Glendening vows role for business leaders

January 15, 1995|By John E. Woodruff | John E. Woodruff,Sun Staff Writer

After a decade of mounting alienation between the state and its business community, Gov.-elect Parris N. Glendening will ask senior business executives to take the lead in reshaping the state's drive to develop and attract jobs.

He and top legislative leaders also plan to cut selected business taxes and start trimming the nation's highest real estate closing costs in this legislative session.

They also promise to begin work this year toward broader tax and regulatory reform, although enactment of those would not occur until next year and later into their four-year term.

Mr. Glendening aims to seize a rare opportunity created by the fact that Maryland has a new governor, a new business community leadership and a legislature whose membership is 44 percent new, said James T. Brady, co-chairman of the governor-elect's transition team.

"We have an unusual consensus in the state right now on many of the things we need to do, an exceptional chance to put economic development into the spotlight in ways Maryland has never done before," Mr. Brady said.

Consensus is clear

That consensus -- and a few limitations on it -- were clear in interviews with Mr. Glendening, senior business leaders and top-ranking state legislators.

"Maryland is widely perceived as an anti-business, high-tax state, and the perception is the reality that counts. It hurts everything we try to do in building jobs," Mr. Glendening said.

"I will quickly change the perception of Maryland as an anti-business state. It's going to be more complex to change the tax perception, but I will also take some specific steps this year, ,, and we can start work this legislative session that will lead to further steps next year and beyond," he said.

Taking many of his cues from strategy papers developed by the private sector, Mr. Glendening will seek to build bridges by naming a senior executive as his secretary of economic development and creating a commission dominated by business leaders to guide the state's drive to develop and attract new jobs, he said.

He also plans to split the 1,400-employee state Department of Economic and Employment Development, creating a 200-member agency to direct business growth, and using the remaining 1,200 to work on unemployment, job-training and other programs not directly related to building and attracting businesses.

Specialized agency

"One of the challenges here is that when a business wants state help, they don't know where in the government to go, and by making DEED a specialized agency and bringing business leaders into the process, we can make it clear where to turn," Mr. Brady said.

"A very sizable increase" in the agency's "sunny day" fund, the prime source of cash to compete with other states for businesses, also will be an early priority, Mr. Brady said.

Both Senate President Thomas V. Mike Miller and House Speaker Casper R. Taylor said, in separate interviews, that they support an infusion for the economic development fund.

Other mid-Atlantic states are very substantially outspending us in seeking employers, and we have to increase that fund to be competitive with aggressive neighbors like Pennsylvania, Virginia and the Carolinas," Mr. Taylor said.

Mr. Glendening also will ask the legislature for between $5 million and $7 million to stimulate small businesses in city and suburban neighborhoods, creating a program patterned after the federal Urban Development Action Grants.

There appears to be support from leaders of both houses to the governor-elect's plan for selective cuts this year in taxes that have direct impacts on businesses.

Mr. Glendening cautions, however, that he will reduce or eliminate business taxes only if it is shown that such moves would create jobs in proportion to the revenue the state would lose.

Standard is urged

"We have to look at all business taxes, . . . and we have to have a standard to apply when we cut or eliminate a tax," the governor-elect said.

One business tax Mr. Glendening has his sights on is the high-technology equipment tax, levied by many Maryland localities, which is the only one of its kind in the Mid-Atlantic region.

"We're going to phase that tax down to zero," he said.

But cuts in the income tax will have to wait, Mr. Glendening and the heads of the two legislative houses agree.

"I hope that in a year or two -- after we cut spending -- we may be in a position responsibly to reduce the personal income tax, giving some cut to working families for tax equity and some cut to high-income people to promote economic development," the governor-elect said.

What makes Mr. Glendening and legislative leaders nervous about any income-tax cut is the fear of deficits soon afterward.

"Fiscal projections show a $250 million deficit only two years away and bigger to follow, and besides that, the new Congress is cutting federal grants to the states and cutting federal jobs, which will impact Maryland much harder than any other state," Senate President Miller said.

Hasty action feared

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