A cost-saving proposal to reduce tax benefits to companies under the state’s Business Equipment Tax Reimbursement program was met with immediate opposition from corporate representatives because they said it would stifle economic development.

BETR, as the program is known, may well be vital to the state’s business interests, but there is currently no way to quantify this. Further, if BETR is an effective economic development tool, perhaps other less effective programs should be eliminated and more money directed toward BETR and other programs that are showing results.

A major problem, however, is that the state spends more than $200 million a year in business incentives and tax credits without knowing whether this investment is paying off.

In 2006, the Office of Program Evaluation and Government Accountability reviewed 46 state economic development programs, ranging from tax exemptions on fuel and electricity used at manufacturing facilities to agricultural grants. OPEGA found that a quarter of the programs had no clearly stated public purpose, a quarter did not have specific objectives, and a third did not regularly report their performance.

OPEGA also reported that any efforts to monitor or oversee these programs as an investment portfolio would be hampered by a lack of essential information because 94 percent of the programs do not collect or maintain sufficient data to allow analysis of overlap and gaps between programs. More than half the programs did not provide information on administrative costs. “Without such data, there may be missed opportunities to streamline programs and reduce administrative costs within and among programs,” OPEGA said. “It is also difficult to determine whether some businesses or business sectors are receiving more assistance than needed while others are not receiving enough.”

The OPEGA report did not conclude that Maine was spending its tax money badly, but that it didn’t have enough information to know or to determine whether shifting the money it did spend could produce a better result.

The report did conclude that Maine should judge its programs for efficiency and effectiveness, coordinate those programs statewide, clarify program requirements and accountability, and collect data to improve transparency and accuracy of any development claims made. Lawmakers took steps in this direction last year with passage of a bill by Sen. Richard Rosen to require evaluation of these programs.

Lawmakers are now considering going further with a study to compare the effectiveness of the programs. The cost of the study is small – $150,000 – but this will be money wasted if lawmakers don’t have the stomach to act on the findings since every incentive has supporters.

In these difficult budget times, lawmakers should want to know what state expenditures and tax breaks (which mean less state revenue) are effective. Those that aren’t should be axed and the resources shifted to those with documented benefits.