Who Benefits and Who Pays for Maine's Big Government Management of Our Economy?

An Open Letter to Senator Trahan,


Dear Senator Trahan,

I wrote to you in the past about The Small Enterprise Growth Fund, an investment corporation created by the Maine State legislature for the purpose of attracting high growth venture capitalists to Maine.

At the time I suggested that “the Fund” should “roll over” to invest in the micro-economy, which you thought was a good idea. I am now writing to say that I think it is a terrible idea. It is redundant and wasteful, as it requires an expensive government bureaucracy to select which small businesses in the micro economy will be the beneficiaries. Given Maine’s deficit, it would make more sense to eliminate the taxpayer investment in the Small Enterprise Growth Fund, allowing the micro economy to retain more of their self-generated profits, which is the primary source of capitalization within the micro-economy.

You said the Small Enterprise Growth Fund is one government program that is working quite well. I have heard this before. I read such statements in the Small Enterprise Growth Fund’s email updates, but those statements leave me wanting for more information. Information about The Small Enterprise Growth Fund is difficult to uncover because the legislation that created it states that the SEGF will report to the legislature, bypassing the general public.

I am on the mailing list for the Small Enterprise Growth Fund and The Office of Innovation, The email newsletters read like advertisements and political slogans. I use them as a starting point to uncover the real facts. However I have yet to find the annual report of the Small Enterprise Growth Fund. It may be publicly available, but if so, it is certainly not well publicized- and so fundamental facts such as the identity of the private investors with whom the Maine state taxpayer is in partnership, through the SEGF, remains a mystery. Since the taxpayer portion of the profits always “rolls over to re-invest in the fund, while the private investor demands an “exit strategy” (selling the business), I submit that the tax payer contribution to the Small Enterprise Growth Fund is functioning as a bribe to attract the “high growth” private investor. A “roll over investment” has no “exit strategy”. It just keeps rolling over to reinvest in” the Fund”. The private investor requires an “exit strategy” in order to realize a profit.

Why would the legislation call this partnership “the Fund”? The answer may lie in the Maine State Constitution, Article IV, which describes legislative powers. Section 14 of Article! V states:

“ Section 14. Corporations, formed under general laws. 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 to the general laws of the State.”

I submit that the formation of The Small Enterprise Growth Fund through an act of legislation, is unconstitutional, - short of the argument that is premised on the belief that the State of Maine cannot attract high growth investors without bribing them. To that end I submit that the recently passed LD1666 is yet another bribe to attract “high growth” capitalization to Maine. This legislation, combined with LD1, provides “tax credits” for investments in Maine businesses that are approved by FAME. Who does it allot these tax credit to? First to government employees who get a credit of 80 % of their investment, and then, a tax credit of 60% of the investment, to private entrepreneurs, who, as stated in the legislation need not be Maine residents paying Maine taxes in order to qualify for a Maine state tax credit. The LD1666 legislation also states that the same 60% tax credit is available to non-profit organizations, which for the purpose of the tax credit will be treated as taxpayers. The reason this needed to be stated is obvious.

The legislation also identifies who is not eligible for this tax credit, and that would be primarily small business owners of the micro-economy who not only invest their “roll over capital funds” created by their self-generated profits, but also their time and energy and soul in their businesses. Also excluded are any persons related to the owner of the business. It is a long standing tradition that one of the primary sources of micro-economy investment are friends and family, and so this legislation, by offering a carrot for investment in businesses favored by our government, thus stacks the deck against the micro-economy, whose resources are already being taxed to fund the sector which our government has pompously designated as “the creative economy”.

LD1666 was submitted by the president of the Senate and Gubernatorial candidate, Libby Mitchell. I am hoping that gubernatorial candidates will emerge that will campaign on reducing the size of our indebted state government by getting the government out of the business of managing our economy and picking and choosing who gets the benefits and who gets taxed to pay for those benefits. I see no guarantee that investments that are lured to Maine through bribes and which demand ‘exit strategies” are actually here for the long term. “High growth” investors have their personal profits in mind when the business is sold, as is the meaning of the “exit strategy”. A high growth investor will sell to the highest bidder. To my knowledge the 10% taxpayer investor has little say about the “exit strategy”, any more then they have easy accsess to the annual report or the identities of the other investors.

