Md. Senate increases proposed job credit to $5K 

Posted: 7:00 pm Sun, February 21, 2010
By Nicholas Sohr
Daily Record Business Writer

ANNAPOLIS – Gov. Martin O’Malley’s proposed job creation tax credit has been increased to $5,000 by a Senate committee, answering calls from business groups that questioned the efficacy of the original legislation

The change narrows the scope of the program, but supporters said it will increase its chances of success.

“I’d rather have a program work with fewer people than not work at all,” Sen. Edward J. Kasemeyer, D-Baltimore and Howard, said Friday. “If we offer $5,000, I think there’s a better chance this will work.”

The governor’s bill set the credit at $3,000, meaning the proposed allocation of $20 million would cover the hiring of 6,666 workers. The amended bill, which maintains the same $20 million cap, would cover 4,000 hirings.

“By increasing it from $3,000 to $5,000, it gives a little more incentive for small businesses,” said Kathleen T. Snyder, president and CEO of the Maryland Chamber of Commerce.

The chamber requested the change at a committee hearing Feb. 2.

“It doesn’t address all the unemployment needs, but the $5,000 might help a business hire someone sooner than they would otherwise,” Snyder said.

The change moves the bill in line with a similar proposal before the U.S. Senate, which also includes a $5,000 job creation tax credit.

The governor’s bill would make businesses eligible for the credit for each worker hired from the unemployment rolls or who had exhausted their unemployment benefits in the previous year. According to the Department of Labor, Licensing and Regulation, more than 190,000 Marylanders fall into those two categories.

Individual businesses would be eligible for up to $250,000 of the credits.

Two senators opposed the credit increase, arguing for the lower limit that would cover the hiring of more unemployed workers.

“If there’s a tax credit on the table, they’re going to take it,” said Sen. David R. Brinkley, R-Carroll and Frederick. “If we want to get people back to work, you don’t want to do the amendment [to $5,000].”

Brinkley, however, supported the approval of the full bill, and it passed the committee unanimously. It will be heard next by the full Senate.

The bill — cross-filed as SB 106 and HB 92 — is one of the governor’s most high-profile initiatives this legislative session both because it is a key component in his efforts to jump-start the state’s economy, and represents a large funding increase in a year marked by a nearly $2 billion budget shortfall.

O’Malley spokesman Shaun Adamec said the governor’s office considered setting the credit at $5,000 after capping the program at $20 million, but settled on the lower number with the knowledge the Legislature could bump it up.

“There’s a balance between having the lesser incentive and gaining more jobs, and having the higher incentive and increasing the likelihood of maxing out the fund,” Adamec said. “That’s a balance that had to be struck and we’re fine with that.”

The House Ways and Means Committee is wrestling with the governor’s bill. Chairwoman Sheila Hixson, D-Montgomery, called the increase to $5,000 “an interesting concept.”

“I think that it might be acceptable,” she said.

Hixson said Ways and Means would likely vote on the bill this week.