Status report as lawmakers enter last week of highly-charged session

Entering the final week of the 2006 legislative session, we can report a number of successes on the GBC legislative agenda that have resulted. Unfortunately, as we anticipated, a number of our new proposals, although positively received, have not moved through the legislative cycle. The following is an overview of the status of GBC legislative priorities:

Eminent Domain: The GBC strongly opposes any legislation that would inhibit the use of eminent domain for economic development purposes or would increase the cost of eminent domain that would make its use cost-prohibitive. To date, it appears that no legislative action will be enacted on this issue. The legislature is strongly divided and it appears that no consensus will develop. Although the Senate Judicial Proceedings Committee approved a bill that would have established strict standards justifying a “taking” of property and increasing the rights of property owners, the bill stalled when it reached the Senate floor. Efforts to attach a constitutional amendment prohibiting the use of eminent domain for economic development resulted in the legislation being returned to committee where it appears to have died, although proponents are making efforts to revive the issue. We are still keeping close tabs to ensure the bill remains in committee.

Biotechnology Investment Tax Credit: The GBC strongly supported dedicating up to $20 million in the budget for this program. Governor Ehrlich provided for $6.3 million in his budget for the program. Under the rules, the legislature cannot increase an appropriation of the Governor but may only reduce it or eliminate it. Restrictions can also be placed on the expenditure through budget language. The budget has passed both houses of the General Assembly and $6 million has been approved for the Biotechnology Investment Tax Credit. Legislation has also been introduced to correct minor problems to the program. As of this date, no action has been taken on that legislation.

Research and Development Tax Credit: The GBC advocated and supported an increase of the spending cap on the Research and Development tax credit from $6 million to $12 million. Governor Ehrlich’s FY 2007 budget proposed $12 million for the R&D tax credit. The budget has passed both houses of the General Assembly and $12 million has been approved for the Research and Development tax credit. However legislation authorizing the spending of the additional dollars has yet to move through the legislature.

Heritage Structure Rehabilitation Tax Credit: The GBC supported increasing the amount of the tax credit to $30 million and eliminating a provision that prohibits any single jurisdiction from receiving more than 50 percent of the total credit amount. Governor Ehrlich’s FY 2007 budget included $30 million for the Heritage Structure Rehabilitation Tax Credit and that amount was accepted by the legislature. Legislation that would have eliminated the prohibition of any jurisdiction receiving more than 50 percent of the total amount budgeted for the credit appears stalled in committee. Efforts to move that legislation continue. An interpretation of the law was provided and clarifies that any amount budgeted in a fiscal year that is not awarded is carried over and added to the appropriation for Heritage Structure Rehabilitation tax credits in the following fiscal year. The increased budget and the clarification of the law are clear victories on this issue.

Life Science and Technology Research Park Tax Credit: The GBC proposed the creation of a new tax credit for technology businesses that locate at research parks connected with institutions of higher education in Maryland. Although this legislation received a very positive hearing in both the House of Delegates and the Senate, it appears that the General Assembly does not have the appetite to pass new tax credits this year. This type of legislation often requires a multi-year effort to secure its passage. It is not expected that this legislation will be adopted this year.

Life Sciences Funding: The GBC supports the continued State investment in the Science + Technology Park at Johns Hopkins and the University of Maryland Baltimore BioPark. Governor Ehrlich provided for funding levels similar to previous years and the amounts were approved by the legislature.

Stem Cell Research Funding: The GBC supported legislation that would provide funding for the capital and/or operational components of stem cell research. The House and Senate agreed on legislation that provided for the Governor to appropriate a sum of money for stem cell research. The amount of money would be appropriated at the Governor’s discretion and the expenditure of the fund would be through a commission that studies various proposals and awards grants for the research projects.

Commission on Health Care Workforce Shortages: The GBC, in collaboration with the Chair of the House Health and Government Operations Committee, proposed legislation that would set forth a commission to make immediate recommendations and strategies to fill the unmet workforce needs in the health care industry. The House of Delegates approved the legislation. No action has taken place in the Senate to date.

Teachers’ Incentive Tax Credit: The GBC recommended legislation that would provide tax credits for teachers who commit to teach for a number of years in jurisdictions with challenged schools or in the math, science, technology and special education fields. As a new proposed tax credit, this form of legislation usually requires a multi-year effort. In the face of a multitude of tax credit legislation, including a proposal for tax credits for all new teachers, it is unlikely that this bill will move forward.

Higher Education Funding: The GBC supported increased funding support for community colleges and public and private higher education systems in Maryland. Governor Ehrlich included in his FY 2007 budget significant increases in funding of higher education including community colleges and public and private higher education institutions. The legislature approved significant increases for higher education. The legislature also imposed a cap on tuition increases for one year.

Another issue that has received attention in Annapolis and statewide over the past weeks has been the proposed 72 percent rate increase proposed by BGE, effective with the lifting of price caps this summer. The GBC has taken no position on the rate increase as it is outside our purview to know the financial dynamics involved in rate setting, cost recovery, etc. These are specialized areas generally resolved by the Public Service Commission and the technical and legal staffs in conjunction with industry specialists.

As we have highlighted in prior editions of the State House Update, in a highly charged election year, political expediency and grandstanding often threatens good public policy. Numerous legislative steps have been proposed to exert pressure on BGE/Constellation Energy to achieve concessions on the rate increase. Some of the proposals have included threats to delay or thwart the merger efforts of Constellation Energy with Florida Power and Light. As many of these proposals were intrusive on a private business transaction and could negatively impact Maryland’s business reputation, a statement was issued on behalf of the GBC urging legislators to move with caution and to utilize more conventional tools of reaching an agreement. Unfortunately, the legislature has chosen to pass bills to both alter the regulatory functions of the public Service Commission, and also alter the ability of BGE/Constellation to merge.

Finally, as a word of caution, this is the current state of affairs in Annapolis on issues that are important to the GBC. With a little over a week remaining and the legislative pace at a heightened level, anything can still happen and changes in the status of bills can be very fluid. We will continue our presence in Annapolis and will wrap up the legislative session in next week’s State House Update edition.

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