Despite engaging in a General Assembly session that ultimately deferred action on many major public policy issues, lawmakers acted favorably on a key commercial rehabilitation tax credit bill and a number of other GBC priorities relating to strengthening the state’s business climate.
The General Assembly passed a GBC-supported bill that addresses snags in the rules governing caps on tax credit awards that have kept many qualified Baltimore City projects from using available credits during the last two years
The legislation, HB 598, sponsored by House Ways and Means Committee Chair Sheila Hixson, D-Montgomery, raises to 75 percent the cap on the amount of available tax credits that can be awarded in any single jurisdiction. The bill’s provisions would also waive the cap requirements for qualified projects if excess funding remains after all awards have been made in accordance with cap rules.
“This is a significant positive development that expands access to credits for many private commercial projects that are driving Baltimore’s current downtown revitalization,” said GBC President & CEO Donald C. Fry. Existing cap regulations had effectively denied millions of dollars in available tax credits to otherwise qualified redevelopment projects in Baltimore City over the last several years, while virtually all other eligible projects in the state received the credits, he noted.
Lawmakers also passed a budget for FY 2008 that includes funding to support life sciences development — a top GBC strategic priority. The budget includes increased state funding for stem cell research, as well as funding for biopark development in Baltimore and for the state’s nano-biotechnology initiative. The state’s tax credits for biotech investment and for research and development were retained. Lawmakers did not increase funding for the credits, measures the GBC supported.
On the issue of transportation funding, another top GBC priority, lawmakers earmarked $300 million in the budget for transit projects. The budget includes funding to keep planning and design on schedule for two key Baltimore projects — the Red Line from Woodlawn to Canton, and the Green Line extension from Johns Hopkins Hospital to Morgan State University.
GBC-supported legislation was passed creating both a governor’s sub-cabinet and a joint legislative committee to address issues relating to the impact of federal base realignment and closure (BRAC). The bill to create the joint legislative committee was filed at the urging of the GBC, which has played a coordinating role in working with the Baltimore City and the region’s counties to assess the potential impact of BRAC on the region, to identify and prioritize needed infrastructure improvements, and to advocate for expedited development of them.
The General Assembly also increased funding in FY 2008 for education, drug treatment, and minority business development programs.
Lawmakers did not, however, act on proposals to expand health care access to include many of the state’s more than 700,000 uninsured residents. They have also deferred acting on measures to address the state’s looming deficit and the need to increase transportation revenue — something that the GBC feels is critical to the state’s economic development.
“Look for turbulence and anguish the next time lawmakers meet, whether it will be in a special session this fall or in the 2008 session beginning next January,” said Fry. He noted that lawmakers will have to address a projected $1.5 billion FY 2009 deficit, raise up to $600 million more for needed transportation infrastructure, and find between $200 million and $500 million to fund expanded health care access.
While Governor O’Malley will seek, during the summer, to identify efficiencies to reduce state spending, Annapolis observers calculate that the amount of achievable savings is likely to be between $200 million and $300 million.
“Even if the governor were to identify twice that amount in savings, many would argue that the state still faces a need for a billion dollars in new revenue,” Fry said. “And that’s not including new transportation infrastructure that will cost up to an additional $600 million which, for discussion purposes, equates to at least a 12-cent increase in the gasoline tax.”
If revenue estimates over the summer decrease, the stage could be set for a special session in the fall to enact a package of revenue increases. Options likely to be considered by lawmakers include a slots bill, a sales tax increase, expanding the sales tax to a variety of services, a gasoline tax increase, or other yet-to-be-determined measures.
Such a scenario would put the GBC and other business advocates in a tough position. “Rather than simply react to these options, we will be challenged to propose viable, proactive solutions that lawmakers can embrace and that will maintain, rather than diminish, the business climate in Baltimore and the state,” Fry said.
2007 legislative action on GBC priorities