Committee approves Libby bill to spur development of cooperatives and employee-owned businesses

Posted: May 23, 2019 | Senator Libby

Legislation from Sen. Nate Libby, D-Lewiston, to incentivize and assist with the development of cooperatives and employee-owned businesses was unanimously approved by the Legislature’s Taxation Committee on Tuesday.

“Workforce development and retention are among the greatest challenges facing Maine’s economy. By incentivizing and assisting with the conversion of businesses assets to cooperative or employee ownership, we can help preserve existing Maine businesses, even as owners transition into retirement; empower current Maine workers; and attract new working-age people to Maine,” said Sen. Libby. “The severity of this crisis is clear to legislators, and that’s reflected in yesterday’s vote.”

As amended, LD 1520, “An Act To Create and Sustain Jobs through Development of Cooperatives and Employee-owned Businesses,” excludes from Maine income tax the amount of gain, up to a maximum of $750,000, recognized by a business owner in transferring the business to an employee stock ownership plan, eligible worker-owned cooperative, consumer cooperative or affordable housing cooperative, as well as interest from the loans that finance these transfers.

The bill also requires the Department of Economic and Community Development (DECD) to contract with an outside organization to establish a program to inform and educate Mainers about employee-owned businesses and how these transitions can happen. The program also would connect them to available resources, including financing.

“Research shows that employee ownership can help stem Maine’s ‘brain drain’ and attract and retain more young workers,” said Rob Brown of the Cooperative Development Institute at a recent public hearing on LD 1520. Citing recent data, he said that “young workers in employee-owned companies were in a much better financial situation, with 33 percent higher wages, 92 percent higher household wealth, and 53 percent longer job tenure.”

Also speaking in favor of LD 1520 at the public hearing were:

  • Beckie Swanson Conrad, President and CEO of the Lewiston Auburn Metropolitan Chamber of Commerce;
  • Craig Saddlemire, resident and Manager of Raise-Op Housing Cooperative in Lewiston;
  • Nolan Gauttier, President of Charter Oaks Village Cooperative in Arundel;
  • Nancy Smith, Executive Director of GrowSmart Maine;
  • Kevin Malmstrom, General Manager of Rock City Employee Cooperative in Rockland;
  • Deborah Hawkins, Northest New England Loan and Outreach Officer of Cooperative Fund of New England;
  • Michael Newsom, CEO of W.J. Wheeler Insurance Agency in South Paris;
  • Norma Sprague, President of Pemaquid Villas Mobile Home Cooperative in Bristol;
  • Jonah Fertig-Burd, Co-owner of Celebration Tree Farm in Durham;
  • Ellen Stern Griswold, Policy and Research Director at Maine Farmland Trust; and
  • Stephen Kosacz, President of Autoworks in Kittery.

The Taxation Committee will take an initial vote on LD 1520 in the coming weeks.