Stung by legislation aimed at forcing it to spend more on health care benefits, Wal-Mart Stores Inc. has temporarily stopped talking to state officials about the possibility of building a large distribution center in Western Maryland and has slowed its drive to construct one on the Eastern Shore, a state official said yesterday.
Aris Melissaratos, the state's secretary of business and economic development, said the company does not appear to be on track to open a facility in Somerset County by fall 2006 as originally planned and broke off discussions about a Western Maryland center during the legislative session. His department said the latter proposal, which had not been publicly announced, remains possible but has at least been delayed.
But residents say they don't see evidence that Wal-Mart is pulling back on either project, and supporters of the bill say Melissaratos's statements are political posturing.
Somerset County's administrator says Wal-Mart is continuing the process of seeking approval for its distribution center there, while the administrator of Garrett County in Western Maryland said that to his knowledge the company is still considering the area for a center.
A Wal-Mart official said that the company could not confirm whether it was ever interested in building a second facility and that its plans for Somerset are not a done deal.
"We're continuing to explore the opportunity to put it there," said Nate Hurst, government relations manager for Wal-Mart, the world's largest retailer. "This health care bill ... won't be the single deciding factor on whether or not that distribution center moves forward, but it will be factored into the overall decision."
He added: "You do have to take a step back and question how business-friendly the state of Maryland is."
State officials announced the Somerset project in November. At that time Wal-Mart spoke of it distribution center as a needed facility rather than a possibility. The deal both sides negotiated included grants and tax incentives for the company.
Distribution centers can be a shot in the arm for job-strapped areas such as parts of Western Maryland and the Eastern Shore.
Maryland is aggressively pursuing the centers since they offer jobs that do not require a college education. Wal-Mart's distribution facilities usually employ 500 to 1,000 people with starting salaries of about $12 an hour, higher than its wage at retail stores.
But the retailer has been bombarded with criticism about its health benefits. The General Assembly this session passed legislation - which effectively applies only to Wal-Mart - that requires companies with at least 10,000 employees to spend 8 percent of their payroll on worker health care or pay the shortfall into a state fund. It was the first bill of its kind nationwide.
Supporters argue that companies that don't pay their fair share of health care are driving up costs for everyone because uninsured residents rely on tax-supported government programs when they need medical attention. Opponents insist that such a law would only hurt job creation because other businesses believe they'll be targeted next.
Giant Food lobbied for the bill, while Costco Wholesale Corp. - another Wal-Mart competitor - purposely stayed on the sidelines. Several business groups, including the state Chamber of Commerce, lobbied against it.
Gov. Robert L. Ehrlich Jr. has said he will veto the bill, though legislators appear to have enough support for an override.
"Anytime we do something as ... irresponsible as what our legislature did relative to business climate in the state, you expect that you're going to pay a price," Melissaratos said yesterday. He said he had expected a decision from Wal-Mart about a Western Maryland facility in March or April, but "during the legislative session, they stopped talking to us completely about that."
Supporters of the bill take a dim view of that perspective.
"To me, it seems like this has been a whole bunch of smoke and mirrors on behalf of Wal-Mart," said Glenn E. Schneider, executive director of the Maryland Health Care for All Coalition.
"I think they are trying to scare people away from this bill when we know it is the right thing to do for businesses and the right thing to do for taxpayers."
Wal-Mart representatives have told Somerset that they expect to purchase land for the site at the end of this month or the beginning of June, said County Administrator Charles E. Massey. The company hasn't brought up the health care bill with county officials, he said.
The development process, not the health care bill, is to blame for the slower-than-expected movement on the Somerset County distribution center, said Michael A. Pretl, a Salisbury attorney who is treasurer of Health Care for All.
Wal-Mart is working through environmental issues on the site, which is near U.S. 13 just outside Princess Anne, and is still negotiating to buy the land, said Pretl, who said he briefly advised the property owner.