuant to section 5219-RR, subsection 9, 
paragraph B of the revenue loss attributable to each taxpayer claiming the tax credit 
under that section, regardless of the number of persons eligible for the credit; and 
FFF. The disclosure of information to the Department of Economic and Community 
Development necessary for the administration of the tax credit for major shipbuilding 
facility investments pursuant to section 5219-RR. 
Sec. 2. 36 MRSA §5219-RR is enacted to read: 
§5219-RR. Tax credit for Maine shipbuilding facility investment 
1. Definitions. As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A. 
11Certified applicant
means a qualified applicant that has received a certificate of 
approval from the commissioner pursuant to this section. 
B. 
11Commissioner
means the Commissioner of Economic and Community 
Development. 
C. 
11Employment'' means, for each tax year, the amount dete1mined by adding the 
total number of qualified employees of a certified applicant on each of 6 consecutive 
measurement days of that tax year as chosen by the certified applicant and then 
dividing that sum by 6. 
D. 
11Full-time
means an average of at least 32 hours weekly during the tax year. 
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COMMITTEE AMENDMENT f~·" to H.P. 1227, L.D. 1781 
E. 
11Maine shipbuilding facility" means a facility or facilities located within the State 
dedicated to the design, production, maintenance and repair of surface water vessels 
and includes real estate, tangible personal property, fixtures, machinery and 
equipment necessary for those activities. 
F. "Measurement day" means the last business day of every other month of a tax 
year. 
G. "Qualified applicant" means an applicant for a tax credit under this section that 
satisfies each of the following requirements: 
(1) 
The applicant owns and operates or proposes to construct a Maine 
shipbuilding facility; 
(2) The applicant proposes to make a qualified investment: and 
(3) The applicant employs at least 5,000 qualified employees at the time the 
application is filed. 
H. "Qualified employee" means an individual: 
(1) Who is a full-time employee of the certified or qualified applicant, as the 
case may be, working at a Maine shipbuilding facility owned and operated by 
that applicant; 
(2) Whose income from that employment is taxable under chapter 803; 
(3) For whom a retirement program is provided subject to the federal Employee 
Retirement Income Security Act of 1974, 29 United States Code, Sections 1001 
to 1461, as amended; 
(4) For whom group health insurance is provided; and 
(5) 
Whose income derived from employment with the Maine shipbuilding 
facility calculated on a calendar year basis is greater than the average annual per 
capita income in the State. 
I. "Qualified investment" means expenditures incuned on or after January 1, 2018 
that total at least $100,000,000 and are related to the construction, improvement, 
modernization or expansion of a Maine shipbuilding facility, including, without 
limitation, all expenditures for investigation; planning; design; engineering; 
permitting; acquisition; financing: construction; demolition; alteration: relocation: 
remodeling; repair; reconstruction; design, purchase or installation of machinery and 
equipment; clearing; filling; grading; reclamation of land; activities undertaken to 
upgrade a waterway serving the facility; training and development of employees: 
capitalized interest; professional services, including, but not limited to, architectural, 
engineering, legal, accounting or financial services; administration; environmental 
and utility costs, including, without limitation, sewage treatment plants, water, air and 
solid waste equipment and treatment plants, environmental protection devices, 
electrical facilities, storm or sanitary sewer lines, water lines or amenities, any other 
utility services, preparation of environmental impact studies, informing the public 
about the facility and environmental impact and environmental remediation, 
mitigation, clean-up and protection costs; related offices, support facilities and 
COMMITTEE AMENDMENT 
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COMMITTEEAMEND:tvffiNT •A" to H.P. 1227, L.D. 1781 
structures; and any of th,e foregoing expenditures made or costs incurred prior to or 
after the effective date of this section or ce1tification of an applicant. "Qualified 
investment
includes only expenditures that are capitalized for federal income tax 
purposes. Except for employees who are engaged in the design, engineering and 
construction of tl}e facility, "qualified investment" does not include the salaries ~r 
other compensation paid to the employees of the qualified applicant or of any affiliate 
of the qualified applicant. "Qualified investment" does not include any expenditure 
included as a qualified investment by an applicant under chapter 919. 
2. Procedures for application; certificate of approval. This subsection governs 
the application and a1;mroval process for the tax credit under this section. 
A. A qualified applicant may apply to the commissioner for a certificate of approval. 
An applicant shall submit to the commissioner information demonstrating that the 
applicant is a qualified applicant. A certified applicant may hold only one certificate 
under this section at any time. 
