Maine Heritage Policy Center says taxes are a major hurdle to growth – but locals say that's out of step with homegrown efforts
• Read the documents for all 40 SPN proposals
Water Street, the main drag in Eastport, America's easternmost incorporated city, is missing something: boarded up storefronts.
When they were built in the late 19th century, the brick-and-granite blocks were bustling with activity, as shoppers came and went from surrounding homes, sardine canneries, and the archipelago of Canadian islands just across the bay from what was then a town of more than 5,000.
Today the canneries are gone, the border is far less permeable, and Eastport's population has fallen by three-quarters, lending a ghostly feel to the town, which stands on an island beset by fog and 20ft tides that make the surrounding ocean flow like a river.
But this fall, more shops, galleries and restaurants are staying open, and the rest are closed for the winter, not for good, signs that a long anticipated renaissance is at hand.
"For 10 years we have been doing what we can, where we are, with what we have, and we're really beginning to see the fruits of that effort," says Linda Godfrey, co-founder of The Commons, a gallery exclusively featuring work by area artists and craftsmen. "Throughout Washington County you can see these things happening, the result of our own efforts, energy, and capabilities."
So many hereabouts say they were surprised by a conservative thinktank's proposal to further economic development by turning Maine's poorest county into a gigantic tax-free zone. While open to considering its merits, many business and political leaders think the proposal is philosophically out of step with local efforts, which have emphasized homegrown revitalization rather than reliance on special breaks for the long-struggling county.
Under the Maine Heritage Policy Center's "FreeME" initiative, Washington County residents and businesses would cease to pay state income taxes or collect sales taxes until economic conditions reach the statewide average and stay there for three years running.
The initiative, unveiled last summer and currently being evaluated by Maine governor Paul LePage's administration, would make America's easternmost county the first to waive such taxes in a state that has them, and is intended to showcase economic libertarians' contention that taxes are a central impediment to economic development.
According to a grant application acquired by the Guardian and passed on to the Press Herald as part of a reporting collaboration, Maine Heritage sees it as "a research and demonstration project" that will "release residents from extreme government dependency" and "spark an economic boom that can be easily transferred to other areas of Maine and serve as an example for all the United States."
The grant application was drafted in May for submission to the State Policy Network, a national group that funds and co-ordinates activities between Maine Heritage and 62 similar thinktanks across the country. SPN intended to seek funding for promising proposals from the Searle Freedom Trust, an important donor to conservative groups like the American Legislative Exchange Council, Americans for Prosperity, and SPN itself, according to the Guardian.
Maine Heritage requested $35,000 to underwrite most of the costs of the project, which originally included an effort to adopt anti-union "right-to-work" laws in Washington County. It is not clear if funding was approved, although Maine Heritage launched its FreeME website and associated research study late last summer, as promised in the grant proposal's timeline.
In the application, the group said it was partly acting to counter the "Fair Share Now" initiative, a proposal put forward by a coalition of progressive and labor groups during this year's state budget that sought to shift more of the tax burden onto the wealthy.
In the face of such liberal efforts, the group wrote, "FreeME will allow MHPC to go from defense to offense".
"Washington County has so much going for it that I think there is no reason outside of policy that it shouldn't be booming," says J Scott Moody, Maine Heritage Policy Center's CEO. "Maine's high tax burden is a big part of the reason why it is among the poorest counties. If we can correct that where it's worst, that will help economic development in the entire state."
Washington County was chosen because it performed worst of Maine's 16 counties under a series of economic metrics developed by Maine Heritage.
But once the county rises above its nearest competitor – currently Aroostook County in northernmost Maine – the program would be expanded to the new last place county. This would continue, theoretically, until all of Maine had been treated, although supporters acknowledge that would likely take decades. Counties that maintained the statewide average economic performance under the metrics for three years running would graduate from the program, although Moody hopes something resembling New Hampshire's tax system would then be imposed, not the existing one.
