Business incentive bills enacted by governor

Laws target film, biotech, high-tech industries

April 27, 2005|By Andrew A. Green | Andrew A. Green,SUN STAFF

Gov. Robert L. Ehrlich Jr. signed into law three business incentive bills yesterday and announced that one of them, a film production credit, has secured projects that will have a $65 million economic impact for the state.

The $2 million per film credit provides a rebate of up to 50 percent of certain wages paid by production companies that do business in Maryland. Ehrlich said that the bill has helped keep HBO's The Wire filming in Baltimore and attracted two independent films. The productions will generate about $30 million in direct spending and more than double that in total impact, the governor said.

"We have built up a marvelous film industry over the last few years, but other states and Canada have begun offering generous incentive programs," said Business and Economic Development Secretary Aris Melissaratos. "We were likely to lose all that activity if we didn't have equivalent incentives."

The other bills provide tax credits for investments in biotechnology companies in Maryland and extend a $6 million research and development tax credit for the state's high-tech companies. Ehrlich, House Speaker Michael E. Busch and Senate President Thomas V. Mike Miller signed 180 bills in all yesterday.

Melissaratos said extending the research and development grant plays on one of Maryland's strengths. The state already sees $11 billion a year in federal research and development spending, and the tax credit will help foster private investment on top of that, he said.

Similarly, the biotech incentive is designed to help the state capitalize on research going on at the National Institutes of Health, the Johns Hopkins University and the University of Maryland, said Del. Brian J. Feldman of Montgomery County, one of the bill's sponsors.

The incentive is necessary in the biotech industry, Feldman said, because startup costs for developing new products are high and the lag before businesses can profit from them is long.

Robert O.C. "Rocky" Worcester, president of Maryland Business for Responsive Government, said the bills are helpful to a segment of the business community but that an overhaul of the entire tax code would be fairer and more effective.

"This puts government in the picking winners and losers game," he said.

Karen Syrylo, a certified public accountant who is the state Chamber of Commerce's taxation consultant, said that taken together, the tax credits send an important pro-business message that will benefit industries other than those specifically helped by the legislation.

"There's a spillover effect in terms of reputation," Syrylo said. "These kinds of bills send a message to businesses across the country and indeed across the world that Maryland is interested in this kind of economic activity in our state, and even businesses that may not now be specifically impacted by these credits are getting the message that Maryland is interested in business-friendly legislation."

Since the end of the General Assembly session, Ehrlich has complained that bills he calls "anti-business" will hurt Maryland's economic standing. In particular, he has pointed to the Fair Share Health Care Fund Act, which requires large businesses - effectively, only Wal-Mart - to spend 8 percent of their payroll on employee health care or pay a penalty.

The bill has received national attention and is becoming a model for legislators in other states. An advocacy group took out a full-page ad in The New York Times last week criticizing the Wal-Mart's wages and benefits and pledging to send model legislation to every state lawmaker in the country. That legislation, according to the group's Web site, walmartwatch.com, is the Maryland bill.

Ehrlich said that signing three pro-business bills doesn't repair the damage done to Maryland's business reputation.

"To some extent, it counterbalances the damage inflicted by Wal-Mart, living wage, bills of that type, but only to some extent," Ehrlich said. "You can't counterbalance a full-page ad in The New York Times. You can't counterbalance 30 seconds at the top of [the] Rush Limbaugh [radio show] saying, `Don't go to Maryland.'"

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