Plan targets economies in rural counties

Taylor's proposal includes tax credits to attract business

`Pull together and sacrifice'

5 localities, Baltimore struggle as rest of Md.'s economy booms

January 22, 1999|By Timothy B. Wheeler | Timothy B. Wheeler,SUN STAFF

Maryland's economy may be "the strongest in a decade," as the governor said yesterday in his State of the State address. But House Speaker Casper R. Taylor Jr. worries that the boom has bypassed the state's rural reaches and its urban core.

Troubled by a gap between the state's prosperous suburban counties and its distressed areas, the Western Maryland Democrat has introduced a pair of economic development bills aimed at wooing new jobs to his native Allegany County as well as to Garrett, Dorchester, Somerset and Worcester counties and to Baltimore.

The legislation is the centerpiece of an ambitious plan by the speaker to forge what he calls "One Maryland."

"Maryland is like a family where one or two kids are sick," he said. "It's a normal thing for the rest of the family to pull together and sacrifice if they have to, to take care of the kids."

Over the past 50 years, he noted, western Maryland, the lower Eastern Shore and Baltimore have slipped into economic distress, troubled by chronic high unemployment and poverty. The six localities have consistently had jobless rates at least 1 1/2 times the state average.

The state has a variety of economic development loans and funds available to help its subdivisions attract business. Gov. Parris N. Glendening and his predecessor, William Donald Schaefer, also have steered state funds and jobs to the depressed regions -- through prison construction, for example. But Taylor says much of the state relief is a Band-Aid approach to a more serious problem.

Hamstrung by their shrunken tax bases, local officials in distressed areas lack the resources to help themselves by luring new businesses and jobs, he says.

"These counties can't afford to create the mousetrap necessary to catch the mouse," he said.

To remedy that, Taylor proposes a package of loans and tax credits to woo business to the six localities. He would like to provide $40 million toward buying and developing sites for new or expanded non-retail businesses that would create at least 25 jobs in their first two years.

Tax credits

Businesses that locate in the targeted localities could claim a 100 percent credit against their state corporate income tax, up to the amount of capital invested in the location. To qualify, the company would have to spend at least $500,000 in start-up costs.

Companies adding 25 or more full-time jobs also could keep the state income tax assessed on each employee, up to $10,000 per worker. The money is normally withheld from the workers' wages and paid to the state.

Officials have no figures on how much revenue the tax credits would cost the state, but Taylor said his bill is modeled on a rural economic development program in Kentucky that has been successful. Alabama, South Carolina and North Carolina also have similar programs.

Tax credits like those proposed by Taylor are a new wrinkle in the nationwide effort by state and local officials to lure businesses.

William Schweke, senior program director for the Corporation for Enterprise Development, a nonprofit think tank in Durham, N.C., said many economic development incentive programs are a waste of tax dollars.

"Most of these programs don't work. They just finance what's happening anyway," he said. But the tax credits proposed by Taylor may have a short-term appeal, he added, because they are so new.

"If you're the first on the lot with this thing, it might make a difference," he said.

`Chronic unemployment'

Taylor has garnered support for his legislation from his fellow House members. He also notes that Glendening has been repeating his "One Maryland" slogan, most recently at the end of his inaugural speech this week.

"We're very aware of these localities that have chronic and sustained high levels of unemployment," said Richard C. Mike Lewin, state secretary of business and economic development. "We're aware that some of these counties need special assistance."

While the governor supports Taylor's plan, he has noted that Baltimore's woes are greater and more complicated than most of the rural counties'. Administration officials also have a variety of economic development initiatives that they are contemplating.

Taylor said he has been assured that Glendening will provide funds for the loan program in his supplemental budget. The speaker said he is willing to consider different treatment for the city.

"If you guys don't give us the tools by which we can make productive economies," Taylor said, "you're going to keep paying the bills, through subsidies, going into the indefinite future."

Pub Date: 1/22/99

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