An Act To Create Fairness in the Revitalization of Maine's Paper Industry
Maine Legislature, Session 129, LD 2123
Committee: Taxation
Sponsors: JACKSON, MARTIN, CARPENTER, CHIPMAN, DOW, POULIOT, BICKFORD, GIDEON
Amends: 36 MRSA §191, 36 MRSA §5219-W

Legislative Document
No. 2123
S.P. 763
In Senate, February 27, 2020
An Act To Create Fairness in the Revitalization of Maine's Paper 
Industry
Approved for introduction by a majority of the Legislative Council pursuant to Joint Rule 
203.
Reference to the Committee on Taxation suggested and ordered printed.
DAREK M. GRANT
Secretary of the Senate
Presented by President JACKSON of Aroostook.
Cosponsored by Representative MARTIN of Sinclair and
Senators: CARPENTER of Aroostook, CHIPMAN of Cumberland, DOW of Lincoln, 
POULIOT of Kennebec, Representatives: BICKFORD of Auburn, Speaker GIDEON of 
Freeport, MARTIN of Eagle Lake, McCREA of Fort Fairfield.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  36 MRSA §191, sub-§2, ¶KKK is enacted to read:
KKK.  The disclosure to the joint standing committee of the Legislature having 
jurisdiction over taxation matters pursuant to section 5219-WW, subsection 4, 
paragraph B of the revenue loss, including the loss due to refundable credits, 
attributable to each taxpayer claiming the tax credit for paper manufacturing facility 
investment provided under that section, regardless of the number of persons eligible 
for the credit.
Sec. 2.  36 MRSA §191, sub-§2, ¶LLL is enacted to read:
LLL.  The disclosure of information to the Department of Economic and Community 
Development necessary for the administration of the tax credit for paper 
manufacturing facility investment pursuant to section 5219-WW.
Sec. 3.  36 MRSA §5219-WW is enacted to read:
§5219-WW.  Credit for paper manufacturing facility investment
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings.
A.  "Certified applicant" means a qualified applicant that has received a certificate of 
approval from the commissioner pursuant to this section.
B.  "Commissioner" means the Commissioner of Economic and Community 
Development.
C.  "Employee based at a paper manufacturing facility" means an employee that 
performs more than 50% of the employee's employee-related activities for the 
employer at a paper manufacturing facility.
D.  "Full-time" means an average of at least 36 hours weekly during the period of 
measurement.
E.  "Paper manufacturing facility" means a facility in the State at which paper 
products are manufactured, including facilities used in support of such paper 
manufacturing.
F.  "Qualified applicant" means an applicant that, at the time an application for a 
certificate of approval is submitted, satisfies all of the following criteria:
(1)  The applicant owns a paper manufacturing facility located in a county in this 
State with an unemployment rate that is at least 20% higher than the state average 
unemployment rate, as determined in the most recent annual state and county 
unemployment rate report issued by the Department of Labor;
(2)  The applicant directly employs at least 400 qualified employees, at least 75% 
of whom earn at least 115% of the most recent annual per capita personal income 
in the county in which the qualified employee is employed;
(3)  The applicant intends to make a qualified investment in the State within 2 
years following the date of the application;
(4)  The applicant's paper manufacturing facility is not located within a low-
income community.  As used in this subparagraph, "low-income community" has 
the same meaning as in the Code, Section 45D(e)(1); and
(5)  The applicant's headquarters are or will be located in the State.
G.  "Qualified employee" means a full-time employee based at a paper manufacturing 
facility for whom a retirement program subject to the federal Employee Retirement 
Income Security Act of 1974, 29 United States Code, Chapter 18 and group health 
insurance are provided, and whose income derived from employment at a paper 
manufacturing facility, calculated on a calendar year basis, is greater than the most 
recent annual per capita personal income in the county in which the qualified 
employee is employed.  "Qualified employee" does not include an employee who is 
transferred, as determined by the commissioner, to a qualified applicant from an 
affiliated business located in the State.
H.  "Qualified investment" means an investment of at least $15,000,000 to design, 
permit, build, rebuild, modify, replace, repair or acquire machinery or equipment, 
including supporting equipment, to modernize or improve a paper manufacturing 
facility.  The investments and activities of a qualified applicant and other entities that 
are members of the qualified applicant's unitary business must be aggregated to 
determine whether a qualified investment has been made.  A qualified investment 
includes any amount spent, prior to the issuance of a certificate of approval, on 
machinery, equipment, repair parts, replacement parts, replacement equipment, 
including additions and accessions to other machinery and equipment, as long as the 
machinery, equipment, parts, additions or accessions are placed in service after the 
issuance of a certificate of approval. A qualified investment does not include an 
investment made after December 31, 2023.
