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Governor signs pioneering tax credit law to stop ‘brain drain’


With applause filling his office, Gov. John Baldacci signed on Monday what’s described as the nation’s most far-reaching law to keep the state’s best and brightest from fleeing after graduation by offering tax credits to reimburse their college loans.

“The eyes of the nation are looking at Maine,” said Justin Alfond of the League of Young Voters, which helped push the Opportunity Maine bill that was enacted with a historical flourish before the legislative session closed in late June.

The law, described as Maine’s version of the GI bill that was signed by President Franklin D. Roosevelt 63 years ago, attempts to end a “brain drain” of Maine college graduates to other states in search of better pay to meet the demands of their college loans among other expenses.

It provides tax credits to reimburse educational loan payments for any Maine resident who earns an associate degree or a bachelor’s degree in a state college or university and then lives, works and pays taxes in Maine after earning that degree.

Opportunity Maine offers an option allowing a Maine company that hires a Maine college graduate to take the credit if it assumes the former student’s loan debt.

While other states have similar proposals and programs that target people in specific careers such as teaching, Maine’s new program is believed to be the nation’s most far-reaching, said Tony Giampetruzzi, Opportunity Maine spokesman.

Before it was unanimously approved by the Maine House on June 19, the Legislature’s lone World War II veteran, Kittery Democratic Rep. Walter Wheeler, compared Opportunity Maine to the GI Bill of Rights as he made a pitch for passage.

The GI bill, or Servicemen’s Readjustment Act, was signed into law by FDR on June 22, 1944, and provided payments for school tuition, fees, books, supplies and subsistence allowances.

Maine’s benefits can be claimed only while a recipient lives and works in the state. Tax credits would have a maximum of $2,100 per year or $8,400 total for a graduate who spent all four years in a Maine college.

Baldacci acknowledged Monday that the law will require a major commitment by future legislatures if the program, which has a two-year startup cost of more than $150,000, is to remain funded.

“I can tell you I am personally committed to this,” said Baldacci, a Democrat who was re-elected to a four-year term in 2006.

“I often wanted the ability to be able to do this, but we have struggled financially over the years,” said Baldacci, adding, “We finally have been able to get to a point where we can get our head above the water and make investments in higher education.”

A coalition that launched a citizens’ initiative drive last year collected thousands more voters’ signatures than they needed to force a referendum. Recognizing popular support for the plan, the Legislature opted to enact the proposal themselves instead something that had been done only five times previously.

“This is a huge deal for our state,” said Democratic Rep. Hannah Pingree, majority leader in the House, which approved the bill 142-0.

Hours after Baldacci signed the state bill, U.S. Rep. Tom Allen, D-Maine, held a news conference to trumpet similar federal legislation he has introduced to create Lifelong Learning Accounts.

Employees would contribute after-tax money to savings accounts that would be employer-matched and portable. Employees would get tax credits on the first $500 they contribute to the account, and a tax deduction on subsequent savings.

There would be no tax penalty for funds withdrawn for educational costs, Allen said.

Americans need such a program to keep their skills sharp amid the rapid pace of technological innovation and increasing international trade that changes jobs, Allen said.

“There is a real need in our work force for continuing education,” said Allen.

A Senate version of the bill has been introduced by Sens. Maria Cantwell, D-Wash., and Olympia Snowe, R-Maine.

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