Harford leaders oppose tax on snacks

Officials call bill a threat to expansion of factory

March 21, 2004|By Ted Shelsby | Ted Shelsby,SUN STAFF

Harford County delegates to the General Assembly are rallying their forces to block passage of a proposed 5 percent sales tax on snack foods that county officials say would threaten the future expansion of the Frito-Lay Inc. plant in Aberdeen.

With 418 workers, Frito-Lay is the county's largest manufacturing employer and a major contributor to the county's fast-growing economic base.

Lynn Markley, a spokeswoman for Frito-Lay, which is based in Plano, Texas, said the company is not speculating on its plans but added, "A snack-food tax would certainly hinder any type of expansion" in Maryland.

"It's hard to invest in a state, the only state in all of the United States," she said, "that has a snack-food tax."

Markley said the Aberdeen plant has the capacity for expansion, but the company could expand its facilities in York, Pa., or Lynchburg, Va.

The Senate gave preliminary approval Wednesday to a $23.6 billion state budget that included a snack-food tax that is designed to raise $16 million a year.

County Executive James M. Harkins said that revenue would come at a big price to Harford County.

Harkins said Frito-Lay purchased 100 acres adjacent to its Hickory Drive plant in 2001 for expansion. "They have not told us that they will not expand at Aberdeen, but the bottom line is that this tax puts any future expansion there in serious jeopardy."

"This is not rocket science," he said. "If you are Frito-Lay and you have a plant in Maryland and one just up the road in York, Pa., where are you going to do your expanding?"

Harkins said he would be making a direct appeal to Gov. Robert L. Ehrlich Jr. to kill the snack tax. "To my knowledge," he said, "this only affects Harford County."

Aris Melissaratos, secretary of the state Department of Business and Economic Development, said his office is also working on a plan to eliminate the snack tax. "I think we will prevail," he said.

"The governor is very, very pro-business, and we think this is a business issue."

If the tax is approved, Maryland would be the only state to have a snack tax, according to the Snack Food Association.

Sen. Nancy Jacobs, a Harford County Republican, said the snack-tax proposal was a major surprise. "This is a huge issue," she said. "It is not the kind of thing you do without having a public hearing where the public can testify and people can learn the truth."

Republican Del. Barry Glassman, chairman of the Harford County delegation, said county lawmakers hope to meet with Del. Sheila E. Hixson, Democratic chairwoman of the House Ways and Means Committee, by tomorrow and convince her of the need to eliminate the tax from the House tax bill. "We need to do it in committee," Glassman said. "You can't tackle this kind of issue on the floor. It is too difficult.

"We've got our work cut out for us."

Differences in the House and Senate budget bills would be worked out in conference committee meetings.

Maryland repealed a sales tax on snack food in 1997 at Frito-Lay's request. The repeal came three years after the company launched plans for it $115 million pretzel, Tostitos and Doritos manufacturing plant and distribution center in Aberdeen.

Jacobs said the company has invested $64 million at Aberdeen since the repeal of the tax, which was enacted in 1992. It has also hired an additional 125 workers.

J. Thomas Sadowski, the county's economic development director, said Frito-Lay could accommodate a 175,000- square-foot expansion. He said the company has invested $500,000 to bring rail service to the site.

Melissaratos also mentioned the possible expansion and said his office had recently reached an agreement on a water and waste water plan with Aberdeen that clears the way for the expansion.

Frito-Lay opened its Aberdeen distribution center in 1993. It was followed the next year by its manufacturing plant.

The Aberdeen plant pays $6.5 million a year in state, county and local taxes. It has a payroll of more than $15 million and its average employee salary is $38,000 a year.

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