2.  Procedures for application; certificate of approval.  The provisions of this 
subsection govern the procedures for providing for and obtaining a certificate of 
approval.
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.  If a certified applicant undertakes to make an 
additional qualified investment, the certified applicant may apply to the 
commissioner for an additional certificate of approval.
B.  The commissioner, within 30 days of receipt of an application submitted pursuant 
to paragraph A, shall determine whether the applicant is a qualified applicant and 
shall issue either a certificate of approval or a written denial indicating why the 
applicant is not qualified.  The certificate issued by the commissioner must describe 
the qualified investment and specify the total amount of qualified investment 
approved under the certificate.
The commissioner may not issue certificates of approval under this subsection that 
total, in the aggregate, more than $40,000,000 of qualified investment.
C.  A certified applicant shall obtain approval from the commissioner prior to the 
transfer of the certificate of approval or, if the certified applicant has obtained a 
certificate of completion under paragraph E, that certificate of completion to another 
person.  A certificate of approval or certificate of completion may be transferred only 
if all or substantially all of the assets of the certified applicant are, or will be, 
transferred to that person or if 50% or more of the certified applicant's voting stock or 
analogous noncorporate equity interest is, or will be, acquired by that person.  The 
commissioner shall approve the transfer of the certificate of approval or the 
certificate of completion only if at least one of the following conditions is satisfied:
(1)  The transferee is a member of the applicant's unitary affiliated group at the 
time of the transfer; or
(2)  The commissioner finds that the transferee will, and has the capacity to, 
maintain operations of the paper manufacturing facility in a manner that meets 
the minimum qualifications for continued eligibility of benefits under this section 
after the transfer occurs.
If the commissioner approves the transfer of the certificate, the transferee, from the 
date of the transfer, must be treated as the certified applicant and as eligible to claim 
any remaining benefit under the certificate of approval or the certificate of 
completion that has not been previously claimed by the transferor as long as the 
transferee meets the same eligibility requirements and conditions for the credit as 
applied to the original certified applicant.
D.  The commissioner shall revoke a certificate of approval if the certified applicant 
or a person to whom a certificate of approval has been transferred pursuant to 
paragraph C fails to make a qualified investment within 2 years of the date of the 
certificate of approval.  The commissioner shall revoke a certificate of approval or a 
certificate of completion under paragraph E if the applicant or transferee ceases 
operations of the paper manufacturing facility in the State or the certificate of 
approval or certificate of completion is transferred to another person without approval 
from the commissioner pursuant to paragraph C.  A certified applicant whose 
certificate of completion is revoked within 5 years after the date issued shall return 
within 60 days following revocation of the certificate to the State an amount equal to 
the total credits claimed under this section.  A certified applicant whose certificate of 
completion is revoked during the period from 6 years after to 10 years after the date 
the certificate was issued shall return within 60 days following revocation of the 
certificate to the State an amount equal to the total credits claimed under this section 
for the period from 6 years after to 10 years after the date the certificate was issued.  
If credit amounts are subject to recapture after a certificate of approval has been 
transferred as provided in paragraph C, the transferee is responsible for payment of 
any credit amounts that must be returned to the State.
E.  Upon making a qualified investment, a certified applicant shall submit an 
application to the commissioner for a certificate of completion.  If the commissioner 
determines that a qualified investment has been made, the commissioner shall issue a 
certificate of completion to the certified applicant as soon as is practical.  The 
certificate of completion must state the amount of qualified investment made by the 
certified applicant. 
F.  Upon issuance of a certificate of completion in accordance with paragraph E, the 
commissioner shall issue, on behalf of the State, a memorandum to the qualified 
applicant describing the tax credits provided by this section to the applicant at the 
time the certificate of completion is issued. The memorandum must provide that the 
certificate of completion does not prohibit the commissioner from revoking a 
certificate in accordance with paragraph D and does not prohibit the assessor from 
assessing and collecting an overpaid benefit in accordance with the provisions of this 
Title.
3.  Refundable credit allowed.  A certified applicant is allowed a credit as provided 
in this subsection.
A.  Subject to the limitations under paragraph B, beginning with the tax year during 
which a certificate of completion is issued under subsection 2, paragraph E or the tax 
year beginning in 2021, 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 the 
taxable year in an amount equal to 4% of the certified applicant's qualified 
investment.
The credit allowed under this paragraph is refundable.
B.  The credit under this subsection is limited as follows.
(1)  A credit is not allowed for any tax year during which the taxpayer does not 
have at least 400 qualified employees based at the paper manufacturing facility 
where the qualified investment was made, as measured on the last day of the tax 
year.
(2)  Cumulative credits under this subsection for all certified applicants may not 
exceed $1,600,000 per year and $16,000,000 in total.
