Despite what has been a difficult session for both lawmakers and business advocates, a number of GBC-supported bills that will have a positive impact on Maryland’s business climate and economic growth gained passage, including measures to extend and improve the bioscience investment tax credit, provide local incentives for transit oriented development, and to strengthen the minority business enterprise program.
Meanwhile, a bill to re-regulate electricity — which was strongly opposed by the GBC — did not pass. Another GBC-opposed bill that did not pass either chamber would have imposed a combined reporting requirement for corporate income tax and would have allowed the Comptroller to set the corporate tax rate in 2011.
A GBC-supported administration bill that would have strengthened and extended the state’s tax credit program for commercial rehabilitation of historic buildings found success in the House but failed in a Senate committee on Sine Die.
Following are summaries of key measures relating to business climate issues.
Successful GBC-supported legislation
- Bioscience development. Legislation to broaden the definition of eligible investors who qualify to receive a state tax credit for investment in Maryland bioscience firms passed. The bill, HB493/SB800, was strongly supported by the GBC. It will allow individuals as well as corporate entities to receive the biotech investment tax credit. It also clarifies that the tax credits can be claimed in the tax year for which an investment was made.
- Minority business development. Two GBC-supported bills to expand business opportunities for small, minority, and women-owned firms passed. These bills were among the few to pass from many minority business bills introduced this session.
- Procurement bundling. HB124/SB187, a bill that prohibits the state from unnecessarily “bundling” procurements, passed both the House and the Senate. The GBC supported this measure as a way to increase the number and frequency of opportunities for minority-owned and small businesses to bid and successfully be awarded state contracts.
- MBE certification. Legislation that clarifies state law so that minority-owned businesses whose owners are also women can be dually certified for MBE contract purposes passed both houses. While this GBC-supported legislation, HB641/SB211, is procedural in nature, its effect can be potentially meaningful because it could allow businesses with women minority owners greater flexibility in pursuing subcontracting opportunities on state procurement contracts, according to state analysts.
- Transit oriented development. Legislation was passed, SB274/HB300, enabling local jurisdictions to provide special incentives to encourage development near transit resources.
- Public safety. HB88/SB181, a Baltimore City administration bill supported by the GBC, would prohibit the pretrial release of defendants charged with one of nine specified firearms offenses if the defendant has been previously convicted of one of those crimes. The bill, which was first introduced last year, passed both houses.
- Electricity re-regulation. An administration bill, SB844, which would have returned the state to a regulated electricity market under the Public Service Commission (PSC) passed the Senate, but was killed by a near-unanimous vote of the House Economic Matters Committee. The GBC strongly opposed this bill, citing a recent PSC report recommending against re-regulation. The GBC argued that the complex issue of re-regulating this market could be fraught with unintended consequences and should not be acted upon in haste.
- Workplace fraud. The GBC opposed the administration bill, SB909, concerning the misclassification of employees as independent contractors that nevertheless passed both chambers. Vigorous GBC opposition, however, assisted in the bill being heavily amended, softening some of its more onerous provisions. The bill establishes penalties for employers who fail to properly classify employees in the construction and landscaping industries. The bill also assesses penalties against employers who fail to properly classify an employee as an independent contractor for the purposes of avoiding payment of Workers’ Compensation and Unemployment Insurance premiums. If the Secretary of the Department of Labor, Licensing and Regulation (DLLR) determines that an employer knowingly improperly classified employees, the employer is subject to a civil penalty per employee for two years. These penalties are not limited to improper classification in the construction and landscaping industries.
- Mandated shift breaks. The GBC was very much engaged in defeating SB660/HB16, which would have imposed mandated shift breaks on Maryland employers and created a new civil right of action. The GBC lobbied key legislators, and worked with business coalition members to defeat this bill, which died in the Senate Finance Committee and received an unfavorable report from the House Economic Matters Committee.
Heritage tax credit bill fails on final day; $7 million allocated for FY 2010
The House-passed version of the GBC-supported administration bill, HB 309, to extend and strengthen the Maryland Heritage Structure Rehabilitation Tax Credit Program received an unfavorable report from the Senate Budget and Taxation Committee on the last day of the session.
The House greatly amended the original version of the bill but maintained the 20 percent refundable credit for commercial and residential rehabilitation of historic buildings. The credits would have continued to be awarded through a competitive ranking and rating process and the bill provided a bonus credit for rehabilitating a commercial project at a LEED certification of Gold or higher. A provision was inserted to reserve 10 percent of units in projects with 30 or more residential rental units for low-and moderate-income households.
One year remains on the current Heritage Tax Credit program, which has been allocated $7 million for the next fiscal year. The GBC strongly supports the tax credit’s extension and will continue to work to strengthen its value as an economic development and job-creation incentive.
FY 2010 budget represents 3.5 percent increase in overall spending
The FY 2010 state budget passed by the General Assembly on the last day of the session reflects not only the impact of the recession on Maryland’s finances, but the positive fiscal effect of Maryland’s share of federal stimulus funding. It also leaves the state with a looming FY 2011 deficit — which lawmakers will likely look to the federal stimulus’ second year of funding to resolve — and potentially larger deficit issues in FY 2012 if the state’s economic performance doesn’t return to pre-recessionary levels.
The $32.3 billion budget, including the federal stimulus funds, for FY 2010 represents a 3.5 percent overall increase from the current fiscal year.
The budget calls for $13.8 billion in spending from the General Fund, which is the state’s primary operating budget resource. This represents a 3.3 percent decrease from projected FY 2009 General Fund spending.
The budget incorporates $2.5 billion in federal stimulus funding, maintains the state’s commitment to public education funding, and allows the continuation of the tuition freeze at Maryland state colleges and universities for the fourth consecutive year.
Business-related budget actions include:
- Providing $6 million in available tax credits for bioscience investment;
- A $7.7 million increase in funding for Maryland’s community colleges to accommodate enrollment growth. This is one of the few areas of the budget that is increasing;
- A projected $100 million General Fund balance at the end of FY 2010 — twice the balance under the administration’s original budget proposal;
- Providing $6 million in funding for the Maryland Tourism board;
- A $3 million reduction in stem cell research grants, limiting funding to $15.4 million;
- A $7.7 million reduction in available heritage tax credits, from $14.7 million to $7 million.
Comprehensive summary of the Conference Committee Report on the budget.