Donald Fry: Government and business teamwork: an essential prerequisite for economic growth

By Donald C. Fry

The road to job creation and economic recovery will be smoother and stronger if state government partners with business to develop policies rather than imposing policies on the private sector. There is an opportunity in the 2012 General Assembly session and going forward to not waste energy by having government and business work at odds with one another, which we all know does not work well for either party.

Everyone remembers the great tech tax battle of 2007-2008. A late-session attempt to plug a $200 million revenue hole during budget deliberations initiated an all-out pitched battle between the tech industry and the state legislature. The tax passed with no input from business, no hearings and no opportunity for industry to argue against it, much less be involved in developing it. A tremendous amount of effort was expended to get it repealed and the net result is a lingering sense of unease between the tech industry and government.

Scarcely a year later, the biotech industry went toe-to-toe with the Maryland Department of Business and Economic Development when it sought to issue new regulations regarding the way the biotech tax credit was administered to young biotechnology companies.

The tax credit is one of the sacred cows of the biotech industry and a model for the nation. Companies did not want anything changed. They were just happy to have it available to them. If, for the sake of efficiencies, changes had to be made, the biotech industry wanted to be right there at the crafting table helping and advising. As it turned out, the regulations were not changed, but Maryland’s young industry remains confused about why it had not been consulted.

The bottom line is that usually companies in an industry know what they want and need. They can be invaluable resources and formidable opponents. For the most part, neither government nor industry comes to negotiations with a negative intent. When government acts, it is legitimately trying to improve a process or solve a problem. The same is true of industry. When companies ask for tax relief, or regulatory relief, it is not out of greed. It stems from a sincere desire to improve the functioning and welfare of the industry and to create more jobs.

One of the Greater Baltimore Committee’s core pillars for a competitive business environment is “government leadership that unites with business as a partner.” This is neither an unlikely nor an unattainable goal. Both government and industry bring expertise, experience and expectations to any negotiations for change. But both have to be at the table from the beginning for the outcome to be positive. Business can’t be seen as an after-thought.

Governor Martin O’Malley’s indication last fall that business regulation reform will be a signature issue for this year’s legislative session is a good sign. This is an initiative that merits strong follow-up. It’s also an initiative to which business can and should have significant input and work in partnership with government for maximum benefit.

This can be the year that a new public-private team is formed to build a strong, smooth road to economic recovery. Let’s hope that this window of opportunity is not missed.

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