Anatomy of a taxpayer rip-off

By LANCE TAPLEY  |  February 19, 2014

And capital market discipline didn’t prevent Cate Street from shutting down a New Markets beneficiary, the East Millinocket mill. Citing high energy and other costs, the company on February 6 laid off more than 200 workers — including Representative Stanley, who was employed loading paper onto trucks.

If the mill will reopen is uncertain. Cate Street’s troubles also include close to $3 million in unpaid property taxes to East Millinocket and Millinocket — plus, the company admits, unpaid bills to suppliers.

The mill confronts “big challenges,” said forestry economist Lloyd Irland, citing heavy competition in the paper industry. A Vietnam veteran, Irland compared state-government’s actions to revive the Millinocket-area paper industry to America’s commitment to continue the Vietnam War after it made no sense except for loyalty “to our allies.”

Other ways exist, of course, of expressing commitment to the region’s workers besides shoveling millions of tax dollars willy-nilly to out-of-state corporations. For example, to “keep wealth anchored locally,” commented University of Maryland economist Gar Alperovitz, there’s employee ownership, local investments by state pension funds, and the reorientation of nonprofits such as hospitals and universities toward community development.

Alperovitz, on the other side of the ideological spectrum from the Tax Foundation’s McBride, is a prominent national proponent of community- and worker-centered business development. (For more on his ideas, see “The future progressive,” by Lance Tapley, January 17, 2014.)

But there has been no indication state government will ever consider other than the expensive path laid out by corporate lobbyists.

Other giveaways
>>> FAME’s board voted in October to issue $25 million in state-guaranteed bonds for the Thermogen venture, despite agency staff finding its prospects sketchy and Thermogen “not creditworthy.” The bond issue is essentially a bank loan the state must repay if the project fails. (See “Socialism for the well-off, capitalism for the needy,” by Lance Tapley, November 15, 2013.)

>>> In 2011 the Legislature voted for the state to take possession of the toxic Dolby Solid Waste Landfill in East Millinocket, used by the paper mills for decades, from Brookfield Asset Management. Cate Street required this takeover before it would buy the then-dormant mills from Brookfield. It costs the state now nearly $350,000 a year to maintain the landfill. The state estimates that closing it will cost between $2 and $14 million, depending on how it’s done. (The Conservation Law Foundation believes the cost will be on the high side.)

>>> Millinocket has given Cate Street a Tax Increment Financing (TIF) deal to return half of its property taxes (though the company hasn’t paid this year’s $2.2 million owed).

>>> Most recently, Cate Street has demanded that, in order for it to reopen the East Millinocket mill, the state allow the mill to resell the cheap electricity it gets from dams owned by Brookfield, which also would have to agree. Possible costs to the public are unknown.

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