Note. This post was written as my introductory past for Portland, Maine edition of examiner.com. I applied and was accepted by Mr. Rick Brown with the words" You would make an excellent examiner". However when I went to post this article, I encountered a software glitch that prevented me from doing so. The examiner was changing its software and so at first I took it to be that I was encountering a general problem. However the glitch that I encountered was not listed in the common issues.
After a week of waiting for a response to my support ticket, and receiving no communications from normal channels, I contacted Rick Brown, who promised to look into it. After another week of waiting for further response form Rick Brown, I wrote and indicated that at that point I was inclined to believe that the software glitch was there by intent. Over a week has passed since then and I have received no further communication from Rick Brown. I no longer take seriously being a contributor to the Examiner.com.
I believe that there are political forces at work that have an interest in silencing any discussion of the mountain of state capitalism that has been constructed by our legislature, with astounding speed, over the last fifteen years. The only way to know about it is to read the original sources- the legislative bills that have constructed it. I have provided a list of links to some of this legislation in this post.
It’s Constitution Time, Governor LePage!
The election is history and now LePage is Maine's governor to be.
As with the nation, the economy, the economy, and the economy are the first order impacting the now and future Maine. Inseparable from the economic debate is a debate about which political philosophy will lead Maine into the new decade and beyond.
LePage campaigned as a constitutionalist. Lepage has been among those that say it is not the role of government to create jobs, but rather to create an environment furthering creation of private sector jobs. The method by which the government influences the environment is slippery territory, which is why the constitution needs to be applied like a golden rule.
To my knowledge, LePage has not expressed a view on the entrenched structure of state capitalism, constructed by the Maine legislature over the last fifteen years. The legislation often reads like a corporate business plan. It is clear that our past and current legislature and administrations believed that it is their role to manage Maine’s economy and to move Maine toward their vision of the way we ought to be. The legislature has repeatedly utilized special acts of legislation to charter corporation after corporation, always promoting and justifying the acts with the vision that they are creating jobs.
Article IV, Part Third, Section 14 of the Maine State Constitution states in no uncertain terms that corporations shall not be created by special acts of legislation:
Corporations shall be formed under general laws, and shall not be created by special Acts of the Legislature, except for municipal purposes, and in cases where the objects of the corporation cannot otherwise be attained, and, however formed, they shall forever be subject of the general laws of the state
And yet state capitalism has been advanced with astounding speed.
The corporations, chartered by special act of legislation, and other associated legislation created since 1995 include:
In 1995, The Small Enterprise Growth Fund was chartered by special act of legislation. It focused on investments in Maine businesses. The Taxpayer accounts for 10% of the investment in “the fund”, as the SEGF is identified in the legislation. The taxpayer’s investments always “roll over” to reinvest in “the fund”. The other 90% of the investors are private “high growth” investors who require an “exit strategy” in order to realize a profit. The legislation mandates that The Small Enterprise Growth Fund submit it’s annual report to the legislature. The annual report is not readily accessible to the public, although the public is an involuntary investor in this investment corporation.
The Small Enterprise Growth Fund does not have a government web address, indicating that although it reports to the legislature and was chartered by the legislature, it is a private corporation. This is a common structure for the corporations that the legislature has chartered during the last fifteen years.
The 1999 Annual Report for the Maine Technology Institute identifies the structure of the corporation in the following manner
MTI is a private, non-profit (501(c) 3) organization. It receives a direct appropriation from the Legislature through the Department of Economic and Community Development. $9,600,000 was appropriated to MTI for the 1999-2000 and 2000-2001 biennium. MTI is limited to using up to 7% of the appropriation for administrative costs. MTI is governed by its By-Laws (Appendix C), consistent with the word and intent of the legislation
The Maine Technology Institute is a nonprofit research corporation which functions as a conduit for transferring capital from the taxpayer and other sources available to non-profits to private commercial enterprises, which realize healthy profits from this arrangement. Like a magician doing a slight of hand trick, the government promotes jobs created thanks to the investment and research corporations chartered by special acts of legislation. The quasi government network regulates “social benefit” requirements on the beneficiaries of the re-channeled capital resources. The money flows from the taxpayer and other sources to the MTI to the MEP (Manufacturing Extension Partnership) to the privately owned business. The main stream media functions as the public relations arm of the quasi governmental network, exclusively encouraging the public perception that all is well and good because the government is creating jobs, and not to notice that capital funds are being transferred from the general economy to those that serve the government sanctioned “social benefit” agenda.
