Editor’s note: The following commentary appeared on CenterMaryland.org on April 10, 2015.
By Donald C. Fry
State funding for most key business-related development and financing assistance programs will be level funded or slightly reduced in FY 2016, according a quick review of available information as state lawmakers look to agree on a final budget over the last weekend of the 2015 General Assembly session.
State funding for research and development and biotech investment tax credits and technology transfer programs will remain the same as this year, while funding for assistance to small and minority businesses, stem cell research and rehabilitation of historic commercial properties will be slightly reduced.
Meanwhile, the newly-created Maryland E-Nnovation Initiative will receive $8 million to offer matching funding for private-sector contributions to create science and technology research endowments at higher education institutions.
As of April 9, House and Senate versions of the budget are in conference committee as lawmakers seek to iron out differences in the budget and to resolve issues with Governor Larry Hogan over funding education and a cost-of-living increase for state employees, among other things.
House members of the budget conference committee are Delegates Maggie McIntosh, Adrianne A. Jones, Tawanna P. Gaines, Anne R. Kaiser and Craig J. Zucker. Senate conference committee members are Senators Edward J. Kasemeyer, Richard S. Madaleno, James E. DeGrange, Nancy J. King and George C. Edwards.
Following are status reports on proposed funding for eight other key business-related programs in the pending budget:
- R & D tax credits. The research and development tax credit program funding will remain capped at $9 million.
- Biotech investment tax credits. $12 million will again be available for these tax credits in FY 2016, same as the current year.
- Technology transfer. The Maryland Technology Development Corporation will have $3.6 million available to facilitate tech transfer and commercialization – the same as its current funding.
- Small and minority business development. The Small, Minority and Women-owned Investment Account will receive $10.6 million to be distributed to businesses in targeted areas around Maryland’s five casinos. This would be a reduction from this year’s $11.1 million in funding.
- Stem cell research. The Maryland Stem Cell Research Fund that promotes research and cures through grants and loans to public and private entities in the state will receive $9.4 million in funding for FY 2016, a reduction from $10.4 million budgeted in FY 2015.
- Historic property renovation. The Sustainable Communities Tax Credit program for rehabilitation of underutilized commercial and residential historic properties will receive $9 million in funding, a reduction from $10 million in funding for the current fiscal year.
- Commercialization of research. The Maryland Innovation Initiative, a partnership between the state and five Maryland academic and research institutions that is designed to promote commercialization of research at partner universities, will receive $4.9 million in FY 2016, approximately the same as existing funding.
- Cyber security. Available state funding to support investment in cyber security companies and technologies will be $2.5 million in FY 2016, a reduction from $4 million budgeted in FY 2015.
Meanwhile, proposed legislation to create a tax credit for angel investors that was strongly supported by the Greater Baltimore Committee, investors and entrepreneurs has not emerged from either the House Ways and Means Committee or the Senate Budget and Taxation Committee, both of which held hearings on the proposal in February and March respectively.
The hearings drew strong support from angel investors and economic development professionals emphasizing the importance of this tax credit as a tool if Maryland wants to grow its innovation economy.
However, this year there is a plethora of tax credit bills and, this being the first year that the angel investment tax credit was introduced, it may be caught in the mass of requested tax credits amid a difficult budget session in a post-election year with a new governor and a bulk of new lawmakers.
The General Assembly is a decidedly incremental body. Many good ideas take more than a year to be approved. To paraphrase a quote from Arnold Schwarzenegger, “we’ll be back!”
Donald C. Fry is president and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland.