Schaefer aims to help manufacturers

February 04, 1993|By Ross Hetrick | Ross Hetrick,Staff Writer

ANNAPOLIS -- Stressing the need to reverse the decline in Maryland manufacturing, Gov. William Donald Schaefer unveiled a package of tax bills and regulatory reforms yesterday to encourage research and development and to cut bureaucratic red tape.

"Manufacturing is where the jobs are," Mr. Schaefer told a gathering of state legislators at the State House. For too long, the state government has neglected manufacturing, he said.

"We didn't do much about it," he said. "All of a sudden, we looked around and they were gone."

But even as the state takes preliminary steps toward making manufacturers feel more welcome, a representative of a group of heavy industrial companies said the measures don't go far enough for traditional manufacturers.

The governor's package includes three bills that would change the tax law on research and development. They are:

* Change the sales and use tax so that materials used in research and development that can be used indefinitely will qualify for an exemption.

* Exempt the sale of computer software that will be used in other computer products from sales and use tax.

* Give local jurisdictions the option of exempting research and development equipment from personal property taxes.

The Department of Economic and Community Development estimates that the first two bills would decrease annual state revenues by $2.75 million. There was no estimate on how much local governments would lose if they exercised the proposed option.

On the regulatory front, the governor will issue an executive order to state agencies to do the following:

* Consult with companies before modifying or enacting regulations.

* Make technical assistance to business a priority.

* Allow businesses a reasonable opportunity to correct first time violations, within the confines of the law.

* Streamline regulatory processes, eliminating duplication among state, local and federal authorities and setting timetables for review and decision making.

Mark L. Wasserman, secretary of the Department of Economic and Employment Development, said the plan represented just the first steps. "We're definitely committed to this second industrial revolution in Maryland," he said.

The moves came after a two-decade decline in the state's manufacturing work force to 192,800 in 1991 from a high of 271,400 in 1970.

But while applauding the governor's actions, Carolyn T. Burridge, executive director of the Chemical Industry Council of Maryland, said the Maryland Department of Environment and the Department of Natural Resources were taking steps to impose several millions of dollars worth of new environmental fees on traditional industries.

"They haven't addressed the tax problems for any of the traditional manufacturers," she said.

Ms. Burridge, a lobbyist for the chemical industry, said the new fees would increase the cost of the annual air permit for Bethlehem Steel Corp. steel mill at Sparrows Point, for example, to $200,000 from $10,000.

Mr. Schaefer said he did not see a contradiction between his new efforts to promote manufacturing and the proposed fees.

"I don't think industry will be against the fees if they are fair and equitable."

Bob Perciasepe, secretary of the Department of Environment, said the new fees proposed by his agency would total about $9 million, with about $4 million to $5 million being levied on industry. The rest would be on developers and municipalities.

Many of the fees are mandated by the federal Clean Air Act and the money would go for new programs to comply with the act. "These are new things we have to do," he said.

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