We need strict standards to guide tax exempt for-profit business expansion.

The governor’s proposal for Pine Tree Zones contains a full package of tax exemptions for new businesses that agree to locate in areas of economic distress. However, the draft bill offers nothing beyond state tax breaks; and it is studiously vague on where these zones might be located.

There are two major problems with the “tax-only” approach. First, businesses in Portland and Millinocket both pay the same taxes now. It is clear that something other than taxes is responsible for the difference between their economies. Call it locational advantage. Portland can compete for new investment with low-tax New Hampshire, while Millinocket cannot.

The second major drawback with a tax-only approach is that, without statutory standards for applying them, they quickly become the expectation for every expanding business. Without standards, a good lawyer can get a tax free zone anywhere, say, Portland’s Outer Congress Street. If that happens, Millinocket is certainly no better off; and the state is much the worse because we lose tax revenue to pay for genuine needs and services. A “race to the bottom” is all that we will have if the new zones lack objective criteria.

Proponents argue that the bill will cost nothing because of its “but for” clause, a condition that tax concessions in a Pine Tree Zone may be given only to a business that would not come here without them. To satisfy this condition, presumably nothing more is required than the CEO’s statement to that effect.

If the state accepts that evidence (and how can we not), that is the end of it. The standard is subjective, untrustworthy and self-serving.

Equally important is the question of whether the business might still agree to invest with the benefit of fewer than all concessions available. If the business would come anyway under an agreement to receive back only, say, half the withholding taxes, then the state is losing out by extending additional concessions beyond those necessary. There is no provision in the bill to grant anything but all of the concessions at once.

Every new business induced to invest also expands the BETR/TIF double-dip. Each use of the double-dip costs the state out-of-pocket money, sometimes quite a lot of money as we have seen with BIW, National Semiconductor and IP.

As a practical matter, if these Pine Tree Zones become the new minimum standard for doing business in Maine, no one will come without expecting one. If our established businesses like L.L. Bean and MBNA don’t get these benefits, they would be justified, based on pique alone, in refusing to expand here.

In short, giveaways without standards earn us no points among business people. They will accept what we give but won’t respect us in the morning.

This does not mean that tax incentives are unimportant. But they must be applied with a scalpel, not an ax, or we will face the kind of embarrassment created by the BETR/TIF double-dip.

Aside from taxes, there are other things we should do to address the locational disadvantages of rural Maine. Here are some examples:

• New investors in Maine should not pay for the costs of our bad electric power decisions of past decades, the so-called stranded costs portion of our electric bills. For investments that are genuinely new, it would not be cost-shifting to exempt such businesses fully from such energy surcharges.

• New investors in many states are offered free or reduced-costs for training skilled workers. The governor’s initiative to create community college centers offers a great opportunity to focus further education on business needs. We could offer free skills training for specified levels of investment and new hiring in Pine Tree Zones.

• Many states offer buildings that are tailor-made for the types of business they seek to attract. Perhaps the Finance Authority of Maine or another state agency should enter the property development business in those regions where the risk is too high for a for-profit developer to put up a spec building.

The governor’s proposal to create Pine Tree Zones for troubled areas of Maine is an opportunity for a fresh start in economic development. Let’s begin with appropriate tax incentives; but well thought-out, non-tax inducements may be more effective in attracting business with less risk to Maine’s fiscal stability.

Let’s make Pine Tree Zones a big success, not for political reasons, but to prevent a failed initiative from becoming a cruel hoax on northern Maine.

Sen. Chris Hall, D-Bristol, serves on the Business and Economic Development Committee and chairs the Utilities and Energy Committee. Rep. Peter Mills, R-Cornville, a former four-term senator, serves on the Appropriations Committee.