The social benefits are not completely defined in the legislation but instead much is left to the discretion of the Small Enterprise Growth Fund which functions as the head honcho in the network of government chartered corporations. At one time the Small Enterprise Growth Fund published the social benefit requirements on its web site but at last inspection they were not to be found. The social benefits included mandating that recipients of capital provide 50% of the employee health insurance as well as providing for pension funds. This in the face of the huge unfunded public liability resulting from the original government chartered corporation, The Maine Public Employees Retirement Fund- and so- highly problematic government policies are mandated on the private sector by the quasi governmental network.
LD1, legislation passed in early 2010 is misleadingly titled “
An Act to Stimulate Capital Investment For Maine Businesses”. LD1 expands the authority and reach of the Small Enterprise Growth Fund, which is authorized to manage the “Fund of Funds”, a mutual funds investment corporation. Despite the title of the legislation, the text of the legislation prohibits investment in individual businesses and reduces the requirement to invest in Maine to a mere token. LD1 authorizes The Small Enterprise Growth Fund to minimize the risk for the private investors to the tune of 80 percent of a potential loss to be covered by the taxpayer in the form of “tax credits”. The Maine Public Employees Retirement Fund is identified as the “preferred investor”, And in so doing enabled the proponents of the new mutual funds investment corporation to tout the “Fund of Funds” as a benevolent solution to the unfunded liabilities created by The Maine Public Employees Retirement Fund. However to date the latest MPERS email newsletter made no mention of investing in the Fund of Funds, nor have I heard of it else where.
This is the climate in which our new governor finds himself. Will LePage take on the constitutionality of the massive structure of state capitalism in Maine? LePage has yet to comment on government-chartered corporations as a constitutional issue. As an election issue this is not an indicator as it is not a good election strategy to raise an issue with which the general public is disengaged. If state capitalism is ever to be reversed, the general public must become engaged.
This past election has shown the potency of public participation in the process. As an infamous politician recently said “Why waste a crisis?” That sentiment can be turned in any direction. We are still in crisis mode, though some would have us believe that we are past it, but that surely cannot be for the people of Maine who have the unfunded liability to Maine Public Employees Retirement Fund. Around 1997, the contractual agreement with MPERS was embedded into our constitution, conflicting with Article IV, Part Third, Section 18, of the Maine State Constitution which says that all corporations, however formed, are subject to general laws. The implication of embedding a corporation’s contractual agreement into our constitution creates an ominous precedent. The roots of state capitalism are long and deep in our past but If not now, then when can they be rooted out?
When, in 1947, the Maine Public Employees Retirement Fund was chartered by a special act of legislation, it was done with these words: “This is an essential government function”. The same words were used to charter The Small Enterprise Growth Fund. Although the state government had existed for many decades without either corporation, it was not deemed necessary to justify the claim, which is the basis of a political philosophy radically different from the political philosophy, which formulated the constitutions of Maine and the United States. Now is the hour to have this conversation. Good Morning, Governor LePage!
After Note: As I was working on the links for this post, I realized that the 2010 “Act to Stimulate Capital For Maine Businesses” has been amended by deleting and replacing the entire text of the bill (See links above). I have not had time yet to read the new version but on first glance it appears to be that the Maine Public Employees Retirement Fund is no longer the “preferred investor”, it is now the only investor. The Small Enterprise Growth Fund no longer manages the “Fund of Funds”- now the fund is managed by The Finance Authority of Maine.
I am researching the time line but will not be able to immediately read the new version of the bill as this is a busy time of year. I will be posting on this matter and the amended version of the bill at a later date.