"We won't need the old system because the economy will be larger and there will be less need for governmental welfare," Moody says. Initially – with only Washington County in the program – he estimates that lost revenues will amount to $35m a year – out of $2.3bn on such taxes collected – and suggests this could be paid for via budget cuts.
The Democratically-controlled legislature would have to pass a law to implement the proposal, and that's an uncertain prospect.
"When all you have is a hammer, everything is a nail, and unfortunately this governor and the Maine Heritage Policy Center only have a hammer in their economic toolbox," says House majority leader Seth Berry, who chairs the workforce and economic future committee. "The hammer is 'if we put a new loophole in out tax code, our problems will be solved.' But the data doesn't bear out that point."
Republican state senator David Burns, who represents all of Washington County, says he hopes to introduce a bill and win over his Democratic colleagues. "Washington County has been making some significant strides, but its been a tough time for everybody," he says. "I think this will help spread businesses into the county that will create jobs and improve the economy. It will increase the interest of business here, something we haven't seen in 40 or 50 years."
The governor's office and the Department of Economic and Community Development did not respond to interview requests. The administration has previously indicated they are supportive of the proposal, and might submit legislation themselves.
The initiative has received a mixed reaction in Washington County, where many say the economy is starting to rebuild due to a grassroots, up-from-our-bootstraps effort by local businesspeople and officials. But all acknowledge there is a substantial hole to get out of. Over the past century, the county has lost a quarter of its population (now 32,000) while America's nearly quadrupled. It has the highest rates of unemployment (8.4%) and poverty (20.4%) in the state.
Many county residents cobble together a living off the land, cutting wood, raking blueberries, gathering balsam tips for wreath-makers, digging clams, or picking the area's oversized periwinkles off the shore as the seasons and markets allow.
Paul Molyneaux, an East Machias fisherman and writer who's done all of those things, says the loss of access to many of those resources – through over-harvesting or mechanization – has made it harder for many to make ends meet. FreeME strikes him as not quite hitting the mark.
"Suppose I go to the store and buy $50 worth of clothing and save $3 in taxes. That's nice, but it's not going to do much for me over the long haul," Molyneaux says. "It seems like a 'give a man a fish' instead of a 'teach him how to fish' argument, because without access to resources, it's not going to carry you very far."
But the county – much of which is four hour's drive from Portland and two from the nearest commercial airport or Starbucks – is no longer as isolated as it was, on account of the spread of broadband internet.
"As soon as you cross into the county on Route 1, every turn you make you're in a place even more beautiful than the one before," says Susan Corbett , founder and CEO of Axiom Technologies, a full service informational technology company in Machias that brought broadband to large parts of the county, which has a land area a third larger than the state of Delaware.
"People who visit are realizing that as long as they're connected [via the internet], does it really matter where you wrote from? You can still work while the little ones frolic in the sand. That's changing things."
Would FreeME make a major difference? "Maybe. It might be another tool for the toolkit," Corbett says. "But there are a lot of people who have been laying the foundations for moving our economy forward, and that's what's happening."
Chris Gardner, the chair of the county commissioners and executive director of the Eastport Port Authority, agrees that the primary solution to the county's problems lies from within. "We've been browbeaten for so long around here, people say nothing can ever happen, and that's been our biggest problem: our lack of vision and courage," he says. "We've been retreating through the forest for 40 years, and all it's done is get us lost. We need to stop, start digging foxholes, and go on the economic offensive."
And Gardner believes his native county can win. Take Eastport: with 64ft of water at low tide, it's the deepest natural port in the continental US, relatively close to Europe, located in a community with a strong industrial and maritime heritage. With the Panama Canal being widened, he notes, the world's shipping companies are all rethinking their routes and strategies, because many major ports aren't deep enough to accommodate the larger, deeper draft vessels now being built. The missing piece, he argues to one and all, is a $51m rail connection that could make the city a significant North American cargo port.
"We can sit back and hope somebody picks up the phone and calls us, or we can be problem solvers and go out into the world offering the solution to customers' issues," he notes.
