A state representative who has been advocating for the reform of a controversial state tax credit program is appealing a decision that stymies his intent.

Rep. Ryan Fecteau, a freshman Democratic representative from Biddeford, introduced a bill that would reform the Maine New Markets Capital Investment program, a state tax credit program designed to encourage investment in low-income communities by offering refundable tax credits. But the body that selects which bills will be heard in the next legislative session did not accept Fecteau’s measure.

Rep. Ryan Fecteau

“The New Markets credit was an admirable idea that was supposed to help develop businesses in low-income communities,” Fecteau said in a statement. “Instead shrewd investors misused the intent of people’s tax dollars. We need to pass reform right now so that the misuse ends, the taxpayers get their money back and the program starts doing what it’s supposed to.”

Fecteau said he will appeal the decision of the Maine Legislative Council to exclude his bill from the agenda of the 127th Legislature, which begins in January. Because this upcoming session is supposed to be reserved for emergency action, only 33 of 400 proposed bills have been accepted by the 10-person council. A hearing on all appeals is set for Nov. 19.

The New Markets program faced scrutiny after the Maine Sunday Telegram published a series of articles in April that shed light on a few complex investment deals that left the state responsible for paying out more to investors in tax credits than the original investments they made in low-income community businesses.

Fecteau’s bill – LR 2453, “An Act To Protect Taxpayer Dollars and Ensure the Integrity of State Economic Development Programs” – would have directed the governor and state tax assessor to recapture tax credits associated with “sham transactions.”

It would also give the Finance Authority of Maine, which administers the New Markets program, tighter control and stricter oversight of the tax credits. It would also establish benchmarks for job creation and job quality to measure the credit’s effectiveness.

The Legislative Council voted 5-5 on Fecteau’s proposed bill. The vote was along party lines, with Democrats in support of adding the bill to the next session’s agenda. The makeup of the Legislative Council this year – five Republicans and five Democrats – set up a political dynamic in which only bipartisan bills were likely to move forward.

Members of the council – Senate President Michael Thibodeau, House Minority Leader Rep. Ken Fredette and House Assistant Minority Leader Rep. Eleanor Espling – did not respond to requests for comment on Friday afternoon.

The Legislature attempted to revise the New Markets program last session to prevent abuses, but that attempt failed when Democrats and Republicans couldn’t reach a compromise.

As a result, FAME’s board took it upon itself to amend the program’s rules, recently approving changes that would prevent the issuance of Maine tax credits for any investment where more than 5 percent of the money is used to refinance prior loans, to make equity distributions, to acquire an existing business or to pay transaction fees.

The changes effectively prevent the use of so-called one-day loans by financiers.

Fecteau is a member of the Legislature’s Labor, Research, Commerce and Economic Development Committee.