Wednesday, April 25, 2012

Seeing the future: Small cities poised to thrive

Published in the Portland Phoenix

The future of America can be found not in its largest cities nor its deepest wilds, but in the small cities dotting its landscape, recovering from decades of neglect and economic ravaging. So writes Catherine Tumber in Small, Gritty, and Green: The Promise of America's Smaller Industrial Cities in a Low-Carbon World, published late last year by MIT Press.
Tumber, a former senior editor at the Boston Phoenix, will be reading from her book and speaking about what her premise might mean to Maine, the country, and the world, at Longfellow Books on Thursday, April 26, at 7 pm. We caught up with her to get a taste of the future; here's an edited transcript of our conversation.
I KNOW YOU DIDN'T WRITE ABOUT MAINE IN THE BOOK, BUT IT SEEMS LIKE A LOT OF THE PRINCIPLES APPLY. Some of the principles apply. My book really tries to offer a vision for cities of smaller scale. One of the purposes is to restore cities on the size of Portland to their place as cities in the way that we think about cities.
WHEN WE THINK OF CITIES, WE THINK OF THE FIVE OR TEN LARGEST CITIES IN THE US AND THEY'RE BIG, BUT HOW MANY PEOPLE LIVE IN SMALL CITIES? I'M WONDERING IF IT'S NOT MORE THAN LIVE IN THE MAJOR CENTERS. It's hard to say, because demographers don't really collect the information in ways that make it simple to get at that number; they collect it based on the metropolitan area. Estimates have been as much as a third of the American population lives in smaller cities and their suburban areas, smaller metro areas. This affects a large number of people, who tend themselves to think they live in small towns.
Portland fits that profile but most of the cities that I look at have troubles that Portland doesn't have, so that's very much to Portland's advantage.
Also though much of the economy is based on tourism, in the age of global warming, which is nipping at our heels, we aren't going to be able to sustain the sort of long supply chains that have been a part of globalization and that have allowed us to outsource so much of our work. Portland may be in a position to recapture some of its older 19th century productive work.
One of the casualties of thinking of these places as small towns is that it misses the fact that a city of 66,000 is a significant urban market. If you only think in terms of large markets like New York City or Chicago you miss the opportunities to market for a local economy.
Certainly large cities can support more competing services. One of the strengths of smaller cities based on their industrial history and the skills that still exist in their population is that they're suited more for the productive green economy. They could produce for the foreign export market while also participating in a more localized consumer-based economy.

