BRUNSWICK

While the Taxation Committee continues discussion on a tax credit of up to $60 million for Bath Iron Works, a number of lawmakers’ questions remain unanswered.

At a work session Thursday, Jon Fitzgerald, BIW vice president and general counsel, introduced further changes to an amendment to the bill by sponsor Rep. Jennifer DeChant, D-Bath. And, state legislators peppered him with questions about the bill, the state of BIW and technicalities of the tax language.

As discussion came to a close, Rep. Bruce Bickford, R-Auburn, moved to report the bill ought to pass as amended with minor changes to employment requirements. While Rep. Karleton Ward, R-Dedham, seconded the motion, it ultimately failed. Instead, the bill was tabled for a second time, likely to be picked up at a work session on Tuesday.

What are the changes?

The changes introduced Thursday had three purposes, said Fitzgerald: To address concerns raised by Maine Revenue Services, to clarify that the credit is not refundable and there is no carry over, and to ensure the second tax credit of $30 million is dependent on an additional $100 million qualified investment in the shipyard — after the first one, but before 2025.

A representative of Maine Revenue Services, however, noted that the department had not seen the updated language yet and would need a day or more to assess whether their concerns had been properly addressed.

BIW is also requesting further increased tax credits if it raises employment. Under DeChant’s original bill, the shipyard could qualify for an accelerated credit of 110 percent if employment exceeds 5,250. BIW’s current workforce is around 5,600. BIW is asking that be changed to a graded accelerated tax credit starting at employment levels of 5,500 and increasing to 7,000.

“This language provides different steps of increase,” said the committee’s policy analyst, Julie Jones. “They’d have to employ more people to get any acceleration, but it has other steps (as employment rises).”

Ultimately, if employment went above 7,000, the tax credit could reach $3.5 million annually. The total cap of $30 million over 10

years remains.

BIW pushes back

BIW’s changes also reduced reporting requirements in the text that had been strengthened by DeChant in her initial amendment. Fitzgerald noted that the new tax credit had significantly more reporting requirements than the current law. The additional reporting could give competitors a better understanding of the way BIW works, he insisted, giving them an advantage when competing for work.

“(There) are substantially more reporting requirements than exist in the current law,” said Fitzgerald. “And we would just balk at further delineating these discrete items of cost.”

Sen. Justin Chenette, D-York, challenged BIW, pointing out that the reporting requirements were important to ensure the tax credit was working properly.

“I think the intent of us bringing this up last time around in the amendment was to try to delineate between sort of higher management, and not skewing the average salaries and wages when you report adequately for the tax credit,” he said. “I’m concerned once again about not being provided the full financial picture.”

“I’d like to not leave a complete road map for our competitors to figure out what our costs are,” Fitzgerald responded, though he noted that the hourly rates for various salaries were available in the union contract.

Qualified employees

Rep. Ryan Tipping, D-Orono, also raised concerns over the definition of a qualified employee. Under a straight reading of the law, a qualified employee under the current tax credit and in the new bill is a full-time employee who makes more than the annual per capita income in Maine. While Fitzgerald admitted that some BIW employees likely made less than that average, he did not immediately have numbers on how many of their approximately 5,600 employees were qualified employees.

Tipping questioned whether prior reporting by BIW on their employment levels was properly taking into account that definition of qualified employees, which raises the specter that the shipyard has received more in tax credits than it should have. Fitzgerald did not immediately have an answer as to whether that was indeed the case.

nstrout@timesrecord.com