I believe that Maine is capable of attracting investors without bribing them and taxing those lower down on the economic scale to pay for it. Can we bring back honor into our system?


I pay attention to the grass roots political movement, which is against big government and to that end, the focus, is on welfare reform. The legislation that created the SEGF is designed to insure that it’s business takes place behind close doors away from the view of the general public. Every one knows about the welfare system but the general public, by design, is left unaware of the goings on in our Maine State governmental business management system.I hope that in the up-coming election season. This will change.

Maine Taxpayers Fund High Growth Capitalism But What Are Taxpayers Receiving in Return??

Letter to the Editor of the Boothbay Register

Dear Senator Trahan and representative Bruce McDonald,

I wrote to you couple of days ago about The Small Business Growth Fund.

This fund was created in 1995 and appears to be a state government investment in private entrepreneurship for high growth companies doing "public good" (which raises the question who decides what is for the "public good"-does the taxpayer have a voice in this or just the fund managers?)

I asked what does the taxpayer get out of it? I would think that if taxpayers have invested in a private investment company that this information would be readily available and assessable to the general public but I cannot find it.

I would assume that if every dollar the taxpayer puts in were matched by nine dollars of private investment, that the taxpayer is a 10% shareholder in the company- But as I have never seen this stated, it remains only an assumption.

On the basis of that assumption, it leads to the question- why is our state government in so much debt? I saw pitches at the Juice Conference that speculated profits in the billions. If this is the sort of "high growth" that SBGF invests in, then, why haven't the taxpayers, like the good citizens of Alaska, under the governorship of Sarah Palin, received dividends in the mail?

Is it because of the even higher costs of our state entitlement programs?

Entitlements help, especially when people do not have jobs- but even slaves have entitlements. Entitlements are an investment that slave owners have to make to maintain their assets.

Where are the "opportunity" programs for the small scale and modest growth sector of the micro-economy-, which is clearly excluded from investment by the taxpayer-, funded Small Business Growth Fund?

We need a new category for the small business sector that is not classifiable as "high -growth" capitalism or non-profit organizations. This is truly the private sector micro-economy- those small businesses on "Main Street", that we heard so much about when our Federal government was selling TARP to the public. We haven't heard anything about Main Street since then but the credit freeze is still alive and well on Main Street whose primary source of capital investment is self-generated profit, which, with many small businesses filing as S-corporations, (profit reported on individual returns) will be taxed heavily if self-generated profit exceeds $250,000.00. Then the private citizen will be taxed to an increased degree in order to fund our ever-expanding federal government and to pay the interest on our federal government's rapidly escalating debt.

Where are the "opportunity programs" for the people? The United States is transforming from the land of opportunity into the land of entitlements. If there were a growth in opportunity, there would not be such a large need for entitlements. When the House was first formulating the "Stimulus Bill" they called the small business sector " the engine of new job creation" and then allocated 200 billion dollars for food stamps and $450 million for loans for small businesses, which includes the "high growth" businesses that are exclusively favored by Maine's Small Business Growth Fund. Add to that continual extensions in unemployment and a federal administration that only recently got the idea that maybe it should focus on job creation- this after months of promoting the citizens of this country to "volunteer" service. Once the citizenry is programmed to accept that they MUST volunteer service, the dots can be connected between receiving entitlements and "mandatory" volunteer service- and there you have it- the people of the United States squarely become the slaves of concentrated power and wealth.

The Small Business Growth Fund was created by our state legislature in 1995. Times have changed. Where is the Small Business growth fund for small scale and modest growth companies, which are the foundational basis of a flourishing middle class? My family business was started in 1952 with the philosophy of creating a hand made product affordable to the middle class. In those days the middle class was flourishing and the distribution of wealth took the form of a bell curve, with the greatest amount of wealth distributed among the greatest number of people.

Both sides of the political divide agree that we need to move back to a more equitable distribution of wealth- but all the solutions for doing so are targeted at funding and stimulating growth at the top. This is not working! When is someone in government going to get the revolutionary idea of stimulating growth at the bottom to middle sector of the economy? Where is the Main Street Economy Growth Fund? It is in our self-generated profits, capped at $250,000.00 before being heavily taxed to fund the hegemony of concentrated power and wealth that is the new face of government.