Let's get companies off public dole in Md.

February 28, 2007|By JAY HANCOCK

Let's get companies off the dole in Md.

Howard County Executive Ken Ulman is worried about growth, and who can blame him?

Defense realignment is bringing an estimated 2,259 jobs and 1,853 residents to the already booming locality. He wonders who'll pay for all the extra roads, schools and police officers that will be needed.

Incoming federal employment "brings some very significant challenges," Ulman said in a speech a couple of weeks ago, and he's begging Maryland Sen. Barbara Mikulski for Washington money to finance it.

So why the heck are his economic development people stoking even more growth and throwing away scarce tax dollars in the bargain?

Computer-marketing firm Merkle Inc. is moving 350 jobs from Prince George's County to Columbia and pledges to bring its Howard County employment to 900 by 2012. To lure the company, officials promised a $300,000 Howard County tax credit, a $150,000 state grant and a $3.3 million, cut-rate construction loan, also from the state.

In one swoop, government added to the growth challenge and undermined its ability to meet it.

It's not just Howard County, although it may be the best example. Other localities bracing for base realignment, from Anne Arundel County to Harford County, offer big money in training grants, cheap loans, tax breaks and other incentives to try to entice employers.

Capital Lighting is getting more than $250,000 in state and local money for moving its headquarters to Prince George's County.

After a lull in lavishing dollars on selected businesses in the name of growth, Maryland looks ready to renew its corporate-welfare tradition. Gov. Martin O'Malley has asked to add $2 million to the Sunny Day incentive fund, the first new money in years.

And Baltimore, which never got out of the incentives business, looks ready to double down with its contribution to H&S Properties and the planned Legg Mason building in Harbor East.

Incentives are political heroin. When an economy is down and out, as Maryland's was in the early 1990s, they feel great, create a delusion of prosperity and give the governor a few ribbons to cut. But these days Maryland is as high as a kite (to belabor the comparison) and still shooting smack.

The state's unemployment rate is 3.9 percent, less than the nation's. We have added 500,000 jobs almost without stopping since 1993. The need to pay for growth is a primary cause of the projected $1.3 billion gap between state revenue and expenses next fiscal year.

Maybe it's time to re-equip the development toolbox. Thanks to base realignment, a fine university system and promising sectors such as health care and biotechnology, employers will add Maryland jobs in the next few years no matter what happens. Why not make every company pay its way?

In Howard County

Merkle would have come to Columbia even without incentives. David Williams, its chief executive, has lived in Howard County for two decades, The Sun reported. (Three years ago, after a similar deal involving Mills Corp., I wrote: "Landing companies whose CEOs already live here is not going to anchor Maryland's economic development strategy." Now I'm not so sure.)

Howard County's unemployment rate is even lower than the state's. With Merkle on the way, companies that aren't getting cheap loans, tax breaks and training funds will have to compete with it for workers.

Richard Story, Howard County's economic development director, says that some Merkle employees already live in the county and others will commute from Prince George's, so not everybody will be moving in. Without Maryland incentives, he says, Merkle "had an opportunity to pick up and leave altogether" for some other state.

Still, he grants, growth from base realignment will require a fine-tuning of development strategy, although "it doesn't mean we stop marketing."

State view

David Edgerley, the state's new secretary of business and economic development, won't forsake incentives but promises to focus them, which is better than nothing.

"It's not growth for growth's sake," he says. "It's high-technology jobs. It's better-paying jobs and important community resource allocations. It might be for areas that need an extra push," such as lower-income communities.

Baltimore County economic development czar David Iannucci doubts that firms directly related to defense realignment will receive incentives. But he says parts of his jurisdiction - Woodlawn, Sparrows Point - will get no benefit from realignment "and will still need serious attention from us."

OK, but as more prosperous areas run out of capacity, I bet realignment expansion will make communities that need growth look more attractive to companies that have nothing to do with defense or the federal government.

Maryland will probably never give up economic opiates, but there's no better time than now to try.

jay.hancock@baltsun.com

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