By Donald C. Fry
When state lawmakers return to Annapolis for the 2012 General Assembly session, which begins on January 11, they will face the familiar challenge of having to close another projected $1 billion deficit.
However, with a sluggish economic recovery forecast and uncertainty over the potential impact on Maryland’s economy of federal budget tightening, it should be especially clear to our elected leaders that now, more than ever, they must make job creation and economic growth their overriding top priority.
Maryland’s long-term future will be shaped by how lawmakers act, or defer action, on issues relating to economic development and job creation, including an anticipated job-creation proposal by Governor Martin O’Malley.
As part of his pledge to focus on jobs, Gov. O’Malley earlier this year indicated that business regulation would also be among his signature issues for the upcoming session. A review of regulations administered by state agencies- which has been underway since October – could generate additional legislative proposals to enable the state to shed overly burdensome regulations and other barriers to business growth.
The need for regulatory policies that are “streamlined, stable and predictable” is one of eight core pillars for a competitive state business environment that Maryland business leaders and economic developers compiled for a report, “Gaining a Competitive Edge,” published by the Greater Baltimore Committee.
Other core pillars for competitiveness are: government that partners with business, a highly-educated workforce, a tax structure that is fair and competitive, competitive costs of doing business, superior and reliably-funded transportation infrastructure, strategic state investments in business growth, and a coordinated, long-term, and well-funded state business marketing strategy.
The GBC is urging lawmakers to use the core pillars as a guide for making public policy decisions in Annapolis that will promote job creation and economic growth.
In addition to regulatory review, other issues related to these core pillars that are on the 2012 session agendas of the GBC and business advocates include:
• Transportation funding. A statewide coalition of advocates, including the GBC, is supporting increasing transportation funding if the new revenue is not used for the state’s General Fund and would be deployed only for transportation projects. The state’s Blue Ribbon Commission on Transportation Funding, charged with studying the issue, has proposed raising as much as $800 million in new revenue so the state can begin to address a massive backlog in highway, transit, port and airport projects that are planned but not yet funded. In addition to building needed transportation infrastructure, the new projects would create thousands of jobs in the construction industry – a sector that has been severely impacted by the recession.
• Education. Recognizing that a well-educated workforce is a key to Maryland fulfilling its substantial potential to be a leader in the post-recession new economy, business advocates support continued strong funding for higher education, including for community colleges, which play a key training and workforce development role. Maryland lawmakers must also support policies that promote expanding both secondary and higher education emphasis on science, technology, engineering, and math (STEM).
• Bioscience. Increasing the highly-effective tax credits and other funding for bioscience industry development is very important, especially to facilitate the formation in Maryland of companies derived from research performed at our state’s world-class academic institutions.
• Health care. The health care industry is a top employer in Maryland. Our state’s policymakers must support measures that promote research and job creation in the health care field and resist the temptation to enact measures that, either directly or unintentionally, would unreasonably restrict growth in this key industry.
• Business taxes. Although a state commission last year recommended against passing a corporate tax increase, proposals to increase corporate income taxes by imposing combined reporting requirements on businesses with locations in other states have, nevertheless, been introduced in prior sessions and would bear watching by business advocates if introduced this year.
• Energy. The GBC supports energy regulatory policies that balance legitimate environmental concerns with the need to develop energy resources, including alternative sources – such as wind, solar and nuclear, as well as other options – in a competitive and open manner.
• Growing Maryland’s economic base. The GBC supports increasing funding for the Department of Business and Economic Development as an essential investment in effective business development incentives, enabling financing, resources for business expansion, and for marketing the state as a business location.
This year’s lawmakers will convene at a time when our state’s fiscal experts are predicting three years of minimal growth and voicing concerns over the potential effects of federal cutbacks on Maryland.
Federal spending amounts to nearly a third of our state’s economy, according to the December 9 report of the Maryland Board of Revenue Estimates. The federal government “may swing from a source of growth to a drag on growth” if Congress allows the $1.2 trillion in currently legislated automatic reductions to stand, the board noted in the report which reduced the state’s revenue forecast for FY 2013 by $71 million.
This year especially, our elected leaders in Annapolis must not allow themselves to settle for clever approaches to simply get through another year of fiscal challenges. They must ensure that they enact policies that, above all, fundamentally nurture private-sector job creation and economic growth in our state.
If we’ve learned anything in the past several years about the changing landscape when it comes to economic competitiveness, it’s that we can no longer just sit back and wait for the recovery to happen.
Even in Maryland, where the federal presence here has provided a long-term cushion of stability, we must recognize and act upon the reality that our state’s economic paradigm is shifting.
Only an engaged, diverse, and productive private sector can pull Maryland into the era of growth that we are clearly capable of achieving. It’s up to our elected leaders, through smart policy decisions, to put entrepreneurs, investors, business owners and managers and their employees in position to succeed, grow and thrive.
When that happens, the state’s fiscal challenges will recede as our economy and our quality of life improve.
Donald C. Fry is president and CEO of the Greater Baltimore Committee.