Gov. Parris N. Glendening's economic development commission called yesterday for a three-year, 15 percent cut in Maryland's personal income tax and relaxation of environmental regulation as the cornerstone of a plan to improve Maryland's business climate.
The high-profile commission, created by the governor last February to help his administration map an economic development strategy, said the plan could nearly triple the pace of job creation within four years.
The plan, which closely tracks both the initiatives the state Chamber of Commerce has been lobbying for since the 1994 gubernatorial campaign and the past statements of the governor's new Department of Business and Economic Development, won cautious praise from legislators and economists.
However, state officials warned that Maryland may not be able to afford a tax cut as big as the commission wants. And the economists called the report's projections for job growth overstated.
At a news conference in the Legg Mason Tower in Baltimore where officials unveiled the plan, however, the mood was buoyant.
Yesterday "is one of the most important events for the Maryland economy," said Joseph Haskins Jr., chief executive of Harbor Bank of Maryland and co-chairman of the commission. He said the plan would be central to fulfilling the governor's promise that Maryland "would be the new bench mark for economic development and job creation."
The governor called the plan "the blueprint to build a successful and prosperous future" for Maryland, saying it would create "good-paying, family-supporting jobs."
The report is the result of eight months of work by the commission, almost all of whose 21 members came from the business community, ranging from heads of major banks to small-firm lawyers.
It reflects the agenda of the organized business community, which has blamed Maryland's continuing very sluggish recovery from the 1990-1991 recession on the state's relatively high personal income taxes, regulations that in some cases are more strict than federal law requires, and regulatory and permit-review processes that business people believe treat them with suspicion rather than as "customers" who bring jobs to the state.
"Maryland's personal income taxes create a red flag that is deterring both existing and out-of-state firms from investing in the state," the report said. "Maryland's regulatory climate represents one of the state's greatest competitive disadvantages, and is a major red flag in [business'] site selection processes."
Maryland's job base grew about 1.7 percent this year, according to the Regional Economic Studies Program at the University of Baltimore, adding about 25,000 jobs. The program expects Maryland's economy to create 37,300 new jobs next year.
As such, the commission backed an income tax cut proposal very similar to one already endorsed by the Chamber of Commerce, as well as specialized tax cuts and credits aimed at subsidizing job creation, job retraining, exports, laboratory construction, and warehousing. The goal is to "achieve at least $50 million in tax credits for new jobs and investments from creation of industry-specific business tax credits and local tax abatements by 2000."
More on the list
In addition, the plan calls for:
* Increased state spending on economic development marketing, including spending on incentive packages for specific companies. Such targeted incentives have frequently been criticized as ineffective boondoggles but defended as essential to compete with states that use them liberally to lure companies.
* A streamlined permit processes to cut permit review time to as little as 30 days for construction and environmental permits and 60 days in "unique situations."
* Limitations on the liability of landowners for cleanup of polluted industrial sites and amendments to the state's Forest Conservation Act to protect business.
The report also opposes "environmental standing" bills that would allow citizens to sue alleged polluters to enforce environmental laws.
Environmentalists were unhappy.
Dru Schmidt-Perkins, Maryland director of Clean Water Action, said insisting on fast-track environmental approvals "puts greed versus citizens' health."
But business leaders immediately endorsed the plan.
"Generally the plan has a great deal in common with the recommendations the Chamber had made" in 1994, Maryland Chamber of Commerce President Champe C. McCulloch said. "That reassures us the business community is seeing the situation the same way over time."
Tax idea in trouble
The tax cut proposal ran into immediate flak. Mr. Glendening refused to commit to the full 15 percent cut over three years, saying the coming deep cuts in federal payments make it impossible for him to commit to a specific size cut.
He said he would support "affordable, responsible income tax reduction" that would not require cuts that hurt senior citizens, education, or children "who may be left behind by cuts at the federal level."
Legislative leaders echoed the governor's caution.
