Governor seeks tax credits for job creation Glendening offers bill to draw new business

February 07, 1996|By Peter Jensen | Peter Jensen,SUN STAFF

If Maryland wants to win the competition between states vying to attract businesses, then it needs a new weapon -- a tax credit for firms creating new jobs in growth industries, administration officials told a House committee yesterday.

Gov. Parris N. Glendening is asking the General Assembly to approve his job creation tax cut as an incentive to employers considering establishing or expanding a facility within Maryland. To qualify, a company would have to create at least 50 new jobs paying at least 150 percent of the federal minimum wage, or about $13,300 a year.

But state officials conceded they don't know how many jobs might be created by the proposal, which could hand out a maximum $10 million a year in tax cuts. What they were more certain about was that other states have been approving similar tax credits in recent years. Virginia passed such a program last year.

"This is an issue of competitiveness," James T. Brady, state economic and business development secretary, told members of the House Ways and Means Committee yesterday. "This is not a bill we just suddenly conjured up. This is an issue of parity with other states."

Companies that create the required number of jobs would have to pass some hurdles to get the modest tax credit, which would amount to 2.5 percent of eligible wages. For every 50 full-time jobs making the minimum sala-ry, for instance, a company would receive a $16,575 credit. The credit would double to $33,150 if the jobs are created in a business revitalization zone.

The new employees would have to be residents of Maryland. Their jobs would have to be in targeted growth areas, including manufacturing, research and development, transportation, communication, agriculture, mining, computer-related services, finance and real estate.

As economic development secretary, Mr. Brady would have to approve the tax break and a legislative committee would have 30 days to review a decision.

That struck some legislators as a lot of work for a private employer. Committee members questioned why small companies were excluded from the tax break and whether it was worthwhile rewarding a firm for jobs that might only pay $7 hourly. And many wondered whether a company would decide to locate in Maryland for so little a benefit.

"It's a tiny incentive in terms of business expenses," said Del. James C. Rosapepe, a Prince George's County Democrat. "Shouldn't it be bigger if you really want to have an impact?"

Mr. Brady said the program couldn't be counted on to attract business by itself, but should be considered as a part of a larger incentive strategy that includes such things as regulatory reform and job training.

"This could be a useful arrow in the economic development quiver," he said. "We don't know how effective it will be, but we can't wait for a lot of analyses."

The legislation would also grant a tax credit of up to $1,000 to employers for each disabled person they hire.

An estimated 1,800 disabled people could be aided by the incentive program.

Proponents said most disabled people would like to work but can't because their skills and abilities are often underestimated by potential employers. The proposal is patterned after legislation approved last year giving a similar tax break to companies that hire welfare recipients.

"Often, it's a disabled person's poverty and not his disability that prevents him from fully participating in society," said Beatrice M. Rodgers, director of the Governor's Office for Individuals With Disabilities.

The proposal drew no opponents yesterday and is widely expected to be approved by the legislature this year.

But at least one committee member questioned whether any of the myriad small tax breaks the General Assembly has granted in recent years is having much impact on the economy.

"It's like a public relations game that makes people think we're helping people when we haven't made such a big difference," said Del. Clarence Davis, a Baltimore Democrat. "It sounds good in the press."

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