A Referendum lets Mainers Decide on Investing $50 Million in Small Businesses: Do State-Funded Grants Offer a Model for other States?
A referendum on the issue of bonds in the state of Maine is to be held in June of 2017. Citizens of Maine will vote on the grant of $50 million on behalf of the state to two entities — the Maine Technology Institute and the Maine Venture Fund.
If the referendum passes the grant, then $45 million will be allotted to the Maine Technology Institute, or, more specifically, to its Maine Technology Asset Fund. This money will be available for loans and grants; however, there will be a rigorous selection process for those competing for the loan. The money may also be used for larger capital expenditures on infrastructure, equipment, and technology upgrades that are intended to increase productivity in sectors such as aquaculture, agriculture and forestry.
What are these organizations, Mainers might wonder, and why fund them?
The Maine Technology Institute (MTI) is a publicly funded, nonprofit, industry-led corporation that offers early-stage capital and commercialization assistance to small businesses. It was established by the Maine State Legislature in 1999, and supporters see it as a driving force in the long-term expansion of research and development resources that generate high-quality jobs in the state of Maine, via its Maine Technology Asset Fund.
The remaining $5 million will be issued to the Maine Venture Fund, if the referendum goes that way. The Maine Venture Fund (MVF) is a professionally managed fund that invests in companies that show high potential for growth and public benefit. The MVF’s mission is to provide small, eligible businesses with the resources to grow. It operates on returns and interest rates that thus get recycled and invested into new companies. The money that MVF provides is “venture capital”; this is funding that investors provide to startup companies and small businesses that display long-term growth potential. It was started in1997 with a $13 million dollar grant from the Maine legislature.
Do these entities, with other Maine policies, make a difference? Maine is in fact doing better than many states when it comes to small business health. According to a report by Small Business Advocacy (SBA), there are 142,186 small businesses in Maine, which collectively employ 278,957 people. Thus, news sources such as Business News Daily have called Maine the “state of small business.” According to the U.S. Census Bureau, companies with fewer than five hundred employees made up 57.5 percent of Maine’s private workforce in 2014. The small business sector was so profitable in this state that in 2014, Maine small businesses generated about 5764 jobs.
Small exporters are a substantial part of this picture in Maine. In 2014, small and medium-sized goods exporters were, according to the International Trade Administration, responsible for 83 percent of all state exports, generating 58 per cent of the state’s total known export value. Supporters of bills such as the one coming up in the June referendum claim that this relative boom in the small business economy is in part due to the state’s easing of access to capital in the form of grants and investment through these organizations. Some make the case that small businesses help create the small-town feel that attracts millions of visitors.
From 2015 to 2016, Maine’s tourism industry recorded $6 billion in growth, which is a whopping 6% bump over the numbers in 2015. Therefore, supporters of the bill argue that an increase in these funds benefits not only small business owners in Maine, but also the state and its citizens as a whole. Critics maintain that Maine spending has other priorities, as demonstrated in the battles over Maine charter and public school funding, that we at DailyClout have also covered.
The Maine House of Representatives passed the bond in a 138-10 vote. The Senate almost unanimously supported the bond as well. Governor Paul LePage signed the bond into law. It is now subject to the Special Referendum Election on June 13, 2017.
So at this point, it is up to the people of Maine to decide by voting in the referendum, if they do or do not want this $50 million to be spent on supporting investment in and development of Maine small businesses. What do you think, Mainers? Have your say — by turning out for this important referendum on June 13.