DeChant to BIW: I’m Your Puppet
State lawmaker colludes with corporation to push big tax break
By Chris Busby
A trove of e-mails obtained by an investigative reporter in Rhode Island reveal a remarkable degree of collusion between a Maine lawmaker and a Virginia-based defense contractor seeking $60 million from state taxpayers. The documents shed light on the cozy relationship between the legislator, Democratic Rep. Jennifer DeChant, of Bath, and her corporate “client,” shipbuilder Bath Iron Works, a subsidiary of General Dynamics. But the e-mails also show that both parties fear the public is getting wise to the unseemly economics of the deal. They worry that even one activist expressing opinions in the local paper can stir up enough opposition to sink it.
And they might be right.
As detailed in this month’s cover story, “Ship of Fools,” DeChant is sponsoring legislation to renew a 20-year, $60 million tax break for General Dynamics, which acquired BIW in 1995. BIW has already received upwards of $200 million in state and local tax “incentives” over the past two decades. Meanwhile, its parent company has spent over $16 billion buying back its own stock to placate Wall Street investors and line the pockets of its top executives.
What was not known until last week, when Rhode Island reporter Alex Nunes obtained the e-mails (via a Maine Freedom of Access Act request) and wrote about them on his blog, Nunes’ Weekly, is the extent to which DeChant is doing BIW’s bidding. Among the revelations:
- The bill, LD 1781, was written and submitted to the Legislature by an attorney working for BIW: Dan Walker, of the Portland law and lobbying firm Preti Flaherty.
- DeChant has a very limited understanding of the implications of the legislation she sponsored. She requested “talking points” from BIW to “counter” arguments that veteran peace activist Bruce Gagnon made in an op-ed published last December by the Portland Press Herald.
- BIW Vice President and General Counsel Jon Fitzgerald provided the “talking points” for DeChant to deliver to her constituents. The pair then coordinated their efforts to push the legislation, in part by targeting lawmakers in leadership positions and raising the specter of job losses in their districts if BIW is not granted the tax break.
- DeChant and Fitzgerald both privately expressed their hope that the bill would sail through the Legislature in the early part of this year’s short session, with minimal debate, due to public opposition to the tax break and competing demands for state funds — like the need to find money for the expansion of Medicaid benefits that Mainers demanded at the polls last fall.
That hope appears to be fading. The DeChant/BIW bill was stalled by strong headwinds during a Feb. 8 meeting of the Legislature’s Taxation Committee, which tabled the legislation to give members more time to consider amendments. Several of DeChant’s fellow Democrats questioned the need for the tax break, including one, Sen. Justin Chenette, of Saco, who asked Fitzgerald why General Dynamics can’t invest $60 million in its Maine subsidiary’s operations.
According to an account of the meeting published by Gagnon on his blog, Organizing Notes, Fitzgerald rebuffed legislators’ suggestions that BIW open its books to prove to lawmakers that it needs the public subsidy. “At one point during the meeting Fitzgerald cried out, ‘For us to be punished because our owner has capital seems unjust!’” Gagnon reported.
Public opposition to the bill is growing, according to Gagnon, who’s had success cutting corporate welfare for General Dynamics before. In 2013, he and other local activists helped convince Bath’s City Council to reduce BIW’s request for an additional $6.3 million property-tax break over 25 years to $3.7 million over a 15-year period.
On Feb. 12, Gagnon began a hunger strike “in the spirit of solidarity” with sick and impoverished Mainers who he believes would be better served by the public money that DeChant is trying to give to General Dynamics. Gagnon and his compatriots have started standing outside the shipyard’s Washington Street headquarters on weekday afternoons holding protest signs and handing out flyers with information about LD 1781 to workers and passersby.
“There’s a lot of people calling and e-mailing [their state lawmakers] all over the state,” Gagnon said in a recent interview. “I think that’s slowing [the tax-break bill] down a little. That doesn’t mean we’re going to win, but people know about it. And when they do find out about it, generally they’re opposed to it.”
Well before dawn on Monday, Dec. 4, DeChant wrote an e-mail to Fitzgerald with a link to the op-ed by Gagnon published in that day’s Press Herald. “I am sure you have seen the Op Ed piece below,” she wrote. “I am looking for some talking points to counter this or provide context. I am not going to use publicly but I am meeting with constituents so want to provide context to their opposition.”
Gagnon’s opinion piece pointed out that BIW has already received $200 million in state and local tax breaks, and that its parent company spent $9.4 billion buying its own shares between 2013 and 2016. General Dynamics CEO Phebe Novakovic made $21 million in 2016, Gagnon noted. Over 40 percent of her pay is based on stock performance.
Fitzgerald provided DeChant with the “talking points” the next day. “We should discuss co-sponsors at some point as well,” he added.
