Image already hurt, business leaders say


While business leaders hailed a federal court opinion striking down the so-called Wal-Mart law yesterday, they said Maryland's commercial reputation already has been damaged by the legislation.

"The harm that gets done by proposing, passing and overruling a veto [of the bill] is much longer lasting than a sweet victory in court," said Aris Melissaratos, the secretary of the state's Department of Business and Economic Development.

During recent sessions, the Maryland General Assembly has passed legislation that gives tax breaks and other incentives to startup companies and investors. It also approved a landmark law that provides $15 million for stem cell research.

Lawmakers also have raised the minimum wage; delayed a 72 percent rate increase by Baltimore Gas and Electric, which led to a drop in the company's credit rating; and passed the Fair Share Healthcare Fund Act, which is widely referred to as the Wal-Mart bill because it essentially required that company to pay more for employee health care. The bill was to take effect Jan. 1.

Members of consumer and labor groups have praised the latter legislation, calling it good for workers. But others - including Gov. Robert L. Ehrlich Jr. - have declared it anti-business. It's a refrain that often was used to describe the state's political leadership about a dozen years ago but had been waning, particularly since a Republican governor took office in January 2003, according to business leaders.

"Don't get me wrong, [Maryland is] a great place to do business. ... There's so much deal flow, so much activity here, so many intelligent people here," said Anirban Basu, chief executive of Baltimore economic consulting firm Sage Policy Group Inc.

He pointed to the state's low unemployment rate and its national ranking as a biotechnology hub, as well as a healthy high-tech industry in Maryland. But he cautioned that a number of issues make companies leery. "Nationally, I have to say the Wal-Mart bill is No. 1," he said.

Some legislators say the state's effort to increase health care for workers is good for business. They argue that the General Assembly has helped several industries grow and that the Wal-Mart bill did nothing to jeopardize that environment.

Democratic Del. Kumar P. Barve of Montgomery County, the House majority leader, said, "I never had trouble making money in this state. Biotech and health care are thriving industries here. The Wal-Mart bill didn't hurt the business climate in Maryland."

In a 32-page opinion issued yesterday, U.S. District Court Judge J. Frederick Motz granted a motion declaring that the Wal-Mart bill is pre-empted by a federal law and is therefore invalid. He did not deem it unconstitutional as some business leaders had hoped, though it appears to target one company. The opinion was part of a lawsuit filed by the Retail Industry Leaders Association - a trade group that counts Wal-Mart as a member - against Maryland's Secretary of Labor, Licensing and Regulation.

The state's Attorney General promised to appeal the ruling, and lawmakers said they would rewrite the law if they had to - remedies that union groups are counting on.

"We're obviously disappointed by today's decision but encouraged that it will be appealed," said Nu Wexler, a spokesman for Wal-Mart Watch, a union-supported group that pushes for reforms in the retailer's policies. "This setback doesn't change the fact that Wal-Mart's health care plan is unaffordable and inaccessible for its employees."

The Maryland Retailers Association supported Ehrlich's veto of the legislation, which was overturned by the General Assembly.

"I've gotten an earful over the last year and a half," association President Thomas S. Saquella said of the Wal-Mart legislation. "When it first happened, my phone was just ringing off the hook. I was in a conference last week, and I heard it again. It really was a blow to Maryland's business image."

The judge's decision isn't likely to have an immediate effect on that perception, Saquella said. noting, "It is the court that acted, not the state legislature."

At least one group said it hoped the ruling would reopen the dialogue between lawmakers and businesses, leading to a possible compromise.

"This gives us an opportunity - and by `us,' I mean the private sector - to redirect the legislature's attention to other alternatives," said Robert O.C. Worcester, president of Maryland Business for Responsive Government. Worcester said he has been working with other organizations to develop ideas.

Sarah Clark, a Wal-Mart spokeswoman, said the legislation never deterred the company from doing business here. In April, Wal-Mart said it would continue with plans to build a 1 million-square-foot distribution center south of Princess Anne on the Eastern Shore, despite concerns from business leaders that the legislation might hurt the project. "We're just glad that this issue has been solved," Clark said. "The residents in Maryland shouldn't have to suffer from bad public policy."

Sun reporter Meredith Cohn contributed to this article.

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