B. The commissioner, within 30 days ofreceipt of an application under paragraph A, 
shall review the information contained in the application and issue a written 
determination as to whether the applicant is a qualified applicant. If the commissioner 
determines that the applicant is a qualified applicant, the commissioner shall issue a 
certificate of approval to the qualified applicant at the time of the determination. If 
the commissioner determines that the applicant is not a qualified applicant, the 
commissioner shall issue a denial of the application at the time of the deterntlnation. 
C. If a certified applicant proposes to transfer, including, without limitation, transfer 
by operation of law, all or substantially all of the Maine shipbuilding facility in which 
a qualified investment was made to another person or if a person proposes to acquire 
more than 50% of the voting stock of the certified applicant, application may be made 
to the commissioner to approve transfer of the certificate of approval to that person in 
connection with the transfer of the stock or facility. The commissioner shall grant the 
transfer of the certificate only if: 
(1) 
The transferee of the Maine shipbuilding facility or of the certified 
applicant's stock is a member of the certified applicant's unitary affiliated group 
as defined in section 5102, subsection 1 -B at the time of the transfer; or 
(2) 
The transferee of the Maine shipbuilding facility or of the certified 
applicant1s stock is not a member of the certified applicant's unitary affiHated 
group as defined in section 5102, subsection 1-B at the time of the transfer and 
the commissioner finds that the transferee intends to continue the operations of 
the Maine shipbuilding facility in substantially the same manner as prior to the 
transfer and has the financial capability to do so. 
If the commissioner grants a transfer of the certificate of approval, the transferee 
must be treated as the certified applicant for all purposes of this section. For purposes 
of calculation of employment and qualified investments of the certified applicant, the 
qualified employees and the qualified investments of the transferor prior to transfer 
must be considered the qualified employees and qualified investments of the 
transferee. 
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COMMITTEE AMENDMENT "A" to H.P. 1227, L.D. 1781 
D. 
The applicant or certified applicant may appeal in accordance with Title 5, 
chapte1; 375, subchapter 7 any determination, action or failure to act by the 
commissioner. 
3. Credit. A certified applicant is allowed a credit annually against the tax otherwise 
due under this Part as provided in this subsection. 
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A. 
Beginning with the tax year after the certified applicant has made qualified 
investments of at least $100,000,000, or the tax year beginning on or after January 1. 
2020, whichever is later, and for each of the following 9 tax years, a certified 
applicant is allowed a credit against the tax due under this Part for each taxable year 
in an amount equal to 3% of the certified applicant's total qualified investment. 
B. If a certified applicant completes an additional qualified investment of at least 
$100,000,000 prior to January 1. 2025, the certified applicant is allowed a credit 
against the tax due under this Part beginning with the 11th tax year after the 
investment required in paragraph A was made and continuing through the 15th tax 
year after making that investment. The amount of the additional credit available in 
each of those tax years is 3% of the certified applicant's additional qualified 
investment. Eligibility for the additional credit must be demonstrated by the certified 
applicant in the annual reports submitted pursuant to subsection 9. 
C. The credit allowed under this subsection may not reduce the tax otherwise due 
under this Part to less than zero. 
4. Limitations. The following are limitations on the credit allowed under subsection 
A. 
Except as provided in subsection 5, the annual credit allowed to a certified 
applicant or its transferee may not exceed $3,000,000 in any tax year. Cumulative 
credits taken under subsection 3, paragraph A may not exceed $30,000,000 to any 
ce1iified applicant or transferee. Total cumulative credits taken under this section 
may not exceed $45,000,000 to any certified applicant or transferee. 
B. For a tax year in which the qualified applicant has employment of fewer than 
5,500, the amount of the credit is reduced as provided in subsection 6. 
C. A taxpayer that is certified as a qualified Pine Tree Development Zone business 
under Title 30-A, section 5250-0 or that has received a certificate of approval for its 
employment tax increment financing program pursuant to section 6755 is not eligible 
for a credit under this section. 
D. In no case may the credit be claimed for a tax year that begins after December 31, 
2034. 
5. Accelerated credit. If a certified applicant has employment in any tax year of at 
least 6,000, the credit limitation in subsection 4, paragraph A is increased to $3,125,000 
for that tax year. If employment is at least 6,500, the credit limitation is increased to 
$3,250,000. If employment is at least 7,000, the credit is increased to $3,375,000. If 
employment is 7,500 or more, the credit is increased to $3,500,000. 