Friday, April 20, 2012

Corporate Welfare Watch: King-BIW deal resurfaces during tax-incentive scrutiny

Published on

Bath Iron Works staff subsidize their own jobs as a result of a 15-year-old deal now coming under criticism from a national watchdog group. In 1997, Bath Iron Works threatened to leave Maine in search of greener pastures. In exchange for staying — and agreeing to invest $200 million in its shipyard here — lawmakers and then-governor Angus King agreed to pay BIW as much as $60 million over the years between then and 2018.
The payment comes even more directly from state coffers than if Augusta sent BIW a check. The company deducts state income tax from workers' paychecks, but from July 1 to the end of each year, BIW pockets the money, rather than the usual practice of turning it over to the state treasury.
Six years before that deal ends, it has been pinpointed as one of the biggest such handouts by Good Jobs First, a national watchdog group studying economic-development incentives. A recent report says the BIW tax break is the 14th-largest nationwide case of workers subsidizing their own corporations.
BIW is the only recipient of the state's custom-made Shipbuilding Facility Tax Credit, which is capped at $3.5 million per company per year. Nearly 100 other Maine companies take advantage of similar deals, under Employment Tax Increment Financing arrangements, which this year are slated to let companies keep $7.1 million of their workers' tax withholdings.
Maine is one of 16 states that has such a program (and one of six that has two), projected to cost Mainers $10.2 million in tax revenue this year alone — cash that would ordinarily be sent to the treasury but instead is kept by companies.
Good Jobs First research director Philip Mattera admits that it's "kind of an abstract issue" his group is worried about in this study. In other studies, he observes, "We're critical of a lot of these subsidy programs in general. They often go to companies that don't need them." He calls the tax-withholding rebates "even worse" than other kinds of corporate welfare because it opens up the opportunity for even more, and larger subsidies; states get much more money from income-tax withholding than from corporate taxes, and so have more cash to hand out if they can tap that source before it ever arrives in the state treasury.
He says the structure of the tax break — requiring specific investment over a specific timetable, and expanding or contracting the annual amount of the rebate depending on actual employment levels — means it's better than it might be, but is still too closely linked to workers' earnings for his group to be comfortable.
Jay Wadleigh, vice-president of Local S6, the biggest union operating at BIW, says workers are well aware of the arrangement. "We lobbied with (the company) to get it," he recalls. "What (lawmakers) did helped the shipyard," promoting investment and saving jobs. He notes that BIW's chief competitor, Ingalls Shipbuilding in Mississippi, also gets state subsidies.
He observed that while Good Jobs Now criticizes the form of the tax break, Maine could have given BIW the same amount by collecting all the workers' taxes and then sending a check from Augusta, and workers wouldn't object then, either.
Todd Gabe, an economics professor at the University of Maine who studies economic development, says business leaders care less about taxes than politicians often think, and says studies of government-subsidy programs are "mixed" as far as effectiveness.
The BIW and ETIF credits are the only corporate handouts in Maine that are actually tied to employment numbers and salaries. State officials have for years given loan guarantees, tax rebates, and other financial incentives to companies without promises of new jobs or decent wages.
The biggest such program, the Business Equipment Tax Reimbursement plan, is designed to reward investment by refunding from state coffers money companies pay in local property taxes for their equipment and machinery. In 2011, BETR gave companies a total of $55,263,656. Eleven companies got more than $1 million each in refunds from the state; of those, only LL Bean ($1 million) is headquartered in Maine. Six are out-of-state, including the biggest winner, Verso Paper ($4.3 million), BIW ($3.2 million), and Walmart ($1 million). The remaining four are owned by companies in other countries, like Nestle Waters North America (owner of Poland Spring; $1.9 million).
And these are hardly the only handouts the state offers. There are dozens of tax breaks on the books in Maine, all detailed in Maine Revenue Services reports (issued every other year, most recently in 2011). Lance Tapley analyzed the first such report on these so-called "tax expenditures" for the Portland Phoenix in 2008 (see "Tax Break Heaven") and found that of the state's $3.4 billion in tax breaks that year (an amount almost exactly the size of the state's actual spending), companies got $682 million, and wealthy Mainers got $808 million. Poor people got $157 million in tax breaks, and the middle class saw about half the total tax-break benefit, or $1.7 billion.

