An Act To Reduce Errors in Employment Tax Increment Financing Benefits
Maine Legislature, Session 130, LD 1156
Committee: Taxation
Sponsors: ARATA, LIBBY, POULIOT, TIMBERLAKE
Amends: 36 MRSA §6753, 36 MRSA §6762

Legislative Document
No. 1156
H.P. 834
House of Representatives, March 22, 2021
An Act To Reduce Errors in Employment Tax Increment Financing 
Benefits
Received by the Clerk of the House on March 18, 2021.  Referred to the Committee on 
Taxation pursuant to Joint Rule 308.2 and ordered printed pursuant to Joint Rule 401.
ROBERT B. HUNT
Clerk
Presented by Representative ARATA of New Gloucester.
Cosponsored by Senator LIBBY of Androscoggin and
Senators: POULIOT of Kennebec, TIMBERLAKE of Androscoggin.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  36 MRSA §6753, sub-§5-B is enacted to read:
5-B.  Benefit base.  "Benefit base" means the total incremental gross wages paid during 
the calendar year by a qualified business to qualified employees multiplied by the benefit 
percentage.
Sec. 2.  36 MRSA §6753, sub-§5-C is enacted to read:
5-C.  Benefit percentage.  "Benefit percentage" means the percentage calculated by 
the commissioner by dividing the total amount of benefits paid to all qualified businesses 
under this chapter in fiscal year 2020-21 by the total gross income paid to all qualified 
employees during that fiscal year.
Sec. 3.  36 MRSA §6753, sub-§7, as amended by PL 2005, c. 351, §22 and affected 
by §26, is further amended to read:
7.  Employment tax increment.  "Employment For reimbursement based on calendar 
years prior to 2022, "employment tax increment" means that level of employment, payroll 
and state income withholding taxes attributed to qualified employees employed by a 
qualified business above the base level for the qualified business, adjusted pursuant to 
subsection 12 for shifts in employment by affiliated businesses.  For reimbursement based 
on calendar years beginning in 2022, "employment tax increment" means the total gross 
wages paid by a qualified business to qualified employees above the base level of 
employment for the qualified business.
Sec. 4.  36 MRSA §6753, sub-§9, as enacted by PL 1995, c. 669, §5, is amended to 
read:
9.  Gross employment tax increment.  "Gross For reimbursement based on calendar 
years prior to 2022, "gross employment tax increment" means that level of employment, 
payroll and State state income tax withholding taxes attributed to qualified employees 
employed by a qualified business that is greater than the base level for the qualified 
business.  For reimbursement based on calendar years beginning in 2022, "gross 
employment tax increment" means the total gross wages paid by a qualified business to 
qualified employees above the base level of employment for the qualified business.
Sec. 5.  36 MRSA §6753, sub-§12, as amended by PL 2015, c. 368, §5, is further 
amended to read:
12.  Qualified employee.  Except for an employee in a call center in Aroostook County 
or Washington County, "qualified employee" means a new, full-time employee hired in 
this State by a qualified business, for whom a retirement program subject to the 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 with the 
applicant, 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, as long 
as Maine income tax withholding attributed to the qualified employee is subject to 
reimbursement to the qualified business under this chapter for calendar years beginning 
before 2022 and, for calendar years beginning in 2022 and after, the gross wages paid to 
the qualified employee is subject to reimbursement under this chapter.  "Qualified 
employee" does not include an employee who is shifted to a qualified business from an 
affiliated business.  The commissioner shall determine whether a shifting of employees has 
occurred.
For an employee in a call center in Aroostook County or Washington County, "qualified 
employee" means a new, full-time employee hired in this State by a qualified business, for 
whom a retirement program subject to the 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 with the applicant, calculated on a weekly basis, 
is greater than the average weekly wage for the most recent available calendar year as 
derived from the quarterly census of employment and wages and provided annually by the 
Department of Labor, as long as Maine income tax withholding attributed to the qualified 
employee is subject to reimbursement to the qualified business under this chapter for 
calendar years beginning before 2022 and, for tax years beginning in 2022 and after, the 
gross wages paid to the qualified employee is subject to reimbursement under this chapter.  
"Qualified employee" does not include an employee who is shifted to a qualified business 
from an affiliated business.  The commissioner shall determine whether a shifting of 
employees has occurred.  The calculation of the average weekly wage must include data 
from the counties of Androscoggin, Aroostook, Franklin, Hancock, Kennebec, Knox, 
Lincoln, Oxford, Penobscot, Piscataquis, Sagadahoc, Somerset, Waldo and Washington.  
Notwithstanding this subsection, with respect to a call center in Aroostook or Washington 
county, in a county in which the average annual unemployment rate at the time of 
certification for the most recent calendar year is greater than the state average for the same 
year, the wage threshold is 90% of the average weekly wage as derived from the quarterly 
census of employment and wages.  Notwithstanding this subsection, with respect to a call 
center in Aroostook or Washington county and upon approval of the commissioner, a 
qualified business located in a county in which the average annual unemployment rate at 
the time of certification for the most recent calendar year is greater than the state average 
for that same year qualifies for a phase-in of salary threshold requirements.  A qualified 
business under this provision must meet 70% of the average weekly wage as derived from 
the quarterly census of employment and wages in the first year of certification, 80% of the 
average weekly wage as derived from the quarterly census of employment and wages in 
the 2nd year of certification and 90% of the average weekly wage as derived from the 
quarterly census of employment and wages in all following years of certification.  Failure 
to meet any of these requirements results in automatic revocation of certification.
Sec. 6.  36 MRSA §6762 is enacted to read:
§6762.  Benefit calculation for calendar years beginning with 2022
Notwithstanding any provision of this chapter to the contrary, for requests for 
reimbursement under this chapter for calendar years beginning with 2022, the amount of 
reimbursement must be based on the benefit base for a qualified employer rather than on 
the amount of income tax withheld for qualified employees.  The commissioner and the 
State Tax Assessor shall take whatever action is necessary to implement this subsection, 
including the adoption of routine technical rules as defined in Title 5, chapter 375, 
subchapter 2-A.
Sec. 7.  Authority to submit legislation.  The Commissioner of Economic and 
Community Development and the State Tax Assessor shall submit legislation by December 
1, 2021 to the Second Regular Session of the 130th Legislature if necessary to implement 
the provisions of this Act.
SUMMARY
This bill improves the employment tax increment financing program for calendar years 
beginning with 2022 by basing benefits on the gross wages of qualified employees rather 
than on income tax withholding for those employees.  The bill directs the Commissioner 
of Economic and Community Development and the State Tax Assessor to take actions, 
including the adoption of routine technical rules, to implement the change.