GBC-supported tax credits gain passage in 2010 Assembly session

In a 2010 General Assembly session punctuated by more fiscal shuffling to close yet another budget deficit, lawmakers managed to pass a number of bills, including several key tax credits, that could favorably impact the state’s business competitiveness.

GBC-supported measures that passed the General Assembly included bills to continue and broaden an incentive program for historic building rehabilitation, to fund tax credits for bioscience investment, to extend tax credits for research and development and for job creation, to create a state commission on transportation funding, and to nurture the development of minority-owned and small businesses.

Lawmakers also passed education measures supported by the GBC to extend the teacher probationary period and create alternative teacher certification paths in specialized subjects for career professionals.

Meanwhile, a proposed future “raid” of Maryland’s Transportation Trust Fund, strongly opposed by the GBC, did not pass.

Also, GBC-opposed proposals to implement combined reporting for corporate income taxes did not pass. However, lawmakers did pass a bill to move up the deadline to December 2010 for a Maryland Business Tax Reform Commission report on the state’s business tax structure. This will likely set the stage for attempts during the 2011 session to pass legislation to move Maryland’s corporate income tax structure to a combined reporting method.

Specific key GBC legislative issues and outcomes included:

Business Competitiveness — Lawmakers passed GBC-supported legislation extending and broadening a tax credit program for commercial rehabilitation that is among the state’s most effective incentives for redevelopment. They also passed a job creation tax credit and did not pass a combined reporting bill opposed by the GBC. Legislative action included:

  • Commercial rehabilitation tax incentives — The administration’s Sustainable Communities Act, strongly supported by the GBC, passed on the final day of the session. Among other things, it will make $10 million in annual grants available for FY 2011 — up to a 25 percent credit for commercial rehabilitation of historic buildings and a 10 percent credit for other rehabilitations in designated growth areas. Despite GBC support to convert this program to a true tax credit, lawmakers chose to retain its structure as a grant program.
  • Job creation tax credit — Lawmakers passed and the governor signed an administration bill that allocates $20 million for a $5,000 tax credit for each new employee that businesses hire from the unemployment rolls.
  • Combined reporting — The GBC strongly opposed three bills that would have implemented a combined reporting method of calculating corporate income tax this year. All three measures died in committee.
  • Millionaires tax — The GBC strongly opposed a measure that would have extended to 2014 the current high-earner tax surcharge that is set to expire this year. The GBC also opposed another bill that would have made the surcharge permanent. Both measures died in committee.

Bioscience Development — Two important GBC-supported tax credits passed, as well as a measure to further nanobiotechnology development in our state.

  • Bioscience investment tax credit — The state budget includes $8 million in available bioscience tax credits in FY 2011, an increase of $2 million.
  • Research and development tax credit — Lamakers extended this tax credit until 2021.
  • Nanobiotechnology development — A task force was created to study nanobiotechnology development and how to best promote it.

Education — Key GBC-supported legislation that passed included:

  • Education reform — An administration bill extends the teacher probationary period to three years and provides for incorporating student performance into teacher and principal evaluation criteria. The bill better enables Maryland to compete for federal “Race to the Top” funding.
  • Teacher certification — Legislation passed that directs the state’s Department of Education to create alternative teacher certification paths in specialized subjects for career professionals.

Transportation — The GBC worked hard to fend off two onerous budget provisions and supported the creation of a state commission on transportation funding. Key outcomes included:

  • Protecting transportation funding — The GBC vigorously opposed a Senate budget provision that would have raided the state’s Transportation Trust Fund by reducing the share of state sales tax revenue that would be allocated to the fund. The provision was ultimately removed from the budget.
  • Red Line — Another Senate budget provision would have significantly delayed progress toward gaining federal funding and building the east-west light rail Red Line in Baltimore by requiring the state to again study heavy rail alternatives for the Red Line as well as two transit projects proposed for Montgomery County: the Purple Line and Corridor Cities Transitway. The GBC strongly opposed this provision and it was deleted from the budget.
  • Transportation funding commission — Lawmakers passed legislation that creates a blue ribbon state commission to study transportation funding. The GBC will urge the commission to build on upcoming findings of a GBC private-sector study of transportation funding.

Minority and small business development — Several GBC-supported measures passed that will continue to nurture the development of minority and women-owned businesses, including:

  • State procurement program — Lawmakers extended a key state small business procurement program until 2016.
    MBE certification. The General Assembly passed two measures that will help streamline the process for obtaining MBE certification.
  • Minority environmental businesses — Legislation passed that will broaden opportunities for minority-owned firms with recipients of certain grants from the Maryland Department of the Environment.
  • Investment capital — Lawmakers created a state task force to recommend ways to make more investment capital available to minority-owned businesses.

Full 2010 Sine Die report

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