Wednesday, April 4, 2012

Press Releases: More questions, some answers

Published in the Portland Phoenix; additional info published at

We know a lot more now about the deal that handed Donald Sussman, the hedge-fund mogul, progressive philanthropist, and husband of Chellie Pingree, 75 percent of thePortland Press Herald and its siblings.
First, we know HOW THE DEAL CHANGED, in less than two months, from a $3.3-million loan worth five percent of the company into a $3.3-million cash purchase of three-quarters of the equity. Greg Kesich, a columnist for the Press Herald who is the vice-president of the Portland Newspaper Guild and holds one of two union seats on the company's board of directors, says Sussman's proposal for a loan "didn't work for the private-equity investors," who wanted "a lot of guarantees about how they were going to get out." So the company diluted existing shares — including the employees who own part of the company. "We're part of the 25 percent that just shrunk, that used to be 100 percent," Kesich says. How come? Easy: "Everybody's betting that a smaller share of something is better than a big share of nothing."
Second, we know THE BUSINESS PLAN HAS NOT CHANGED. While union president Tom Bell was dismissive of a proposed takeover plan by Chris Harte, a former PPHpresident and heir to the Harte-Hanks media fortune, because it was "too reliant on print" and didn't include enough investment in new technology. (Also, it would have required crushing concessions from the union.) It's clear the existing model isn't working: circulation and ad revenue have declined for years. Kesich says the company will invest the new cash in a major technology upgrade that union president Tom Bell has described as integrating online and in-print publishing, as well as modern software for advertising sales and accounting. Bell suggests the move will take the company from running way behind in the media industry to being in front of the pack.
Third, UNION-SOUGHT EMPLOYEE RAISES HAVE NOT YET BEEN NEGOTIATED. Wage increases were tabled until this year in the contract approved last year. Kesich says they'll come up in the middle of this year. The rest of the contract is still in force as well, Kesich says, until its original expiration date in June 2013.
Fourth, we can be reasonably sure SUSSMAN ISN'T DOING THIS TO CONTROL A MESSAGE or push a political agenda. (Seriously, as has been noted by others, if he wanted to push a political message, would he buy a newspaper or ads on television?) "He says that he's investing in a community asset and he considers journalism to be a public good, as well as a business," Kesich says. "It benefits everybody whether they read it or not." (So declining circulation shouldn't bother Sussman.) In fact, Kesich suggests, "this is more a philanthropic move" than a business one, though he says Sussman wants the paper to be "self-sustaining."
• That's a lot of good info, but questions remain:
The Bangor Daily News has reported that CRG Partners Group, a Boston-based firm "specializing in restructuring troubled companies," was brought in to reorganize in the wake of Connor's departure, and was looking for $10 million in investments to pay off debt, and an additional $5 million for operating cash. SUSSMAN'S CONTRIBUTION IS TINY compared with those goals. (Not to mention a pending lawsuit over $125,000 in allegedly unpaid bills for paper.) Will $3.3 million be enough to turn a struggling company into a successful one?
While we take Sussman at his word that he'll stay out of editorial decisions, Kesich says "he's going to have a hand in making business decisions." WHAT HAPPENS WHEN BUSINESS CHOICES IMPACT EDITORIAL coverage? That's unclear — while Sussman has said in a written statement that he'll trust the editors and managers hired by the previous owners, at some point they'll leave and he'll hire their replacements. Kesich asks skeptics to "look at what we do and evaluate what we do."
Read this story online to learn more questions — some with answers.
Jeff Inglis can be reached at

My column this week has some questions — and some answers — about the new incarnation of MaineToday Media, the owner of the Portland Press Herald/Maine Sunday Telegram, the Kennebec Journal, and the Central Maine Morning Sentinel.
I ran out of room in the paper to give you all the info I had, so here’s an addendum. (Also, I’m attempting to get an interview with Donald Sussman; fingers crossed on that!)

