By Donald C. Fry
This year, lawmakers in the Maryland General Assembly signaled a growing awareness of the reality that, despite Maryland’s many strengths as a place to do business; there is work to do on the issue of competitiveness if our state is to convert its significant advantages into strong economic growth.
In January, I attended the announcement by Senate President Mike Miller and House Speaker Michael Busch of a joint legislative agenda for business and economic development. Many of the initiatives reflect core pillars for economic competitiveness compiled by Greater Baltimore Committee business and civic leaders in the GBC’s 2010 “Gaining a Competitive Edge” report.
Here’s a summary of legislation on their joint agenda that passed during the 2014 session, which adjourned last Monday:
Cyber seed investment fund. Lawmakers passed bills sponsored by Senator James E. DeGrange, D-Anne Arundel and Delegate Pamela Beidle, D-Anne Arundel, establishing a cyber security investment fund in the Maryland Technology Development Corporation (TEDCO) to provide seed and early-stage funding for emerging tech companies in Maryland focused on cyber security.
Matching private-sector funding for university research endowments. A bill sponsored by Senate President Mike Miller, D-Prince George’s and Calvert, establishes the “Maryland E-nnovation Initiative Program” to create a $50 million fund, by auctioning tax credits to insurance companies, and deploying proceeds to attract private-sector matching funding for scientific research at higher education institutions.
Easing Maryland’s estate tax burden. High-priority bills sponsored by House Speaker Busch and Senate President Miller will increase, over a five-year period, the amount exempted from Maryland‘s estate tax from $1 million currently to the federal estate tax threshold of more than $5 million. Exempt amounts would be $1.5 million, $2 million, $3 million and $4 million in 2015, 2016, 2017 and 2018 respectively. After that, the exempt amount would match that of the federal estate tax.
Improved transparency on tax forms. Legislation sponsored by Delegate Galen R. Clagett, D-Frederick, and Senator Roger P. Manno, D-Montgomery, passed that requires information on each state tax form showing how tax dollars are being spent.
Workforce skills training. Lawmakers passed legislation sponsored by Senator Katherine Klausmeier, D-Baltimore County that will create a pilot program for three years to provide skills training, career counseling and a summer employment opportunities to high school students who are struggling to meet college and career standards. The program would be conducted in four selected school systems in the state.
Technology internships. A successful bill sponsored by Delegate Sandy Rosenberg, D-Baltimore City, will establish a Maryland Technology Internship Program to foster paid internships for college students, recent graduates and veterans in the small-business technology sector. The program, which would be administered by the University of Maryland, Baltimore County, would reimburse businesses for 50 percent – up to $3,000 – of stipends paid to high-tech interns.
Reduced-tax zones. Lawmakers passed legislation sponsored by Senator Catherine E. Pugh, D-Baltimore City, and Delegate Jay Walker, D-Prince George’s, that encourages business investment by offering a number of tax incentives to businesses that locate in Regional Institution Strategic Enterprise (RISE) zones near designated public schools and higher education institutions.
Other legislative action that will promote business competitiveness included:
- Passage of key business-related tax credits, including making $12 million in tax credits available for biotechnology investment, $9 million for research and development investment, and $5 million for cyber security investment.
- Passage of legislation extending the Sustainable Communities Tax Credit Program through fiscal 2017 and authorizing up to $4 million to be awarded for small projects involving commercial rehabilitation of historic buildings. Over the years, this program has supported tens of thousands of jobs and leveraged the tax credits into hundreds of millions of dollars of private investment in revitalizing communities across the state.
- Inclusion in the budget of $5 million for the Maryland Innovation Initiative for technology commercialization.
Lawmakers deserve credit for passing these measures and for the estate tax legislation that eases the burden on taxpayers who are subject to estate taxes and inheritances taxes in Maryland, one of only two states to have both.
But business advocates at the Greater Baltimore Committee are urging the next governor and the newly elected lawmakers during the next term of the General Assembly to seriously consider addressing broader tax issues that are impacting Maryland’s competitiveness.
Business leaders at the GBC believe that Maryland’s more than 60 year-old tax structure is a central factor in our state’s sluggish post-recession economy and its continuing fiscal challenges.
A top policy priority should be to implement tax reform that achieves sustainable long-term government revenue growth driven by tax policies that complement a modern economy and that neither damage the business climate nor create the need for elected leaders to habitually increase tax rates.
A private-sector commission at the GBC is currently working to develop recommendations within the next several months for a revenue-neutral restructuring to accomplish these objectives.
Let’s hope that state lawmakers’ increasing awareness of the need for stronger competiveness signals a willingness to embrace a comprehensive tax policy approach that empowers the private sector to better leverage Maryland’s many advantages into accelerating economic growth and job creation.
Donald C. Fry is president and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland. This column was originally published by Center Maryland on April 11, 2014.