Unfriendly to business? Look in the mirror, Mr. Legislator

March 17, 1996|By Barry Rascovar

THEY BURIED the tax cut last week. Thank goodness. From the beginning the notion of lowering the state's income-tax rate was preposterous.

Look at it this way: If you were faced with a looming $400 million deficit, would you have your company cut prices 10 percent? No, that would exacerbate your immediate problem and imperil your company. You'd trim expenditures, reorganize, downsize and bring your books into balance. Then you might take a hard look at a price cut.

That's the way Gov. Parris Glendening and legislative leaders are approaching the state's fiscal predicament. Because of the exceedingly weak Maryland economy, revenues are now nearly $400 million below projections made just three months ago. How in the world can you even think seriously of cutting taxes at such a time?

And yet there was Robert Kittleman, the GOP House minority leader, proclaiming that this is just an ''excuse'' to avoid lowering taxes. He blamed it all on the state's ''bad business climate.''

Poppycock. If Mr. Kittleman wants to lay the blame for this fiscal crisis on someone, he might try Newt Gingrich and his Republican zealots in Congress. They're the ones who mucked up efforts by Bob Dole and others to hammer out a budget deal. This has led to two federal shutdowns that badly damaged Maryland's economy, and continues to hurt the state as federal agencies restrict spending while working under temporary continuing resolutions.

The culprit is not Maryland's business climate as much as it is Maryland's over-dependence on nearby Washington. Geographic location helped the state become a favorite location for contractors whose livelihood is tied to federal work. A big chunk of the federal work force lives here. When the budget is constricted in Washington, Maryland feels the pain. As budget-balancing efforts continue in future years, Maryland will suffer. This points to a bleak tomorrow.

Long-term, what this state needs is an aggressive and concerted business-recruitment effort. Mr. Kittleman is right that Maryland's business climate must improve. But it's not the governor who is at fault; it's the legislature. Maryland's General Assembly continues to micromanage state policies, interfere in executive decisions and try to reverse earlier decisions affecting businesses.

A hostile legislature

If you are a CEO looking for a new plant site, would you consider Maryland after the legislative efforts to sabotage Art Modell's stadium deal? Lawmakers are still trying to renege on a 1987 law in order to overturn a signed agreement between Mr. Modell and the governor. They even forced Mr. Modell to ante up $24 million after he signed a contract with the state. The message is clear: Our legislature is hostile to businesses.

Some lawmakers seem to suspect that anything a business does must have an evil ulterior motive. Until that attitude changes, don't expect business prospects to improve dramatically.

Yes, steps are under way to streamline business permitting. And the governor is going after new jobs with an array of tax credits and grants. But can you imagine Maryland legislators approving $150 million of incentives and tax breaks for a company? Not this crowd. Yet there was no question of legislative support when South Carolina won a prized BMW plant with such a promise.

Heck, Maryland's lawmakers would gag at $85 million in corporate incentives though that's what it took for Virginia to gain a 5,000-worker Motorola plant.

What would a plant that size be worth to Maryland lawmakers? Apparently, not enough. Two governors have had to beg and plead to get a decent-sized ''sunny day'' fund to help entice businesses here. Yet even the $30 million requested by the governor this year pales next to amounts available to other governors.

There's no sense fooling ourselves. Maryland's economy is teetering. It won't get much better in the near-term. Talk of a tax cut is political hot air.

If the state Chamber of Commerce and other business groups want to zero in on the biggest problem facing their constituencies, it's not the tax structure (which overall is less onerous than North Carolina's, Pennsylvania's, Delware's or West Virginia's).

No, the real enemy lies within the General Assembly. That's where business groups should focus their energies, not on some feel-good nonsense about lowering taxes when the state is desperately trying to make its revenues match its expenditures.

Barry Rascovar is deputy editorial-page editor of The Sun.

Pub Date: 3/17/96

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