Gardner likes FreeME, in part because of its boldness. "Washington County is dying, and we need to embrace new initiatives," he says. "It's a marketing tool if nothing else."
In October, Gardner and Maine Heritage tried to win FreeME the endorsement of his fellow county commissioners, who demurred, seeking further information. "I think we need to look at the economic development of the entire state, not just make special provisions for one county or another," says commissioner and former Calais mayor Vinton Cassidy who, like Gardner, is a Republican. "I spent six years in the state senate, and I can tell you that thing is never going to get through the legislature for a whole host of reasons."
If it were to pass, says Jonathan Reisman, an economist at the University of Maine Machias and an associate scholar at Maine Heritage, it would encourage entrepreneurial activity, creating wealth and solving the problems associated with poverty.
"It's a bottom-up approach rather than having the government make a particular infrastructure investment," he says. "The argument is that the government doesn't have a good track record of spending money wisely."
The Center for Media and Democracy, a national group based in Madison, Wisconsin that tracks the activities of the State Policy Network members and associated groups, says Mainers should be wary of the proposal on account of its source. Last month, it released a report alleging SPN is largely funded by global corporations and groups and foundations associated with the conservative billionaires David and Charles Koch.
"Groups like MHPC paint this work as 'economic development' but we need to look at where they are coming from and who is funding their agenda," says spokesperson Rebekah Wilce who, by coincidence, was born in Washington County, Their agenda, she says, is to pass bills that "benefit corporate funders, not the people of Maine."
Back at The Commons, Linda Godfrey finishes wrapping a gift for a customer from Calais, the county's largest town (population: 3,100). "I do think we need to be very cautious, and carefully about what this is really about," she says as the customer leaves, heading up Water Street in search of lunch.
"There's always been this attitude that Washington County that we can't take care of ourselves. And here we are moving forward and this comes along."
"I'm not saying I'm against it," she adds with a smile, "but it is a little strange."
• This story was produced in partnership with the Guardian and the Texas Observer. Reported by guardian.co.uk 5 hours ago.
• Read the documents for all 40 SPN proposals
Water Street, the main drag in Eastport, America's easternmost incorporated city, is missing something: boarded up storefronts.
When they were built in the late 19th century, the brick-and-granite blocks were bustling with activity, as shoppers came and went from surrounding homes, sardine canneries, and the archipelago of Canadian islands just across the bay from what was then a town of more than 5,000.
Today the canneries are gone, the border is far less permeable, and Eastport's population has fallen by three-quarters, lending a ghostly feel to the town, which stands on an island beset by fog and 20ft tides that make the surrounding ocean flow like a river.
But this fall, more shops, galleries and restaurants are staying open, and the rest are closed for the winter, not for good, signs that a long anticipated renaissance is at hand.
"For 10 years we have been doing what we can, where we are, with what we have, and we're really beginning to see the fruits of that effort," says Linda Godfrey, co-founder of The Commons, a gallery exclusively featuring work by area artists and craftsmen. "Throughout Washington County you can see these things happening, the result of our own efforts, energy, and capabilities."
So many hereabouts say they were surprised by a conservative thinktank's proposal to further economic development by turning Maine's poorest county into a gigantic tax-free zone. While open to considering its merits, many business and political leaders think the proposal is philosophically out of step with local efforts, which have emphasized homegrown revitalization rather than reliance on special breaks for the long-struggling county.
Under the Maine Heritage Policy Center's "FreeME" initiative, Washington County residents and businesses would cease to pay state income taxes or collect sales taxes until economic conditions reach the statewide average and stay there for three years running.
The initiative, unveiled last summer and currently being evaluated by Maine governor Paul LePage's administration, would make America's easternmost county the first to waive such taxes in a state that has them, and is intended to showcase economic libertarians' contention that taxes are a central impediment to economic development.
