O'Malley plan to expand heritage tax credit draws leaders' concern

March 10, 2010|By Annie Linskey | annie.linskey@baltsun.com

The governor's bid to expand a popular tax credit for rehabilitating old buildings faces resistance from key House leaders, who worry that a broader program would be too costly during tough fiscal times.

Gov. Martin O'Malley wants to loosen restrictions on the current heritage tax credit - which may now be applied only to historic buildings - so it may be used to fund renovations of newer structures located in densely developed areas.

He says the change would spur new projects and help prop up the state's faltering construction sector. It would also bring under one umbrella a mix of state programs focused on environmentally friendly development.

"If there is ever a time when we should be stretching, it is now," O'Malley said Tuesday. "We should be stretching to doing everything we can to create jobs." O'Malley has set aside $50 million over the next three years to pay for the expansion.

House leaders are nervous about any idea that could drive up costs as the state tries to dig out of a $2 billion budget hole. House Majority Leader Kumar P. Barve said he'd prefer the status quo. The first part of the program involves setting aside several million dollars for those who renovate commercial buildings with a historic designation. The second, smaller part of the program funds residential renovations and is capped at $50,000 per project. Both parts of the program are due to expire this year.

"I think that the House is interested in passing the bill that we passed last year," said Barve, a Democrat, referring to a measure that extended the credit by one year. "We want to be flexible and reasonable; we are in the middle of real fiscal plunge here."

Del. Sheila E. Hixon, the Democrat who chairs the powerful Ways and Mean Committee, said her panel is still grappling with the idea of expanding eligibility and favors separating the heritage tax credit so it doesn't get "lost" in the governor's larger package of changes.

But any discussion of the heritage program draws criticism from many who see it as subsidy to Baltimore City, which used 65 percent of the funds over the past four years. Administration officials counter that the broader plan is specifically geared to address the funding inequality.

"I'm a little concerned about you saying 'trust us,' " Del. Doyle L. Niemann, a Prince George's County Democrat, said at a legislative hearing Tuesday on expanding the credit. "What is there in this realignment that will make the distribution more equitable?"

Minority Leader Anthony O'Donnell agreed, saying he "hopes" the new plan will spread the funds throughout the state. But he added: "Previous experience would suggest that would not be true."

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