GROWING MAINE FROM WITHIN: The Small Business Initiative

Senator Bromley Makes Case for Research, Development, and Infrastructure Investments

Asks Appropriations Committee to Support Economic Development Bond Package

AUGUSTA—State Senator Lynn Bromley, D-Cumberland County, today presented to the Joint Select Committee on Appropriations a strong argument for passage of a comprehensive and targeted economic development bond package designed to encourage investments in research, development, and our state’s infrastructure.

During her speech Bromley said that her plan includes “NO NEW INITIATIVES, and instead focuses on existing programs, vehicles and approaches already proven to have a positive and demonstrable return on investment to the people of Maine.” She added, “Simply said, they work and we can prove it.”

Bromley also compared her bond package to the Governor’s proposal and stated that he put forward “responsible package,” but stated that her package has a “sharper focus” and is more comprehensive.

Bromley, other legislators, and organizations that could benefit from this investment proposal plan to have a press conference on Tuesday, March 1, 2005 to further outline the benefits of giving Maine voters the choice to vote on this economic development package.

The text of her speech follows…

Statement to the Joint Standing Committee on Appropriations and Financial Affairs from Senator Lynn Bromley (D-Cumberland County)

February 23, 2005

Good afternoon, Senator Rotundo, Representative Brannigan and esteemed members of the Joint Standing Committee on Appropriations and Financial Affairs. I am Senator Lynn Bromley and I am pleased to present for your consideration LD844 “An Act to Authorize a General Fund Bond Issue to Stimulate Maine's Economy.” I represent the people of South Portland, Cape Elizabeth and part of Scarborough in the Maine Senate, but today I come before you as the Senate Chair of the Joint Standing Committee on Business, Research and Economic Development and as a voice for critical economic development for all of Maine. LD844…is a $120 million bond for Economic Development…it is a Really Daring Initiative. RDI...more about that in a minute.

First let me applaud the Governor for putting forward a responsible bond package. You will notice considerable overlap in the Economic Development bond presented by the Governor and this one, LD844. There are also some significant differences. The primary difference is that LD844, in addition to being comprehensive, is Economic Development in sharp focus. The individual items in this bond are related, connected and in proportion. They operate together in a system.

This bill includes NO NEW INITIATIVES, and instead focuses on existing programs, vehicles and approaches already proven to have a positive and demonstrable return on investment to the people of Maine. Simply said, they work and we can prove it.

On to the RDI….the really daring initiative.

Beginning with “R”. In the past several legislative sessions we, and those who came before us, have made thoughtful and purposeful investments in Research….at our Universities and in our private labs and institutes. We have come to understand the important connection between research and innovation and a growing economy in today’s high tech world. Therefore I propose:

• $25 million to the University of Maine System - our graduate degree granting entity
• $22 million to the Maine Marine Coalition, to leverage the potential of our unique marine asset
• $10 million to the BioMed Coaltion to continue the progress already underway

R&D is a necessary component in a growing economy. Notice I said R AND D. Research AND Development. Without DEVELOPMENT …research is simply that. Research….new ideas, methods, apparatus or systems that may or may not make it from the lab to the market…from tax payer supporter to tax generating.

R with out the D is not a wise investment in these times of scarcity. R AND D….whereby we establish and support the continuum from lab or bench or classroom to product, and revenue and spin off is not only wise…it is absolutely essential.

Next is the “D” in the “really daring initiative” ….. the D in R&D. I propose the following direct business support: And once again NO NEW INITIATIVES but rather existing and proven programs, vehicles and approaches.

• $25 million to the Finance Authority of Maine,
• $ 6 million to the Small Enterprise Growth Fund, and
• $ 5 million to the Applied Technology Development Centers

This money is critical to any economic development strategy that we undertake. In addition to supporting the growth of businesses and the creation of jobs these funds are also used to retain jobs as FAME is frequently asked to step in when the loss of jobs is threatened. A most recent and public example is Lincoln Pulp and Paper. The current status of funds at FAME today would prohibit this level of support. I have attached a breakdown of the $25 million as well as information on the activity, additional funds leveraged and numbers of jobs retained and created. This is NOT A NEW INITIATIVE – but an effective and efficient and proven vehicle.

The mission of the Small Enterprise Growth Fund is to attract, support and develop small businesses that will contribute to the well-being of Maine. SEGF is essential if we are serious about entrepreneurial development. It provides critical dollars to select high potential companies and offers guidance, referrals and education to many more. NOT A NEW INITIATIVE, but an established and highly effective resource it is in the words of one company CFO “an integral part of the fabric of the entrepreneurial neighborhood in Maine”. SEGF will not continue without additional funds.