According to a grant application acquired by the Guardian and passed on to the Press Herald as part of a reporting collaboration, Maine Heritage sees it as "a research and demonstration project" that will "release residents from extreme government dependency" and "spark an economic boom that can be easily transferred to other areas of Maine and serve as an example for all the United States."
The grant application was drafted in May for submission to the State Policy Network, a national group that funds and co-ordinates activities between Maine Heritage and 62 similar thinktanks across the country. SPN intended to seek funding for promising proposals from the Searle Freedom Trust, an important donor to conservative groups like the American Legislative Exchange Council, Americans for Prosperity, and SPN itself, according to the Guardian.
Maine Heritage requested $35,000 to underwrite most of the costs of the project, which originally included an effort to adopt anti-union "right-to-work" laws in Washington County. It is not clear if funding was approved, although Maine Heritage launched its FreeME website and associated research study late last summer, as promised in the grant proposal's timeline.
In the application, the group said it was partly acting to counter the "Fair Share Now" initiative, a proposal put forward by a coalition of progressive and labor groups during this year's state budget that sought to shift more of the tax burden onto the wealthy.
In the face of such liberal efforts, the group wrote, "FreeME will allow MHPC to go from defense to offense".
"Washington County has so much going for it that I think there is no reason outside of policy that it shouldn't be booming," says J Scott Moody, Maine Heritage Policy Center's CEO. "Maine's high tax burden is a big part of the reason why it is among the poorest counties. If we can correct that where it's worst, that will help economic development in the entire state."
Washington County was chosen because it performed worst of Maine's 16 counties under a series of economic metrics developed by Maine Heritage.
But once the county rises above its nearest competitor – currently Aroostook County in northernmost Maine – the program would be expanded to the new last place county. This would continue, theoretically, until all of Maine had been treated, although supporters acknowledge that would likely take decades. Counties that maintained the statewide average economic performance under the metrics for three years running would graduate from the program, although Moody hopes something resembling New Hampshire's tax system would then be imposed, not the existing one.
"We won't need the old system because the economy will be larger and there will be less need for governmental welfare," Moody says. Initially – with only Washington County in the program – he estimates that lost revenues will amount to $35m a year – out of $2.3bn on such taxes collected – and suggests this could be paid for via budget cuts.
The Democratically-controlled legislature would have to pass a law to implement the proposal, and that's an uncertain prospect.
"When all you have is a hammer, everything is a nail, and unfortunately this governor and the Maine Heritage Policy Center only have a hammer in their economic toolbox," says House majority leader Seth Berry, who chairs the workforce and economic future committee. "The hammer is 'if we put a new loophole in out tax code, our problems will be solved.' But the data doesn't bear out that point."
Republican state senator David Burns, who represents all of Washington County, says he hopes to introduce a bill and win over his Democratic colleagues. "Washington County has been making some significant strides, but its been a tough time for everybody," he says. "I think this will help spread businesses into the county that will create jobs and improve the economy. It will increase the interest of business here, something we haven't seen in 40 or 50 years."
The governor's office and the Department of Economic and Community Development did not respond to interview requests. The administration has previously indicated they are supportive of the proposal, and might submit legislation themselves.
The initiative has received a mixed reaction in Washington County, where many say the economy is starting to rebuild due to a grassroots, up-from-our-bootstraps effort by local businesspeople and officials. But all acknowledge there is a substantial hole to get out of. Over the past century, the county has lost a quarter of its population (now 32,000) while America's nearly quadrupled. It has the highest rates of unemployment (8.4%) and poverty (20.4%) in the state.
Many county residents cobble together a living off the land, cutting wood, raking blueberries, gathering balsam tips for wreath-makers, digging clams, or picking the area's oversized periwinkles off the shore as the seasons and markets allow.
Paul Molyneaux, an East Machias fisherman and writer who's done all of those things, says the loss of access to many of those resources – through over-harvesting or mechanization – has made it harder for many to make ends meet. FreeME strikes him as not quite hitting the mark.
