Plan to lure businesses is revealed Tax breaks, fund to support loans among incentives

Council approval required

Proponents cite need to increase corporate tax base

April 11, 1996|By Norris P. West | Norris P. West,SUN STAFF

Seeking to boost the county's corporate tax base, Howard officials are hoping two new incentive programs will help attract new businesses and keep existing county companies from looking to move elsewhere. The county won approval from the General Assembly during the legislative session to introduce bills in the County Council to create the incentives. One measure would create a fund to provide grants or loans to businesses; the other would give tax breaks to companies hiring at least 12 full-time employees and investing in the county.

"We certainly want people to know that Howard County is open for business," Gail H. Bates, an assistant to County Executive Charles I. Ecker, said yesterday.

Proponents of the measures call the incentives "additional arrows in the quiver" to help the county build its corporate property tax base, which is growing at less than half the rate of its residential property tax base.

Ms. Bates said the incentives are needed because the county is relying too heavily on residential taxes, which make up nearly 80 percent of the county's assessable base. Commercial taxes make up about 19 percent of the base and agricultural taxes about 1.4 percent.

She said Mr. Ecker is hoping the incentives will help the county boost the proportion of business property taxes to about 30 percent.

That would require a complete turnaround.

Since 1989, the assessable residential property tax base has grown by 78 percent, from $2.6 billion to $4.7 billion. In the same time, the commercial base has only climbed 35 percent, from $824.5 million to $1.1 billion.

"Businesses tend to pay for the services, and this helps us to keep a healthy balance," Ms. Bates said.

Raymond S. Wacks, the county's budget administrator, said the new incentives would help the county become a player in "the economic development game."

"It's beginning to give us some of the tools that other states have to play in the big leagues," Mr. Wacks said.

But he said the County Council would determine the final version of both measures.

County Councilman Charles C. Feaga said he would have to more thoroughly review the proposals before deciding whether to support them.

"On the face of it, it sounds good," Mr. Feaga said, adding that the county has to do something to expand its corporate tax base. "But I would have to take a look at the long-term effects."

Mr. Ecker supports the incentives. He formed an economic development task force last year to come up with ideas to attract and keep businesses.

The task force originally proposed tax breaks in exchange for hiring new employees and investing in the county -- an idea adopted by the legislature in a bit different form.

Task force chairman Michael T. Galeone, an executive vice president at Columbia Bank, said the incentives would help Howard County fend off competition from states like Virginia and Pennsylvania which offer tax breaks.

"We are absolutely in a position of weakness if we don't come up with a methodology to enhance our ability to compete," said Mr. Galeone. "I think this adds to the total offerings that we have. It's an added enhancement."

The other incentive would involve creating a fund from fees attached to interest charged businesses on county-backed industrial revenue bonds. The fee would add one-eighth to one-fourth of a percent to the interest rate of these bonds.

The fees are expected to put about $50,000 a year into the fund. The county would be able to combine that money with incentives provided by the state to help businesses. Under the proposal, the county would provide a 10 percent match to state aid for grants or loans to companies.

Richard W. Story, executive director of Howard's Economic Development Authority, said the incentives are designed to help businesses that generate relatively high-paying jobs. He said the incentive fund would be weighted toward manufacturing and technology firms.

"We're looking for companies that pay above the industry standard and above the Howard County standard," Mr. Story said. "We will have criteria that will determine which businesses are eligible. We will be developing our own model, weighted toward our goals in Howard County."

He said it was important to point out that the incentives are not meant to lure companies in other Maryland counties to Howard.

"We are not interested in using this to lure a business from a neighboring county," Mr. Story said. "We do not make it a practice of raiding our neighbors. The net effect would be zero on the state of Maryland."

Pub Date: 12/11/96

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