How much are we spending on Economic Development in Maine?

(from Maine Townsman, June 1998)

About $110,000,000 a year. That's how much public money is estimated to be spent annually in Maine in support of economic development, according to an article- "Funding Economic Development in Maine" appearing in Maine Choices 1997: A Preview of State Budget Issues, which was published by the Maine Center for Economic Policy in 1996 and authored by Charles Roundy. Most recently employed as Winthrop's town manager, Roundy served as the executive director for the Eastern Maine Development District, a six-county economic development district, from 1977 to 1981. What follows are excerpts from that article.

Federal

Of that amount approximately $28 million is supplied annually by the federal government, with the Department of Commerce's Economic Development Administration (EDA), the Department of Housing and Urban Development's Small Cities Community Development Block Grant (CDBG) program and the Department of Agriculture providing the bulk of the money, each contributing between $6 million and $7 million a year.

State

Another $62 million is supplied by the state, with more than half the amount ($37 million in FY 97) going toward bond payments of economic development issues. Other major sources of state funds for economic development include approximately $6 million each from the Department of Economic and Community Development and the Finance Authority of Maine and approximately $5 million in so-called "Business Training Commitments".

The report notes Maine's system of "economic development districts", which include Northern Maine Development Commission, Eastern Maine Development Corporation, Kennebec Valley Council of Governments, Androscoggin Valley Council of Governments, and Southern Maine Economic Development District, have combined annual operational budgets exceeding $8.5 million and loan portfolios of more than $40 million. It is estimated that 80 percent of the operating budgets come from federal and state sources that have already been accounted for.

County

Maine counties are also a source of funds for economic development activities, be it contributing to their region's economic development district, other economic development organizations or their county's own economic development offices (Piscataquis, Somerset, and Franklin). The report conservatively estimates that Maine's 16 counties contribute at least $200,000 per year directly to economic development efforts.

Municipal

The report notes that a number of Maine municipalities, including Bangor, Brewer, Augusta, Lewiston, Gardiner, and Portland, fund a full-time economic development office as part of municipal government. Others support small area, multi-community organizations such as the Mid-State Economic Development Corporation (Waterville, Winslow, Oakland and Fairfield) and the Katahdin Regional Development Corporation ( Millinocket, East Millinocket and Medway). It estimates that Maine municipalities contribute more than $2 million in support of their own economic development staffs or those of non-profit organizations directly responsive to the municipalities.

But municipal support for economic development doesn't end there. Since the late 1950's, Maine municipalities have supported economic development in a number of other ways, including partial or full funding of more than two dozen industrial parks, often providing the land and/or local matching share to attract federal grants. The most recent commitment of municipal resources under the so-called Tax Increment Financing (TIF) authority has been in the dedication of tax revenues from a new business development to cover either related infrastructure costs or to return these subsequent revenues to the business as an incentive to attract the business in the first place. The report hazards a guess that the current annual "cost" of TIF agreements to Maine municipalities is about $10 million.

Taking into account the above and other commitments (investment in revolving loan funds, contributions to local chambers of commerce, membership dues in regional planning organizations etc.), the report conservatively estimates that Maine municipalities commit at least $13 million annually to economic development.

Other Non-Profit Organizations

The report notes that there are numerous non-profit organizations ranging from the Maine Development Foundation and the Maine Chamber and Business Alliance down to the smallest local development corporation. Some of these receive federal, state and local funds mixed with private funds; some are funded exclusively through private contributions or membership fees. Discounting double-counts, the report estimates that these groups contribute about $6 million annually to economic development, with Chambers of Commerce accounting for $5.5 million.

Total Resource Commitment

The author warns that the $111 million is a "low estimate".

Federal $27.8 million

State $62.1 million

County $ .2 million

Municipal $13.0 million

Regionals $ 2.3 million

(discounted)

Other non-profits $ 6.0 million

(discounted)

Total $111.4 million