The Maine House of Representatives voted Monday to close a loophole in a controversial tax credit program.

Members voted 100-43 to endorse a version of a bill that eliminates the use of one-day loans in the Maine New Markets Capital Investment program, a state-backed program that awards tax credits to qualified investors who pledge to put money into businesses in low-income communities.

The bill prohibits the use of one-day loans that previously had been used to inflate the overall value of the deals in order to trigger greater tax credits, according to an investigation by the Portland Press Herald/Maine Sunday Telegram. The bill also requires the tax credit program to be thoroughly vetted before any more taxpayer money is committed to it.

The measure, which was endorsed by a Democratic majority of the Legislature’s labor and economic development committee, now goes back to the Republican-controlled Senate, which on Friday voted to send the bill to the Taxation Committee rather than give it an up-or-down vote.

“For any program to succeed it has to operate with integrity. Unfortunately, bad actors have compromised the integrity of this program. They have poisoned the well. It’s not fair to taxpayers – and it’s not fair to the good actors who followed rules,” Rep. Erin Herbig, D-Belfast, House chairwoman of the labor committee, said in a statement. “To restore the integrity to this program, my first goal is to make sure we do all that we can to protect taxpayer dollars.”

In the most egregious abuse of a one-day loan in the program, investors in 2012 arranged a $40 million deal that was intended to modernize the Great Northern Paper mill in East Millinocket. But of the $40 million, $32 million passed in and out of the books in a one-day loan, $7 million was used to pay off old debt and the rest went to brokers’ fees. The deal triggered $16 million in taxpayer refunds, payable over seven years, even though none of the money was used to modernize the mill, which later filed for bankruptcy.

On Friday, Sen. Nate Libby, a Democrat from Lewiston and original sponsor of the bill, L.D. 297, said he wanted it sent to the Taxation Committee because there was a lack of compromise among lawmakers that would likely kill the measure.

Libby said his bill had become too politicized and that “various interests” had appropriated it as a tool “to rail against alleged scam artists, to vent their frustration against the 1 percent and corporate welfare fraud, and to use the issue as an opportunity to gain political advantage over members of the other political party.”

“After many discussions with members of both houses and various outside interests, I see little interest in reaching a reasonable compromise or in passing good policy,” Libby said. “I don’t want to see L.D. 297 used any further for demagoguery or partisan advantage.”