Candidates: Md. business climate troubled

November 01, 1994|By Thomas W. Waldron | Thomas W. Waldron,Sun Staff Writer Sun Staff Writer John E. Woodruff contributed to this article

This is the final article in a three-part series on Maryland's economy and the difficulties the state faces in attracting business. Today, the views of the two major gubernatorial candidates are presented.

Democrat Parris N. Glendening and Republican Ellen R. Sauerbrey see eye to eye on very little, but they agree the business climate in Maryland is in trouble.

Mrs. Sauerbrey blames a state government that "treats business as a problem to be solved rather than the horse that pulls the wagon."

Maryland's reputation is also hampered by oppressive taxes and regulations, said Mrs. Sauerbrey, a state delegate from Baltimore County.

"Maryland is clearly not competitive right now," Mr. Glendening said. "We must make drastic changes in the business climate."

Mr. Glendening, the three-term executive of Prince George's County, said state economic development officials have an inconsistent approach focusing on "headline hunting" for Fortune 500 companies rather than helping existing business.

Maryland's economic development efforts lack coordination at the top, and the state has no comprehensive, joint government-business plan to improve its business climate, The Sun found in 47 interviews over three months with se

nior executives, state officials and others.

That lack of coordination is exacerbated by tensions between the Schaefer administration and core elements of the business community, and by disunity within the business community itself.

The two gubernatorial candidates insist the state's business climate is unsatisfactory and say they would move quickly with remedies.

Both want to cut taxes and make Maryland regulations more business-friendly. They also want to improve communication between government and business, and they favor privatizing some of the state's economic development effort.

They part company, though, over the impact of organized labor on the business environment, where the state should target its effort, and the size of any tax cuts.

Mrs. Sauerbrey said high taxes are the No. 1 obstacle to economic development.

She advocates a 24 percent, four-year cut in personal income tax rates, as well as eliminating the state tax on capital gains that are reinvested in Maryland businesses.

She also wants to reduce closing costs on home purchases, specifically by doing away with the requirement that homebuyers pay a year's worth of property tax in advance.

And Mrs. Sauerbrey proposes talking to the ones that got away -- businesses that left Maryland or decided never to come -- to find out why.

"Were there hot button issues that kept those companies away?" she asks.

Mr. Glendening also favors tax breaks. But he would give tax credits to businesses that create new jobs or those that hire the long-term unemployed in disadvantaged areas.

"It makes no sense for us to spend hundreds of millions of dollars for new roads and new schools for growth in the suburbs, while ignoring the existing poor neighborhoods," Mr. Glendening said.

Mr. Glendening said he favors cutting taxes that hinder business while producing little revenue, though he doesn't specify which ones.

And he would establish an "economic strike force" with representatives of both government and business to move quickly when jobs are on the line.

Overall, Mr. Glendening said, the state must overhaul its "fragmented" economic development push. The secretary of economic development, he said, should be appointed by a board of business leaders, in consultation with the governor.

"We need a clear strategic plan. The state of Maryland really has none," he said.

Both candidates say the state's regulatory process is cumbersome and sometimes anti-business.

Mrs. Sauerbrey, though, favors giving officials in the state Department of Economic and Employment Development veto power over new regulations.

For example, she said: "A regulation put together by the Health Department ought to be looked at by DEED to see what economic impact it has."

The two candidates disagree most pointedly on organized labor. Mrs. Sauerbrey has proposed ending the prevailing wage law, which requires the state to pay union-scale wages to workers on government projects.

"Government could build more roads, more schools, more correctional facilities," she said. "The prevailing wage law is something I would definitely want to see if we can adjust."

And while she would like to see Maryland become a right-to-work state, she says taking on a tough fight with organized labor is not a high priority, particularly since the business community is not pushing the idea.

"For a governor to take on that issue would be like beating your head against the wall," Mrs. Sauerbrey said.

The prevailing wage issue is a "red herring," Mr. Glendening said.

"Other states that have prevailing wage and collective bargaining are flourishing," he said.

Both candidates, like some business leaders, blame part of the state's problems on Gov. William Donald Schaefer.

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