State House Update: Substance over rhetoric needed in gubernatorial campaign

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Democratic and Republican candidates for governor in the June 24 primary elections are trying hard to communicate their commitments to focusing on Maryland’s business climate and to strengthening our state’s competitiveness for private-sector job growth.

All vow to make job creation a high priority. All have something to say about taxes.

This year, “Jobs, Jobs, Jobs” is the name of the campaign song, but the lyrics vary from candidate to candidate.

Candidates’ business-climate strategies range from proposals by two Republican candidates – Harford County Executive David Craig and Charles County business executive Charles Lollar – to eliminate state income taxes entirely, to Democratic candidate Delegate Heather Mizeur’s call to increase taxes on large corporations and high earners and use the new revenue for tax relief to middle-income families and small business employers.

In between those contrasting positions, proposals from Democrats include a vow from Lt. Gov. Anthony Brown to create a commission to study tax reform and a proposal from Attorney General Doug Gansler to gradually reduce the corporate income tax rate through annual quarter-percent reductions.

Other proposals from Republican gubernatorial candidates include a call from business owner and Anne Arundel Delegate Ron George for a 10 percent across-the-board personal income tax reduction, and a pledge to “get the government off our backs” from Larry Hogan, an Anne Arundel County business owner and a former member of Gov. Robert Ehrlich’s cabinet. All Republican candidates vow to repeal the rain tax.

While many of the proposals promising to eliminate or reduce taxes sound promising on their face, they fail to address the very important issue of what to do about the lost revenue.

The state’s income tax is the single largest source of revenue for the general fund, estimated to generate more than $8 billion in FY2015. These revenues are used to support services that almost all Marylanders rely on, such as K-12 education, public safety, and health care. How the candidates intend to eliminate these revenue sources without proposing a solid plan for how to continue to fund these critical services should be the question posed at the upcoming debates or candidate forums in the last 30 days before the primary election.

Some candidates have suggested that enough economic growth will result from the elimination or reduction of taxes to cover the lost revenue while others propose that the budget can be balanced simply by eliminating waste in state government. A candidate’s suggestion that the elimination or reduction of these taxes will result in an equivalent amount of tax revenue from new economic growth or that a reduction of government “waste” should suffice is too simplistic and not based on reality. The candidates owe it to the voters to be more specific in their answers but the voters have to demand that specificity.

There is no question that Maryland’s high taxes are burdensome to business, but a proper solution should include both rate reduction scenarios and detailed plans for how to recover the lost revenue.

We look forward to hearing more about how the candidates propose to make Maryland more competitive as we get closer to the June 24th primary elections.

As always, if you have any questions or concerns, please feel free to contact me.

 

Best wishes,

FrySignature

 

 

 

 

Committee Update

Since the end of the 2014 legislative session, a number of task forces and committees have been meeting in Annapolis on a wide range of issues. Most notably, the Maryland Economic Development and Business Climate Commission – created through the joint legislative agenda announced in January by Senate President Mike Miller and Speaker Michael Busch – has held two meetings.

The first meeting at the end of April focused mainly on assessing the structure of the state’s main economic development agencies: the Maryland Department of Business and Economic Development (DBED), the Maryland Economic Development Corporation (MEDCO), and the Technology Development Corporation (TEDCO). The commission heard from DBED Secretary Dominick Murray on a number of issues including how Maryland compares to Virginia, budgetary challenges, and the reputation Maryland has as a high-tax, unfriendly place to do business.

The commission also heard from economists who offered their take on the current business climate in Maryland, and from local economic development officials who spoke on the challenges faced at the local government level.

The second meeting – which took place yesterday in Western Maryland – focused on the local business experience and the role the federal government plays in economic development. The commission heard from local business leaders, including manufacturing giant Volvo, about their experiences doing business in Maryland, and from federal officials who spoke about the importance of technology transfer.

The Greater Baltimore Committee has two board members on the commission – Calvin Butler, Chief Executive Officer at BGE and Jon Laria, Partner at Ballard Spahr.

The next meeting of the commission is scheduled for the end of June.

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