AUGUSTA — A controversial proposal to provide Bath Iron Works with $60 million in tax credits remains stalled in a legislative committee even as a veteran peace activist’s “hunger strike” on the issue entered its second week.
Members of the Legislature’s Taxation Committee on Tuesday delayed a vote on BIW’s request for up to $60 million in tax incentives – spread over 20 years – contingent on the company investing in the shipyard and maintaining employment levels. Although the bill appears to have strong bipartisan backing in the committee, lawmakers and Maine Revenue Services representatives continue to fine-tune changes to a tax incentives package that BIW officials say is important to helping the shipyard compete for Navy destroyer contracts.
In the audience Tuesday – and during three previous bill discussions – was Bruce Gagnon, a Bath resident waging a one-man hunger strike against what he regards as “corporate welfare” for one of the world’s largest defense contractors.
A vocal peace activist, Gagnon has been eschewing solid foods and subsisting on water, fruit juices and broth since Feb. 12 to protest BIW’s request for the tax breaks. Others have occasionally joined Gagnon in his fasting and during his twice-daily “vigil” outside BIW’s gates during shift changes, where he hands out fliers to departing workers.
“I was an organizer for the United Farm Workers Union, where I learned about solidarity,” Gagnon said earlier Tuesday while holding a sign in the hallway connecting the Maine House and Senate chambers. “So for me, it’s all about solidarity: solidarity in terms of the thousands of people in the state without health care, solidarity with the 43,000 kids living in poverty and solidarity with people driving around on roads (filled) with potholes that are tearing up their cars.”
Asked how he was feeling on the 16th day of his “hunger strike,” Gagnon replied, “I’m hungry,” but indicated he would continue his fast as the BIW bill slowly moves through the legislative process.
Gagnon is part of a very small but vocal group of peace activists critical of BIW’s parent company, the defense contracting giant General Dynamics, and of the Bath shipyard’s solitary focus on building Navy warships.
With roughly 5,600 workers, BIW was Maine’s fourth-largest private employer last year. The shipyard’s payroll alone is estimated at $350 million – with an average salary in excess of $60,000 – and BIW does more than $45 million worth of work with other Maine companies.
BIW is one of only two shipyards that build the Navy destroyers deployed around the world to provide both high-powered offensive capabilities and intercept defense against enemy ballistic missiles. The Bath shipyard is currently bidding against its only competitor, Huntington Ingalls of Mississippi, for a share of at least 10 Navy destroyer contracts – each likely worth in excess of $1.5 billion – that will be awarded over the next four years. BIW also is working with a Spanish shipbuilder in hopes of winning a contract for up to 20 guided-missile frigates for the U.S. Navy.
The tax incentives bill pending in the Legislature, L.D. 1781, would provide BIW with $3 million in annual tax credits over the next decade if BIW invests $100 million in the shipyard before Jan. 1, 2025, and maintains employment around 5,600. The company would qualify for an additional $30 million – for a total of $60 million in tax credits over 20 years – if BIW invests an additional $100 million in the shipyard.
Addressing the committee this month, BIW Vice President and General Counsel Jon Fitzgerald said every dollar counts when trimming contract costs to compete with a shipyard in a lower-cost state. Mississippi’s Legislature is also considering a $45 million bond measure to pay for capital improvements at the Ingalls shipyard, which is located on state-owned land.
“If we believe we are going to have a $3 million credit coming to us, that will absolutely be reflected in our bid,” Fitzgerald told committee members Feb. 8.
But some committee members – most notably Democratic Sen. Justin Chenette of Saco – have pressed unsuccessfully for BIW to be more forthcoming about its internal finances and those of its parent company. Gagnon and other bill opponents, meanwhile, frequently point out that General Dynamics’ CEO had a total compensation package valued at more than $21 million in 2016 and that the parent company has spent billions of dollars in recent years buying back its own stock.
Activist Mark Roman of Solon said he doesn’t believe the Navy would allow one of its two destroyer shipyards to go under, especially when Ingalls is located along the hurricane-prone Gulf Coast.
“General Dynamics is making money from BIW. They wouldn’t own it if they didn’t,” Roman said.
Instead, Gagnon and the small group of activists have said the shipyard should switch to non-defense manufacturing – such as rail cars and wind turbines – especially in the face of a changing climate.
“For our children and our grandchildren to survive on this planet, we have to begin this process of conversion now, or yesterday,” Gagnon said. “And someone has to make that demand.”
The Taxation Committee is expected to take up the bill next Tuesday for a potential vote. In a statement, BIW said the company “has provided information and amended the bill to address the questions posed by committee members and Maine Revenue Services.”
“The legislators are giving this very important investment the thoughtful and deliberate consideration it deserves,” the company said.
Bruce Gagnon of Bath holds his sign opposing Bath Iron Works tax credits Tuesday at the State House. Gagnon was on the 16th day of a hunger strike. (Joe Phelan/Portland Press Herald)