Donald C. Fry: Amid fiscal shuffle, Maryland lawmakers pass measures to spur business growth

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By Donald C. Fry

In a General Assembly session punctuated by more fiscal shuffling to close yet another budget deficit, state lawmakers this year managed to enact a number of bills that could favorably impact the Maryland’s business competitiveness.

One of the more significant measures – the governor’s “sustainable communities” legislation – passed on the last day of the session. Among other things, the measure extends the availability of tax incentives for commercial rehabilitation of historic buildings and broadens incentives to other structures in preferred growth areas.

It will make $10 million in 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.

Strongly supported by the Greater Baltimore Committee and business advocates, this legislation will continue and broaden a proven tool for generating private-sector investment and economic activity.

Since the tax credit was enacted in 1996, $213 million in state tax credits for commercial rehabilitation of historic buildings have generated $923 million in private investment in the redevelopment of 407 properties across the state. The tax credit ultimately generated $1.7 billion in total economic activity and more than 15,000 jobs, according to a 2009 report by the Abell Foundation.

Despite support from the governor, the Greater Baltimore Committee and many other advocates to convert this program back to a true tax credit where credits can be predictably obtained year-round, lawmakers chose to retain its structure as an annual grant program.

Nevertheless, in passing this measure, lawmakers preserve a program that has, over the years, been among the state’s most powerful tools for revitalizing communities and creating jobs and value in the process.

Other 2010 legislative actions to spur business growth included:

• 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.

• Bioscience investment tax credit. The state budget includes $8 million in available bioscience tax credits in FY 2011 – an increase of $2 million from the current year.

• Stem cell research. The FY 2011 budget includes $10.4 million for stem cell research.

• Research and development tax credit. Lawmakers extended this tax credit until 2021.

• Nanobiotechnology development. A task force was created to study nanobiotechnology development and how to best promote it.

• Minority and small business development. Lawmakers passed several measures, including legislation to extend a key state small business procurement program until 2016, to streamline the process for obtaining MBE certification, and to broaden opportunities for minority-owned firms with recipients of grants from the Maryland Department of the Environment.

Meanwhile, lawmakers did not pass several measures strongly-opposed by business advocates, including proposals to extend or make permanent Maryland’s temporary “millionaire’s tax” that will expire this year, and three bills that would have implemented combined reporting for corporate income taxes this tax year.

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 more aggressive attempts to pass legislation in 2011.

Also this year, lawmakers listened to business advocates and declined to enact two onerous measures that would have stymied efforts to strengthen Maryland’s transportation funding and transit resources.

The General Assembly did not accept proposed budget language that would have again raided the state’s already depleted Transportation Trust Fund.

Another proposed budget provision would have significantly delayed progress toward gaining federal funding and building the east-west light rail Red Line in Baltimore. The provision, which would have required the state to again study heavy rail alternatives for the Red Line and for the Purple Line and Corridor Cities Transitway in Montgomery County, was not accepted by lawmakers.

What awaits business advocates and lawmakers when they convene in Annapolis next year after the election?

They’ll be greeted by continuing projections of structural deficits in excess of $1 billion annually through 2015 that will be complicated by that fact that the state’s highly-anticipated slots revenue will likely fall short of previous estimates. Among other things lawmakers will also face pension-funding challenges that Maryland and most other states have not even begun to address.

Key lingering business development issues lawmakers must also come to grips with include strengthening transportation funding and getting the state back on track with its plan to vigorously nurture the development of Maryland’s bioscience industry through strengthened tax credit incentives and stem cell funding.

In the interim, everyone in Annapolis will no doubt be closely watching quarterly revenue projections and hoping for good news.

Donald C. Fry is president and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland.

Previous Center Maryland columns by Donald C. Fry:

Thankfully, Baltimore leads with substance over style in luring Google

Leave damaging transportation provisions out of the budget

Amended budget continues recession-induced fund shifts and stimulus rescue

General Assembly setting stage for combined reporting push in 2011

Wrong timing for proposal to change Baltimore City school board

Baltimore City isn’t alone in facing pension funding challenges

A government investment program that delivers

Proposed transportation fund raid -- a bad habit continues

Where's the outrage over crime?

Small business is where innovation lives
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