Bottles of water are a blur as they move to a laser scriber to be imprinted before packaging. Sun Journal photo by Russ Dillingham

AUGUSTA — Lawmakers are considering a controversial bill that would raise more than $100 million for the state by applying a new tax on water that would be paid only by Poland Spring.

The proposed 12-cents-a-gallon extraction fee would apply to nearly a billion gallons annually used by the Swiss-owned company that has marketed its Maine-only water since 1845.

“We need the revenue,” the bill’s sponsor, Rep. Lori Gramlich, D-Old Orchard Beach, said Thursday.

As it stands, the measure under consideration by the Committee on Taxation would direct 65 percent of the new revenue to a municipal broadband fund and the rest to grants to help Mainers pay for college. But Gramlich said some may be carved out for early childhood education as well.

The company and business community has rallied to block the bill, charging it will crimp sales and perhaps force one of the state’s biggest employers to scale back its operations.

“I don’t buy it,” Gramlich said, because the firm has always depended on Maine’s abundant water, “which they’re not paying anything for.”

The commissioner of the state Department of Economic and Community Development, Heather Johnson, said her department “believes that creating specific, significant taxes on existing industry will make Maine a state where the private sector is concerned to invest.”

For employees like John Bedard, who drives a water tanker for Poland Spring in Hollis, the measure threatens both jobs and futures.

“Why punish any company that does well here in Maine?” he asked lawmakers. “Adding a tax can cause Poland Spring to rethink their presence in Maine at all.”

Gramlich said the bill is not specifically about the Swiss-owned Poland Spring. It would impose the tax on any company that extracts more than 1.5 million gallons of water from underground sources for commercial bottling, she said.

Gramlich told colleagues the bill would “levy a fee on extracting water from our earth water that we all depend on for life. This is about Maine’s future. It is about whether Maine will be a prosperous state moving forward. It is about investing in our future and it is about paying our fair share.”

Robert Marvinney, the state geologist, said the 960 million gallons tapped last year by Poland Spring is a drop in the bucket. He said Maine’s groundwater is recharged annually with trillions of gallons.

Poland Spring is not even the biggest user, he said. One blueberry grower in eastern Maine, Marvinney said, uses more than a billion gallons for irrigation each summer.

Beckie Conrad, president of the Lewiston Auburn Metropolitan Chamber, said while the chamber supports “reducing the cost of secondary education and broadband projects, we do not believe that taxing one narrow sector of the economy to fund another is good or sustainable fiscal policy.”

Poland Spring, she said, is “exactly the type of company we seek to attract, retain and, most importantly, help expand to ensure that our region has a broad range of good job opportunities for our increasing population.”

Conrad said the proposed tax “could effectively price them out of the market.”

A lawyer for the company, Jonathan Block, said the bill “violates several of the most fundamental principles of sound tax policy,” including “that any new tax should be fair and equitable.”

He told legislators, for example, it is not fair to tax only water that is bottled or packaged for sale.

“By way of example,” Block said, “if we consider another renewable natural resource, such as wood and applied a similar concept, we would be proposing to tax wood if it is used for, let’s say toothpicks, but not tax it if it is used for any other use, such as paper, furniture and lumber. “

He said it would be like taxing boiled lobster but not lobster used on a buttery roll.

Patrick Strauch, executive director of the Maine Forest Products Council, expressed concern about the precedent the bill might establish, opening the prospect “for taxing other natural resources,” such as trees and medicinal plants.

Block said if Maine moves ahead with the idea, it would be the only state to tax water extraction.

Some states do have taxes imposed on the use of natural resources. Alaska, for example, has a tax on oil extraction that has kept its treasury flush for decades.

Marvinney said other state taxes of this type are on products that are not renewable. The oil will eventually run out in Alaska. Water in Maine is a different story.

A number of businesses, from trucking companies to ski resorts, pleaded with legislators to back off from the bill, expressing concern it will undermine Poland Spring and hurt the state’s economy, especially in rural Maine.

Peter Vigue, chairman of The Cianbro Companies, said adopting the tax would “send a chilling message to potential investors around the globe that Maine is not a welcoming environment.”

“At a time when our state is thirsting for economic growth and stability, and turning the corner to position itself to achieve that goal, it is our opinion, as a state, we should be looking for ways to foster that momentum, rather than putting up additional roadblocks,” Vigue said.

Block said the tax “will strongly impair Poland Spring’s competitive position in the marketplace, and that will likely drive their future investment dollars elsewhere.”

“This tax will take a productive and successful Maine business and possibly tax it out of existence, threatening almost a thousand good jobs, not to mention the loss of revenues and jobs among Poland Spring’s Maine vendors and suppliers,” Block said.

“This tax will unduly interfere with Maine’s economy and with people’s livelihoods by taxing one company and one industry much more harshly than others. That is not what a well-designed tax should do.”

For state Sen. Justin Chenette, D-Saco, “the main issue” involved is allowing a multinational corporation “to extract our natural resources without any form of payback to Maine people.”

“This bill is not an attack on the workers nor their employer,” he said. “This is about equity for Maine people.”

Carl Dill of Auburn, a longtime company employee, told legislators if they adopt the tax, Poland Spring cannot pass on the extra expense to consumers.

He said its “only option would be to limit the generous contributions our company already makes to the areas in which we operate, to strongly consider lower annual pay increases while the cost of living continues to climb and to limit or reduce the number of interns we can have and the number of tuition reimbursements we are able to offer.”

Poland Spring, whose parent company, Nestlé, headquartered in Switzerland, is among the largest public companies in the world, has 10 springs in the state, largely in western Maine. It employs about 860 people and has bottling plants in Poland, Hollis and Kingfield.

The tax panel has not taken action on the measure since holding a public hearing last month.

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