By Bonnie Washuk,Staff Writer

AUGUSTA – Dennis Rogers of Tambrands in Auburn and other manufacturers went to the State House on Monday to publicly support Gov. John Baldacci’s plan to lower taxes, specifically his plan to phase out Maine’s municipal tax on business personal property.

Baldacci’s plan is opposed by the Maine Municipal Association, which says eliminating the tax by 2009 and paying municipalities only half of what they would get would shift taxes to homeowners and other businesses.

On the day that Baldacci’s tax proposals were aired in a public hearing, Rogers and others spoke at a State House press conference. For years the municipal tax on new equipment has been reimbursed by the state, which has helped grow jobs, Rogers said. That reimbursement made a difference when Tambrands, which manufactures tampons under the Tampax name, was bought by Procter and Gamble in 1997.

“Their decision to continue to do business in Maine was in no small measure a result” of the state reimbursement, Rogers said. “We had to retool our entire production and invest a lot of money.” In the last six years $200 million has been invested in the Auburn plant, which now employs 600.

But each year during legislative budget debates, businesses have to defend the Business and Equipment Tax Reimbursement, “which gives our corporate headquarters fits,” Rogers said.

Ending the tax would “give certainty that when we’re making investments, we won’t be penalized. It’s the kind of stability we’re looking to make additional investments.”

Others speaking for Baldacci’s proposal were IP mill worker Doug Bunker of the Pulp and Paper Research Council; Alan Estes of Rich Tool and Die in Scarborough; Dana Connors, president of the Maine State Chamber of Commerce; and John Williams, president of Maine Pulp and Paper Association.

Williams called the personal property tax the “largest disincentive for getting companies to invest in Maine.” If the tax is phased out as Baldacci wants, “we can encourage investments” and preserve the 10,000 well-paying paper mill jobs.

Last year International Paper in Jay spent $114 million to rebuild a paper machine. Those are expensive upgrades, Williams said, “but when you do that the machines run faster, they run more efficiently, we’re able to make paper as cheaply and better quality than anywhere in the world.” Without upgrades, “our machines are outdated, they’re small … you can’t get the production to keep up with new facilities coming on around the world.”

Like Tambrands, IP invested in Jay because the state reimbursed the tax. But every year that state reimbursement “comes under attack,” which makes the corporation wonder if it should invest in Maine, Wisconsin, Alabama or China, Williams said.

Speaking against the proposal, Geoff Herman of the Maine Municipal Association said municipalities are opposed to repealing the tax because it would narrow municipalities tax base and “push up” taxes for homeowners, small businesses, agriculture and other property owners.

Herman estimated that it could mean a loss of between 4.5 percent to 8.5 percent after 10 years. “Who’s left to pay the taxes?” Herman asked.

Baldacci’s tax expert, Martha Freeman, director of the State Planning Office, said Monday that most other states do not tax new business investments, and that puts Maine at a disadvantage regarding jobs.

She disagreed with MMA’s estimates, and said that under the governor’s proposal municipalities would lose less than 1 percent of their income. Everyone should work to lower Maine’s tax burden, Freeman said. Municipalities can decide to absorb the reductions, “or they can chose to raise taxes,” she said.