Business costs rise with new Md. laws

Tab in higher taxes, fees could be more than a half-billion dollars

General Assembly

April 13, 2004|By Meredith Cohn | Meredith Cohn,SUN STAFF

As the General Assembly scrambled to finish its work late last night, business interests were tallying their tab: more than a half-billion dollars in possible new taxes, fees and surcharges from a pile of legislation scheduled to go into effect this year.

It would not go down as business' finest year. But it was not its worst, either, according to the Maryland Chamber of Commerce.

"Overall, we're still in a bit of defensive posture," chamber spokesman William Burns said yesterday afternoon. "More than in previous years, it has come down to this last-minute push."

Perhaps the greatest frustration this year for business representatives was the failure of the legislature and Gov. Robert L. Ehrlich Jr. to reach agreement on a plan to solve an enormous budget gap expected in coming years.

Some lawmakers, led by House Speaker Michael E. Busch, an Anne Arundel County Democrat, thought that the projected shortfall and the future of education funding could not hinge on gambling proceeds as proposed by the governor. They looked instead to tax increases, which worried the business community.

Business interests credit Ehrlich with holding the line on taxes. They also expect the governor to consider vetoing some of the legislation that might pass over their objections.

Among major items on the business agenda as the legislature wound down its session were:

A bill that would close a loophole allowing companies to form holding companies in Delaware to avoid some Maryland taxes.

Legislation was expanded to include all companies that do business with related entities in other states. Businesses supported closing the loophole only for "sham" operations in Delaware, as well as amnesty for businesses that owe back taxes.

A bill that would extend the heritage tax credit, which is used by developers to offset the costs of rehabilitating historic buildings for new uses.

An agreement has been reached by the legislature and the governor to extend the incentive, although the amount would be limited, as would the credits used in Baltimore. Businesses supported the credit, but with no limits.

A bill that would allow businesses to continue charging their customers certain late fees, for example, on utility and cable bills. It passed both houses, with the support of businesses.

Extension of a research and development tax credit that is to expire next year. The incentive was not extended, but businesses that support it will have another opportunity next year.

A bill to make it easier to redevelop brownfields, polluted industrial sites, for new uses. It passed, with the support of the business community.

Extension of a job-creation tax credit for businesses that expand in or move to Maryland. It passed both houses, with business support.

A transportation package that raises $165 million, largely from an extra $23.50 increase in car registration fees. It passed. Businesses supported it but had sought a $300 million infusion recommended by a task force that studied state transportation needs.

A bill to extend the work of an unemployment insurance task force until the end of the year. It passed, keeping in place a surcharge that kicked in this year on businesses to replenish a state unemployment insurance fund. Businesses supported the task force but hoped to avoid the surcharge.

A bill to reform medical malpractice insurance. Businesses wanted to rein in costs that they say are driving away doctors, particularly obstetrician-gynecologists, by limiting lawyers' fees and limiting awards for pain and suffering. It was put off for more study.

A bill to limit those who qualify for workers' compensation benefits. Businesses argued that the courts recently expanded the coverage to unaffordable levels. Efforts to reverse the ruling were defeated by lawmakers not convinced of the extent of the cost increase. They agreed to monitor new claims.

Several other bills could add costs or regulations to businesses this year, and some that were passed last year go into effect this year, including a higher corporate filing fee and a property tax increase. Together, the chamber said, they could place a significant burden on businesses.

Down-to-the-wire votes made the session hard to gauge for Maryland businesses, said Robert O.C. "Rocky" Worcester, president of Maryland Business for Responsive Government, a pro-business group.

Donald Fry, president of the Greater Baltimore Committee, agreed that much important legislation was left to the end of the session, jeopardizing even bills with wide support. Fry noted that the heritage tax credit, one of the GBC's top priorities, was an example of a bill that had a lot of support in general terms but a bad place in line for consideration.

"Unfortunately, we won't know until the dust settles ... what happened," he said.

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