"Suppose I go to the store and buy $50 worth of clothing and save $3 in taxes. That's nice, but it's not going to do much for me over the long haul," Molyneaux says. "It seems like a 'give a man a fish' instead of a 'teach him how to fish' argument, because without access to resources, it's not going to carry you very far."
But the county – much of which is four hour's drive from Portland and two from the nearest commercial airport or Starbucks – is no longer as isolated as it was, on account of the spread of broadband internet.
"As soon as you cross into the county on Route 1, every turn you make you're in a place even more beautiful than the one before," says Susan Corbett , founder and CEO of Axiom Technologies, a full service informational technology company in Machias that brought broadband to large parts of the county, which has a land area a third larger than the state of Delaware.
"People who visit are realizing that as long as they're connected [via the internet], does it really matter where you wrote from? You can still work while the little ones frolic in the sand. That's changing things."
Would FreeME make a major difference? "Maybe. It might be another tool for the toolkit," Corbett says. "But there are a lot of people who have been laying the foundations for moving our economy forward, and that's what's happening."
Chris Gardner, the chair of the county commissioners and executive director of the Eastport Port Authority, agrees that the primary solution to the county's problems lies from within. "We've been browbeaten for so long around here, people say nothing can ever happen, and that's been our biggest problem: our lack of vision and courage," he says. "We've been retreating through the forest for 40 years, and all it's done is get us lost. We need to stop, start digging foxholes, and go on the economic offensive."
And Gardner believes his native county can win. Take Eastport: with 64ft of water at low tide, it's the deepest natural port in the continental US, relatively close to Europe, located in a community with a strong industrial and maritime heritage. With the Panama Canal being widened, he notes, the world's shipping companies are all rethinking their routes and strategies, because many major ports aren't deep enough to accommodate the larger, deeper draft vessels now being built. The missing piece, he argues to one and all, is a $51m rail connection that could make the city a significant North American cargo port.
"We can sit back and hope somebody picks up the phone and calls us, or we can be problem solvers and go out into the world offering the solution to customers' issues," he notes.
Gardner likes FreeME, in part because of its boldness. "Washington County is dying, and we need to embrace new initiatives," he says. "It's a marketing tool if nothing else."
In October, Gardner and Maine Heritage tried to win FreeME the endorsement of his fellow county commissioners, who demurred, seeking further information. "I think we need to look at the economic development of the entire state, not just make special provisions for one county or another," says commissioner and former Calais mayor Vinton Cassidy who, like Gardner, is a Republican. "I spent six years in the state senate, and I can tell you that thing is never going to get through the legislature for a whole host of reasons."
If it were to pass, says Jonathan Reisman, an economist at the University of Maine Machias and an associate scholar at Maine Heritage, it would encourage entrepreneurial activity, creating wealth and solving the problems associated with poverty.
"It's a bottom-up approach rather than having the government make a particular infrastructure investment," he says. "The argument is that the government doesn't have a good track record of spending money wisely."
The Center for Media and Democracy, a national group based in Madison, Wisconsin that tracks the activities of the State Policy Network members and associated groups, says Mainers should be wary of the proposal on account of its source. Last month, it released a report alleging SPN is largely funded by global corporations and groups and foundations associated with the conservative billionaires David and Charles Koch.
"Groups like MHPC paint this work as 'economic development' but we need to look at where they are coming from and who is funding their agenda," says spokesperson Rebekah Wilce who, by coincidence, was born in Washington County, Their agenda, she says, is to pass bills that "benefit corporate funders, not the people of Maine."
Back at The Commons, Linda Godfrey finishes wrapping a gift for a customer from Calais, the county's largest town (population: 3,100). "I do think we need to be very cautious, and carefully about what this is really about," she says as the customer leaves, heading up Water Street in search of lunch.
"There's always been this attitude that Washington County that we can't take care of ourselves. And here we are moving forward and this comes along."
"I'm not saying I'm against it," she adds with a smile, "but it is a little strange."
• This story was produced in partnership with the Guardian and the Texas Observer. Reported by guardian.co.uk 5 hours ago.