DeChant followed up with an e-mail requesting BIW employment figures for specific counties, including “Kennebec (Katz/Aprops)” and “Lincoln (Dow/Tax).” The parentheticals refer to Republican Sen. Roger Katz, of Augusta, who chairs the Appropriations and Financial Affairs Committee, and Republican Sen. Dana Dow, of Waldoboro, chairman of the Taxation Committee.
The strategy DeChant and Fitzgerald are pursuing is the same one that’s worked in the past when General Dynamics wanted public assistance: threaten the livelihoods of BIW’s workers by claiming that job cuts could follow if tax breaks are not approved.
On Dec. 11, at 1:05 a.m., DeChant dashed off an e-mail to Fitzgerald suggesting they up the ante. Rather than merely threatening some job cuts, what if they raised the possibility the entire operation could fold — putting 5,700 workers on the street — if the tax break didn’t pass? “Jon-,” she wrote, “I have some really good ideas on messaging going forward on this project that you might find helpful. Can you remind me the shipyard that failed? Where was it? What was it named?”
DeChant also suggested they make use of a recent documentary that chronicled the hard work of BIW’s employees (the portrait-and-audio project “Southgate Faces”) to bolster their case for tax cuts. “And what was the documentary of BIW workers?” DeChant asked Fitzgerald in the e-mail. “Was it Southgate ‘something’??”
Three days later, DeChant fired off another missive to Fitzgerald, this time warning that the Coastal Journal, a free community newsweekly, had published a letter to the editor by Gagnon in which he made many of the same points expressed in his op-ed. “Hi Jon-,” DeChant wrote. “Have you see [sic] the LTE by Bruce Gagnon. [sic] Is there a communications plan around responding, etc.? I hope this bill is run early.”
Fitzgerald’s response, sent about an hour later, is telling in several respects. He begins by including a link to a Maine Public news brief about a different form of corporate welfare: a job-training program, specifically tailored to meet BIW’s needs, that’s being offered at Maine’s publicly subsidized community colleges.
Then he turns to Gagnon. “Bruce is a one man band who is also using this as an opportunity to raise the profile of his organization and its central message.” [Gagnon, a Vietnam War–era veteran, is a member of Maine Veterans For Peace, an affiliation noted in his letter.] “While I have no doubt about the sincerity of his convictions,” Fitzgerald continued, “he is attempting to frame the debate about General Dynamics and to demonize the ‘big bad corporation.’ I am not going to oblige him and debate this with him on his terms in the media.”
Instead, Fitzgerald suggested a rhetorical attack on one of Gagnon’s other points: that BIW’s facility could be put to better use building infrastructure for public transit and clean energy. “His suggestions for diversifying [the type of work done at BIW] are not tethered to reality,” Fitzgerald wrote to DeChant. “[T]here is no big demand in the US for building trains or tidal power turbines, not that will employ 5000 people in Maine.”
In closing, Fitzgerald wrote, “I agree earlier in [legislative] session the better, I have no illusions about the difficulty we may have amidst the Medicaid expansion debate.” The state’s share of the cost of expanding Medicaid eligibility during the first year is estimated to be roughly the same as the sum BIW is seeking: $60 million.
It’s typical of BIW to try to push their tax breaks through legislative bodies as quickly as possible, so as to minimize public debate and opposition. For example, when the initial $60 million tax break passed in 1997, the Press Herald observed that the impact of this change in tax policy “remains unclear because the bill was filed late and rushed through the Legislature.” Earlier that same year, BIW officials pressured Bath’s City Council to approve an $81 million property-tax break by April 1 — just a couple weeks after presenting the complex tax-increment-financing plan — contending that it was “critical” to ink the deal before the shipyard submitted a bid to build destroyers for the Navy. The Council unanimously approved that tax break on April 8, a week before the Navy’s deadline to submit bids, but BIW got the destroyer contract anyway.
DeChant did not return a call seeking comment for this follow-up article. BIW has previously indicated, through a spokesman, that it will not make anyone available to The Bollard for comment on this matter.
DeChant and Fitzgerald managed to attract support for LD 1781 from some of the Legislature’s most powerful members. The bill’s 10 co-sponsors include Democratic House Speaker Sara Gideon, of Freeport; House Republican Leader Ken Fredette, of Newport, and Senate President Michael Thibodeau, of Winterport.
The legislation’s support among leaders of both major parties is indicative of General Dynamics’ corrupting influence on Maine politics, said Gagnon. “I feel confident saying General Dynamics controls Maine,” he said, “meaning we’re a corporate colony, there’s no doubt about it, and the façade of democracy is wearing thin.”
Still, the response to criticism of the tax break among citizens of all political persuasions is cause for cautious optimism, Gagnon added. He posted “Ship of Fools” and a recent column in the Forecaster weeklies by emeritus law professor Orlando Delogu (“Enough is never enough for Bath Iron Works”) on social media, and the responses from working-class people across the political spectrum are “fascinating.”
“By and large, they’ve agreed on one thing: They’re tired of corporate domination both here and nationally,” Gagnon said. “It’s exciting, in a way. People are getting it.”