Snack tax costs jobs, miffed Frito-Lay says

April 12, 1995|By Sherrie Ruhl | Sherrie Ruhl,Sun Staff Writer Sun staff writer Bruce Reid contributed to this article.

Maryland will lose as many as 650 potential jobs in Harford County because the General Assembly refused to repeal the snack tax, an irritated Frito Lay executive said yesterday.

The company plans to expand plants in Georgia and Louisiana instead of Harford County because they are "extraordinarily disappointed" the General Assembly has failed to repeal the snack tax, said Robbi Dietrich, director of consumer and government affairs for Frito-Lay, a subsidiary of Pepsico Inc.

The announcement left Harford officials, who were hoping Frito-Lay's Rold Gold pretzel plant in Aberdeen would be expanded by 650 workers, questioning Maryland Gov. Parris N. Glendening's and some legislators' commitment to business.

"The governor needed to be a stronger leader," Harford County Executive Eileen M. Rehrmann said. "It's one thing to talk about it, but it's another thing to do something about it."

Frito-Lay officials expressed a similar view. "This sent a signal to us and other food manufactures that the state was doing more talking than supporting of existing businesses," Ms. Dietrich said. "We are displeased that the Senate decided to tax consumers rather than bring new jobs into the state."

The 5 percent tax, which raises about $15 million annually for the state, is levied on some salty foods, such as pretzels and potato chips, but not crackers or bread sticks.

Governor Glendening has said that one of his top priorities is to reverse Maryland's reputation as anti-business state. The governor devoted almost his entire State of the State address earlier this year to the need to spur job development through tax relief for businesses and other measures.

Frederick W. Puddester, deputy chief of staff for the governor, said Governor Glendening worked very hard to repeal the snack tax. "The governor was very supportive of the repeal and the importance of making Maryland a model for economic development," he said.

Governor Glendening proposed a repeal of the snack tax in his legislative package, but his support for that in the last days of the session appeared to wane.

Frito-Lay had planned to "grow the Aberdeen plant to about 800 jobs" over the next few years, as it had done at facilities elsewhere across the country, Ms. Dietrich said. She said that the 2-year-old Aberdeen plant, where a 30,000-square-foot addition was built in anticipation of expansion, would remain open.

Ms. Dietrich said Frito-Lay now sees no reason to "reward" Maryland with "new jobs and capital development."

"We feel we discussed in good faith what our plans were to grow that facility and that we were reassured about how important economic development and new jobs were to Maryland. We were also reassured that the 'snack tax' would be repealed and how important a positive business climate was to Maryland," Ms. Dietrich said.

Mrs. Rehrmann also expressed dissatisfaction with the Harford legislative delegation, which she said "could have pushed a little harder."

The repeal of the snack tax was the cornerstone of the county's 1995 legislative package. And, indeed, it looked as if it were a deal, said Harford Del. Mary Louise Preis.

Intensive lobbying by politicians, such as Mrs. Rehrmann, lobbyists for Frito-Lay and its suppliers, as well as the backing of the governor seemed to guarantee the snack tax repeal.

"I don't know what went wrong," Mrs. Preis said. "It was frustrating to watch this happen. We revived the bill several times and kept it on life support. We should get an A-plus for effort."

The repeal would have meant a loss of about $15 million in annual revenue to the state, but Harford officials said that could have easily been recouped through increased income taxes from new jobs.

County officials also said the expansion of Frito-Lay's Aberdeen plant would have meant more business for Maryland suppliers, including McCormick & Co. Inc. and Perdue Farms Inc., which provide spices and soybean oil to Frito-Lay.

Mrs. Rehrmann said Maryland will have a second chance next year to grab Frito-Lay jobs and manufacturing plants. But only, she said, if the snack tax is repealed in the next General Assembly.

"I don't want to see us lose more jobs," Mrs. Rehrmann said.

But threats of lost jobs are what cost Frito-Lay a lot of support to begin with, said Sen. Barbara A. Hoffman, chairman of the budget and taxation committee. She said Frito-Lay was heavy-handed from the start of the General Assembly.

"They argued their case with a lot of arm-twisting . . . that they would take their marbles and go home if they didn't get their way. That is not a good way to make policy," Ms. Hoffman said.

Legislative agreements should be based on the needs of the whole state, not just one company, she said.

Ms. Dietrich said Frito-Lay was "absolutely incredulous" that anyone would accuse them of strong-arming.

"You call some of the other states where we do business, like Georgia or Nebraska, and you will find that we are highly thought of corporate neighbors. We make our decisions on the basis of economics," she said.

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