Beyond cheerleading

Until now, Maine’s experience with public-private partnerships gone bad – tax breaks, loans, subsidies and other incentives that turn into layoffs and plant closings – has largely been the result of dealings with large out-of-state corporations. Whether the corporation in question makes shoes, paper or ships, the lesson never quite learned seems to be that the decisions made in far-flung big business board rooms do not always take into account the best interests of this small state.

Until EnvisioNet. The decisions that took millions in state and local taxpayer support and that are currently returning layoffs and bankruptcy were made right here in Maine. The more this situation unfolds, the clearer it becomes that those homegrown decisions, however well-intentioned, bear an unfortunate resemblance to those made elsewhere in that the public interest and public investors were not protected.

Blame irrational exuberance. One expects company officials to trumpet their company at every opportunity, but there is a point at which enthusiasm and optimism become deception. Barely two months ago, EnvisioNet execs were boasting of explosive growth and unprecedented expansion, yet the bankruptcy filings show that the dire circumstances were well known long before that time. From the townspeople of Orono, on the hook for $7.3 million, to citizens of Maine, providers of yet untallied millions in various types and assistance, the list of investors – business partners – kept out of the loop is enormous.

Public officials, from the governor on down to the local town councilor, who once were EnvisioNet’s biggest boosters now say the company was overextended and undercapitalized, stating what is now the obvious. Such a critical view would have been more useful when the partnerships were being forged and the deals being made.

Which gets to the heart of the problem – so much pressure is on government leaders to support business that the support is largely unquestioning, and anyone who does question it is labeled anti-business. The business community prides itself on making wise, thoroughly considered and informed decisions. The business lobby, however, apparently considers prudence a vice when exhibited by public officials.

What is needed is a new model for evaluating public support of business that bases the level and type of support on objective assessments of the particular business and the business climate under which it exists. For example, since the bankruptcy filing it is now widely known that EnvisioNet’s business sector – call centers providing technical support for computer hardware and software companies – is severely overcrowded with competitors, that a serious price war has been under way for months and that the year-old downturn in the technology sector has led some of the biggest names in the field, such as IBM and Hewlett Packard, to move into tech support in a big way.

This information was long known to the experts who keep track of the minutiae of the high-tech industry. It certainly would have helpful to officials in Orono (or in Brunswick or Augusta, where EnvisioNet also got help) but it is unreasonable to expect a town councilor to have the same level of knowledge as a high-tech sector financial analyst. It is not unreasonable, however, to expect publicly funded analysts at, say, the Maine Department of Economic and Community Development or the Finance Authority of Maine to more consistently track these trends and to compile relevant information that can lead to better-informed decisions at the state and local levels.