COMMITTEE AMENDMENT 
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COMMITTEEAMENDMENT"H"toH.P. 1227,L.D.1781 
6. Reduced credit for reduced employment. If a certified applicant's employment 
is fewer th~ 5,500 employees during the tax year, the credit allowed pursuant to 
subsection 3 is reduced as follows. 
A. If a certified applicant has employment in a tax year of fewer than 5,500 but at 
least 5,250, the credit for that year is 90% of the credit otherwise allowed under 
subsection 3. 
B. If a certified applicant has employment in a tax year of fewer than 5,250 but at 
least 5,000, the credit authorized for that year is 80% of the credit otherwise allowed 
under subsection 3. 
C. If a certified applicant has employment in a tax year of fewer than 5,000 but at 
least 4,750, the credit for that year is 70% of the credit otherwise allowed under 
subsection 3. 
D. If a certified applicant has employ:p;ient in a tax year of fewer than 4,750 but at 
least 4,500, the credit for that year is 60% of the credit otherwise allowed under 
subsection 3. 
E. If a certified applicant has employment in a tax year of fewer than 4,500 but at 
least 4,250, the credit for that year is 50% of the credit otherwise allowed under 
subsection 3. 
F. If a certified applicant has employment in a tax year of fewer than 4,250 but at 
least 4,000, the credit for that year is 40% of the credit otherwise allowed under 
subsection 3. 
G. If a certified applicant has employment in a tax year of fewer than 4,000, the 
credit allowed under subsection 3 may not be taken. 
7. Revocation. A certificate of approval must be revoked by the commissioner if the 
certified applicant has not made qualified investments of at least $100,000,000 within 5 
years after issuance of the certificate of approval. 
8. 
Additional requirements. 
A certified applicant, when awarding contracts, 
purchasing supplies or subcontracting work related to a qualified investment, shall give 
preference, to the greatest extent possible, to Maine workers, companies and bidders as 
long as the supplies, products, services and bids meet the standards required by the 
certified applicant regarding value, quality, delivery terms and price. 
9. Annual reporting requirement. A certified applicant, the commissioner and the 
State Tax Assessor shall report annually in accordance with this subsection. 
Notwithstanding any other provision of law to the contrary, the reports provided under 
this subsection are public records as defined in Title 1, section 402, subsection 3. 
A. On or before March 1st annually, a certified applicant shall file a report with the 
commissioner for the immediately preceding calendar year, referred to in this 
paragraph as the 
11report year," containing the following information: 
(1) The employment of the certified applicant for the report year, including 
specific information on: 
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COMMITIEEAMENDMENT"~"toH.P.1227,L.D.1781 
(a) The number of qualified employees that are employed by the certified 
applicant at the end of the report year: 
(b) The total number of qualified employees hired during the report year: 
and 
(c) The number of qualified employees in positions that are covered by a 
collective bargaining agreement: 
(2) The total dollar amount of payroll associated with employment in the report 
year, including specific infonnation on: 
(a) The average annual salary and wages for qualified employees; and 
(b) The median annual salary and wages for qualified employees; 
(3) The total dollar amount that was spent on goods and services obtained from 
businesses with an office in the State from which business operations in the State 
are managed: and 
(4) The incremental level of qualified investments made during the report year, 
including specific information on: 
(a) The amount of qualified investment in facility, production equipment and 
employee training and development, reported as an aggregate sum; 
(b) The portion of the qualified investment reported under subparagraph (a) 
that was spent on goods and services from businesses with an office in the 
State from which business operations in the State are managed; and 
(c) Whether the certified applicant has qualified for the additional credit 
under subsection 3, paragraph B. 
The commissioner may prescribe forms for the annual reports required under this 
paragraph. The commissioner shall provide copies of the report to the State Tax 
Assessor and to the joint standing committee of the Legislature having jurisdiction 
over taxation matters at the time the report is received. 
B. 
On or before April 1st annually, the commissioner shall report to the joint 
standing committee of the Legislature having jurisdiction over taxation matters 
aggregate data, with detail consistent with information required of certified applicants 
under paragraph A, on employment levels and qualified investment amounts of 
certified applicants for each year beginning with expenditures incurred on or after 
January 1, 2018. 
C. 
The State Tax Assessor shall report to the joint standing committee of the 
Legislature having jurisdiction over taxation matters the revenue loss during each 
state fiscal year as a result of this section for each taxpayer claiming the credit. 
