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February 12, 2018

Sponsor's amendment splits BIW tax credit in half

Courtesy / Bath Iron Works
Courtesy / Bath Iron Works
An aerial view of BIW shows the Land Level Transfer Facility (foreground) the Outfitting Hall (left) and drydock (left foreground), elements of the roughly $500 million in facility investments made in the shipyard during the current tax incentive program that expires at the end of this year.

The sponsor of a bill to give a 20-year $60 million tax credit to Bath Iron Works that's tied to minimum investment and employment requirements has submitted an amendment that would split the tax credit in half.

The Times Record reported that Rep. Jennifer DeChant, D-Bath, introduced the amendment during the Taxation Committee's first work session on the bill. As proposed by her amendment, BIW would be eligible for a $30 million tax credit from the state spread over 10 years contingent on $100 million being invested in the Bath shipyard's facilities. BIW would then be eligible for a second $30 million tax credit for the following 10 years if it agreed to make an additional $100 million investment.

DeChant told the newspaper that her amendment also would require the shipyard to report in greater detail its employment metrics during the period of receiving the tax credit, including average and median salaries, the increase or decrease in employees, statewide economic impact and the impact on Maine businesses.

DeChant said the amendment to LD 1781, An Act To Encourage New Major Investments in Shipbuilding Facilities and the Preservation of Jobs, "reflects a multifaceted approach to improving a tax incentive that existed for 20 years."

As originally worded, the bill called for up to $60 million in state tax credits for Bath Iron Works over 20 years that would be linked to the shipyard's owner, General Dynamics Corp., continuing to make "major investments in shipbuilding facilities" and maintaining a minimum employment level of 5,000 workers.

Under Maine's Shipbuilding Facility Credit that's due to sunset this year, BIW was required to invest $200 million in its shipbuilding facilities in order to receive a tax credit of up to $3.5 million annually, with the total credit not to exceed $60 million over 20 years.

BIW's annual economic impact: $400 million

In fact, as BIW Vice President and General Counsel Jon Fitzgerald told the Taxation Committee at a Jan. 30 public hearing on the bill, BIW invested more than $500 million in its facility since 1996, more than double the investment required by the tax credit legislation that is due to expire.

"There are few companies in Maine that have committed comparable levels of investment over a similar period," Fitzgerald said in a written statement submitted to the committee. "BIW has hired more than 2,000 employees since 2014 as manufacturing jobs have declined in other Maine industries. Moreover, BIW plans to hire up to 2,000 more employees over the next five years in skilled trades, such as welding, electrical and pipefitting, as well as engineering disciplines and many others who apply their unique skills to the collective effort of shipbuilding."

Fitzgerald told lawmakers that the average annual wage at BIW, company-wide, is $60,820, with production workers earning an average annya base wage of $53,000.

"As one of the largest employers and most energy-intensive businesses in the state of Maine, BIW works very hard to reduce the total cost of building ships across all areas of its business," Fitzgerald stated. "For BIW to win new work in a competitive bid environment, every dollar matters. The ability to win work has a direct correlation to jobs. BIW cannot do it alone."

Fitzgerald told lawmakers that BIW's annual payroll is $350 million and it makes $45 million ($30 million to small businesses) in payments to 300 Maine companies for goods and services.

Read more

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BIW president says ‘pulling together’ is key to shipyard’s success

Bill provides $60M in tax incentives for BIW over 20 years

BIW bidding on major multi-ship contracts for FY 2018 and beyond

BIW: Renewal of tax credit program essential to 'our future'

BIW bidding on $19B Navy contract involving new class of frigates

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