There’s been a lot of talk about EDITORIAL INTEGRITY as a result of this deal, in which Donald Sussman has bought 75 percent of the company for $3.3 million. We take Sussman at his word that he won’t get involved in the editorial board and daily news operations; if he proves us wrong, we’ll let you know. Also, Greg Kesich, the union veep and PPH columnist I spoke to this week promises, as union prez Tom Bell has in other interviews, that the union will advocate for journalistic principles if issues arise.
On that note, we already know that SUSSMAN WILL BE IN THE NEWS A LOT MORE than he is used to, as a result of this deal. He’s normally just a good-guy character, donating millions to progressive and community causes around the state. Now he’s opening himself to criticism, ridicule, and general widespread attention. The paper is looking at how best to handle DISCLOSURES ABOUT HIS OWNERSHIP when dealing with stories that might relate to him or his interests — or his wife and her political career. While under Richard Connor, that sort of owner-disclosure was rare (“we were told not to do it,” Kesich says), but since Sussman has gotten involved, that information has been regularly inserted in stories about Pingree.
What does the purchase price mean for THE COMPANY’S TOTAL VALUATION? Probably very little. It’s definitely not as simple as saying if $3.3 million equals three-fourths of the company, then the whole thing is worth $4.4 million. For one thing, the company owns land and a building in South Portland, valued by that city at $12.1 million (despite that number, it sold in 2009 for $7 million as part of the Blethens’ exit). The building is home to a printing press and other equipment valued at $6.8 million. And there are subscriber and advertiser databases, which are worth money to marketers, as well as the archival records, which are worth something to collectors and libraries. In the end, though, any company — like a home — is actually worth what it can be sold for, at the future date when it actually sells. So any calculation is unclear at best.
SUSSMAN HASN’T BEEN TO THE PRESS HERALD OFFICES yet. “He hasn’t set foot in the office yet,” Kesich said Friday. “I’m hoping that he will,” because employees whose jobs he saved want to meet him.
Say what you will about Richard Connor (we’ve sure said a lot here) and no-longer-prospective owner Chris Harte: both are extremely experienced at running profitable news operations. Their plans (Connor’s as implemented; Harte’s as proposed) included major changes that reduced the power, scope, and financial commitment to the union and its members. Which means they either saw NO WAY TO PROFITABILITY WITHOUT CUTTING union-related costs, or saw other ways but chose extended combat with the union as the easiest. Sussman has no experience managing a media company; will he find a way to preserve the union that the other guys, with decades more experience, couldn’t?
And lastly, WILL RICHARD CONNOR GET AWAY WITH HIS PLUNDER? He purchased the company for cheap, sold off almost all its real-estate, cut costs, allegedly rearranged the books to his own advantage, and then left town. Does he have personal — or criminal — liability for changes at the paper that slashed jobs, the salaries of those remaining, the paper’s reputation, and ultimately the community’s well-being?

Kids on film: Big top on the small screen

Published in the Portland Phoenix

Circus Smirkus, the Vermont-based youth circus that visits Maine every summer, will appear on Maine televisions in a documentary highlighting both the performances and the struggles — physical and financial — of a small traveling show.
Circus Dreams will be shown in two versions — the 90-minute full-length film and an edit of that footage down to one hour — on the Maine Public Broadcasting Network's television stations this month.
Signe Taylor, a producer for PBS's Zoom, has put together her second child-related documentary (the first was about the Iraq war's effect on Iraqi families), following the 2006 summer season of the circus from auditions through training, and on to 70 performances over seven weeks. The twist of this circus is that performers are between the ages of 10 and 18, which obviously improves the show's appeal to children, and is part of the draw to its annual performances in Freeport and Kennebunkport (this year August 6-7 and 9-10, respectively) as well as elsewhere around New England.
None of what's shown is truly startling or eye-opening; the film is simply a view into a world where teenagers put on makeup and costumes and run around a show ring trying to get other people to enjoy themselves. Which is very much like simply being a teenager.
As you might expect in a story about teenagers, there are a goodly amount of clich├ęs. Some lines, for example, have likely been spoken by anyone who ever went to camp as a teen and really connected with the people who were there: "It's kind of relaxing to know that there are other people in the world who are as strange as you," says trouper Jacob Tischler of his first summer with the circus. And there are tears at the finale as the performers part ways at summer's end and return to places where they again feel like outcasts.
It's worth checking out this weekend, but in truth, the better version to see is the longer one (both feature cameos by Maine's Fritz Grobe, of Eepybird). The shorter version (which I watched first, as people who watch both showings on MPBN will do) feels rushed. Even just the extra 30 minutes in the full-length piece allows significantly greater depth and insight.
It introduces more of the performers as characters, shows more of the backstory behind these kids and their summer-long run-away-to-the-circus exploits. It also spends more time with the adults, paying attention to things like casting, logistics, and finance — but the central drama is really just the kids challenging themselves.
There is a subplot showing the financial tenterhooks by which the company clings to existence, but it seems added in an attempt to inject dramatic tension into this otherwise heartwarming, smiley film.
Circus Dreams | by Signe Taylor | one-hour version on MPBN's regular TV stations: April 5 @ 10 pm, April 7 @ 11 am | 90-minute version on MPBN's World channel (10.3 on the digital spectrum and TimeWarner channel 173 in Cumberland and York counties; see for channel information elsewhere): April 24 and 25, times TBD | |