(3)  A credit is not allowed to any person who receives or has received a qualified 
low-income community investment under section 5219-HH with respect to the 
paper manufacturing facility at which the qualified investment is made.
4.  Reporting required.  A certified applicant, the commissioner and the assessor are 
required to make reports pursuant to this subsection.
A.  On or before March 1st of each year, a certified applicant shall file a report with 
the commissioner for the tax year ending during the immediately preceding calendar 
year, referred to in this paragraph as "the report year," containing the following 
information:
(1)  The number of qualified employees of the certified applicant on the last day 
of the report year; and
(2)  The incremental amount of qualified investment made in the report year.
The commissioner may prescribe forms for the annual report described in this 
paragraph.  The commissioner shall provide copies of the report to the assessor and to 
the joint standing committee of the Legislature having jurisdiction over taxation 
matters at the time the report is received.
B.  By April 1st of each year, the commissioner shall report to the joint standing 
committee of the Legislature having jurisdiction over taxation matters aggregate data 
on employment levels and qualified investment amounts of certified applicants for 
each year that a certified applicant claimed a credit under this section, and the 
assessor shall report to the committee the revenue loss during the previous calendar 
year, including the loss due to refundable credits, as a result of this section for each 
taxpayer claiming the credit.
Notwithstanding any provision of law to the contrary, the reports provided under this 
subsection are public records as defined in Title 1, section 402, subsection 3.
5.  Rules.  The commissioner and the assessor may jointly adopt routine technical 
rules as defined in Title 5, chapter 375, subchapter 2-A to implement this section, 
including, but not limited to, rules for determining and certifying eligibility. The 
commissioner may also by routine technical rule establish fees to offset the costs of 
administering this section. Any fees collected pursuant to this subsection must be 
deposited into a special revenue account administered by the commissioner, and those 
fees may be used only to defray the actual costs of administering the credit under this 
section.
6.  Evaluation; specific public policy objectives; 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 joint legislative 
committee established to oversee program evaluation and government accountability 
matters and the joint standing committee of the Legislature having jurisdiction over 
taxation matters shall consider:
A.  That the specific public policy objectives of the credit provided under this section 
are to provide incentives for the revitalization of paper manufacturing facilities in 
counties with high unemployment and to create or retain high-quality jobs in the State 
by encouraging paper manufacturers to modernize their paper manufacturing 
equipment to better compete in the marketplace; and
B.  Performance measures, including, but not limited to:
(1)  The number of qualified employees added or retained during the period being 
reviewed and how employment during that period compares to the minimum 
employment requirements established in subsection 3, paragraph B, subparagraph 
(1);
(2)  The amount of qualified investment made by certified applicants during the 
period being reviewed and how those investments compare to the minimum level 
of investments required in subsection 1, paragraph H;
(3)  The increase in the vitality and competitiveness of the State's paper industry 
in the marketplace;
(4)  The change in the number of paper manufacturers and machinery used for the 
production of paper products located in the State and the number of 
modernization projects undertaken at those paper manufacturing facilities during 
the period being reviewed; and
(5)  Measures of fiscal impact and overall economic impact to the State and to the 
regions in which certified applicants are located.
Sec. 4.  Legislative findings; purpose.  The Legislature finds that it is in the best 
interest of the people of the State of Maine to encourage the modernization of Maine's 
paper manufacturing facilities, particularly those facilities located in areas of high 
unemployment, to allow Maine's paper manufacturing facilities to better compete in the 
paper industry.  The Legislature further finds that investments in machines used for the 
production of paper products in Maine will create new jobs, retain current jobs, benefit 
small businesses that supply goods and services to paper manufacturing facilities, 
increase the tax base and provide many other direct and indirect economic benefits to the 
State.
SUMMARY
This bill creates a refundable income tax credit for a paper manufacturer that:
1. Makes qualifying investments before January 1, 2024 of at least $15,000,000 to 
acquire, modernize or improve the machinery used for the production of paper products at 
paper manufacturing facilities in this State;
2.  Employs at least 400 employees at a paper manufacturing facility in this State, at 
least 75% of whom earn at least 115% of the most recent annual per capita personal 
income in the county in which the qualified employee is employed;
3.  Is located in an area of the State with high unemployment that is not a low-income 
community that qualifies under the federal new markets tax credit program;
4.  Does not receive a Maine new markets capital investment credit for the same 
investment; and
5.  Is headquartered or will be headquartered in this State.
The refundable credit is equal to 4% of the qualified investment per year for 10 years, 
subject to certain limitations, such as a cap of $40,000,000 on the total investment 
eligible for the credit for all taxpayers, for a maximum of aggregate credit claimed of 
$1,600,000 per year.