10. Evaluation; specific public policy objective; performance measures. The 
credit provided under this section is subject to ongoing legislative review in accordance 
with Title 3, chapter 37. In developing evaluation parameters to perform the review, the 
Office of Program Evaluation and Government Accountability, the Legislature's 
COMMITTEE AMENDMENT 
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COMMITTEE AMENDMENT ·A" to H.P. 1227, L.D. 1781 
government oversight committee and the joint standing committee of the Legislature 
having jurisdiction over taxation matters shall consider: 
A. That the specific public policy objective of the credit nrovided under this section 
is to create and retain jobs in the shipbuilding industry in this State by providing an 
income tax credit to reduce the cost of investments in shipbuilding businesses and 
thereby encourage investment in shipbuilding businesses and improve the 
competitiveness of this State's shipbuilding industry; and 
B. Performance measures, including, but not limited to: 
(1) Employment during the period being reviewed and how employment during 
that period compares to the minimum employment requirements set forth in 
subsection 4, paragraph B; 
(2) The amount of qualified investment during the period being reviewed, and 
how expenditures compare to the minimum level of expenditure set forth in 
subsection 1, paragraph I; 
(3) Measures of industry competitiveness; 
(4) Measures of fiscal impact and overall economic impact to the State; and 
(5) 
Information regarding the procedures for ensuring compliance with the 
preference requirements under subsection 8. 
The Office of Program Evaluation and Government Accountability shall provide a report 
of its evaluation under this subsection to the joint standing committee of the Legislature 
having jurisdiction over taxation matters by August 15, 2024. Following receipt of the 
report, the joint standing committee shall determine whether the credit provided under 
this section is meeting its public policy objectives and whether it should be continued. 
The joint standing committee may submit a bill to the First Regular Session of the 132nd 
Legislature to accomplish its recommendations.' 
SUMMARY 
This amendment makes the following changes to the bill. 
1. It changes the duration of the tax credit provided by the bill to a maximum of 15 
years and requires an investment of at least $100,000,000 be made to qualify for the first 
years and an additional investment of $100,000,000 to qualify for the next 5 years. 
2. It changes the calculation for accelerated credits by changing the number of 
qualified employees required and providing that the amount of accelerated credit is a 
specified amount rather than a percentage. 
3. It provides a reduced credit for years when employment drops below specified 
levels and eliminates the availability of exception years. 
4. It removes provisions making the credit refundable. 
5. It provides that a certified applicant may not receive the credit if it is a qualified 
Pine Tree Development Zone business or has received a certificate of approval for an 
employment tax increment financing program. 
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COMMITTEE AMENDMENT "H'' to H.P. 1227, L.D. 1781 
6. It eliminates language requiring the State and the qualified applicant to enter into 
an agreement that the State will provide the credit for as long as the qualified applicant 
meets the requirements of the law on the date the certificate of approval is issued. 
7. It adds provisions requiring review of the credit by 2024 by the Office of Program 
Evaluation and Government Accountability under the tax expenditure review process and 
changes the reports required by the certified applicant, the Commissioner of Economic 
and Community Development and the State Tax Assessor to facilitate the review process. 
8. 
It makes changes to clarify the intent of the credit and to improve its 
administration. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
Approved: 03/19/18 ;:W'ac:.. 
LD 1781 
LR2789(02) 
An Act To Encourage New Major Investments in Shipbuilding Facilities and the Preservation o~fbs 
Fiscal Note for Bill as Amended by Committee Amendment A' CH- b o5 
Committee: Taxation 
Net Cost (Savings) 
General Fund 
Revenue 
General Fund 
Other Special Revenue Funds 
Fiscal Detail and Notes 
Fiscal Note Required: Yes 
Fiscal Note 
FY2017-18 
$0 
$0 
$0 
FY 2018-19 
$0 
$0 
$0 
Projections 
FY 2019-20 
$0 
$0 
$0 
Projections 
FY2020-21 
$2,660,000 
($2,660,000) 
($140,000) 
The bill provides an income tax credit for major investments in a shipbuilding facility beginning with tax years 
beginning on or after Janua1y 1, 2020. It would result in a loss of General Fund revenue of $2,660,000 and a loss of 
Local Government Fund revenue of $140,000 in fiscal year 2020-21. 
Additional costs to the Department of Economic and Community Development and the Legislature's Office of 
Program Evaluation and Government Accountability to implement the requirements of this bill can be absorbed within 
existing budgeted resources. 
LR2789(02) - Fiscal Note - Page 1 of 1