Applied Technology Development Centers – of the $5 million proposed the majority is for the Center for Enterprise Development our oldest and most successful business incubator which is soon to be homeless. It’s current host institution, Southern Maine Community College, though initially competing to have an incubator located on its campus some years ago now needs the space for their own expansion plans. The Center for Enterprise Development, thanks to the entrepreneurial strength of it’s director and it’s engaged board members, has embarked on an exciting plan of relocation and growth and sustainable funding via a partnership with the University of Southern Maine, the City of Portland and a well designed fund raising plan where they have in hand over a million dollars of the needed $4.5 million. NOT A NEW INITIATIVE, but an established, effective and integral part of our economic development strategy. I’ve attached descriptive detail as well as information demonstrating an 8:1 Return on Investment.

And now the “I” in this “really daring initiative” – infrastructure. For this I propose $15 million for the very popular and well utilized Municipal Investment Trust Fund.

Once again…this is NOT A NEW INITIATVE, but an existing and effective funding mechanism for needed infrastructure, like water and sewer, roads and paths and intersections and for multi-municipal solutions to barriers to economic development.

In our relatively recent past it was widely accepted that it was our job, the job of government, to provide the necessary infrastructure for economic development; this was largely transportation and communication. Today that infrastructure includes more. In addition to roads and communication it includes, as we have come to understand, innovation (research), technical assistance, and access to capital (development) and something more….affordable workforce housing. I propose:

$12 million for the Mane State Housing Authority for Affordable Workforce Housing.

Not so long ago those who came before us in support of affordable housing spoke of the plight of the homeless and an individual’s right to housing. Those issues remain and are now complicated by another layer…the lack of affordable housing for average income working people - workforce housing. Now, in the BRED committee those who come before us to advocate for affordable housing are businesses and companies from Jackson Labs to Hannaford Bros., to Fairchild Semiconductor to the local bookstore, auto mechanic and the like. Affordable Workforce housing is an integral part of our economic development infrastructure.

So there it is….RDI (research, development and infrastructure all connected in an efficient and effective continuum). It IS a “really daring initiative” but not in the usual terms of risk and reward. The programs, vehicles and approaches are proven to be effective and efficient and many are independently audited and evaluated. What is daring is what we may have to set aside in order to make room for this initiative …..because we can be certain that funding these priorities in the proper proportion will absolutely have obvious and immediate positive economic impact in real dollars and cents

Your plate is full of bond requests; I don’t envy your job of choosing what is most important for the people of Maine. But most of us know that Maine people are hungry for bold action….hungry for sensible and sustainable economic development….for a really daring initiative. Research, Development and Infrastructure….RDI a really daring initiative – really doable initiative.

Please join me in supporting LD844 “An Act to Authorize a General Fund Bond Issue to Stimulate Maine's Economy.” There are others behind me with more detail on the specific components of this bill. And please know that the members of the Joint Standing Committee on Business, Research and Economic Development and I stand at your service between now and the various work sessions and report backs on this and any other economic development initiative. Thank you.

LD 844 Appendix A

FAME – Description and Breakdown of $25 million

A. Economic Recovery Loan Program: $12 million

This revolving loan program was first capitalized in 2001, and has had of total of $13.0 million from the state. The program has funded $33,745,000 in loans to date. This is the most flexible loan program we administer at FAME. It allows for our highest level of risk financing and also permits FAME to take equity interests in projects financed. The fund currently has approximately $4 million available and has pending applications that could take a significant portion of that amount.

Program description at http://www.famemaine.com/html/business/econ-recovery.htm

B. Regional Economic Revolving Loan Program (REDLP) $6 million

The funds in this program are administered by FAME, but disbursed by 24 regional economic development agencies throughout Maine. It has deployed $13,250,000 over its life and that has supported loans to businesses of $116,900,000. Often times these funds are used in a subordinate position to FAME and/or bank financing. These loans require local match and relies on the capacity of the "on the ground" agency to understand the local needs. Loans revolve back to the local agencies to reloan.

Program description at http://www.famemaine.com/html/business/revolve-loan.htm

C. FAME Capitalization $7 million

This fund would go to recapitalize FAME in order to increase our lending capacity. Due in part to the restructuring of our manufacturing based economy, FAME is being asked to share the risk in larger credits. In order to meet those needs, FAME required additional capital so as to avoid having to use state resources to support any future loan losses.