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DBED to focus on small-ticket initiatives in 2011

Maryland’s business development arm will focus much of its energy in the coming year on small-ticket initiatives to better market the state and make it more responsive to the needs of the private sector.

The Department of Business and Economic Development won’t be alone in taking a low-cost approach — Maryland lawmakers will grapple with a projected deficit of $1.6 billion when they return to Annapolis in January.

DBED Secretary Christian Johansson described his department’s projects as some “that aren’t necessarily expensive, but yield big dividends” during a briefing with reporters Friday.

Johansson said his department is working with its sister agencies to develop a system to speed the state’s review of major development projects. Projects needing approval of multiple state agencies would be fast-tracked based on their size and scope, Johansson said, regardless of the type of industry involved.

The department is also planning a website where businesses would apply for and monitor state licenses and permits, a radical shift from the paper-heavy processes spread now among disparate state agencies. DBED will also identify the most problematic state permits to streamline the applications and reviews, Johansson said.

A draft of a new procedure for issuing highway user permits, which developers need if their projects tie into state roads, has already been sent to the governor.

Businesses “want timeliness, they want predictability and they want transparency,” Johansson said. “When you shine sunlight on something, it makes it very hard to not be timely.”

Business advocates have long bemoaned the state’s regulatory agencies. A Greater Baltimore Committee report released Dec. 6 said regulators need to “develop a sense of urgency in dealing with business” and make the permitting process more predictable.

That issue reared its head during the gubernatorial elections this fall, with the challenger and former governor Robert L. Ehrlich Jr. lambasting the performance of regulators under Gov. Martin O’Malley. Ehrlich said the agencies were too slow, and sometimes outright unfriendly to business.

O’Malley has acknowledged shortcomings of some state regulators, and said he wants better communication between agencies and the private sector. Johansson said Friday the department’s plans were in place before the issues were raised during the election.

DBED does have one pricey item on its agenda — a $100 million venture fund raised by selling tax credits to insurance companies. Half of the fund would be controlled by the state and half by private venture firms, with the focus on small tech companies that O’Malley’s administration believes are key to the evolution of Maryland’s economy.

The credits, auctioned off with a price floor of 70 cents on the dollar, would be applied starting in 2015. The plan needs legislative approval, and could face opposition based on the amount controlled by DBED’s fund.

“It allows us to make desperately needed investments in the economy today on tax credits we will pay in the future,” Johansson said.

“We are incredible at basic research and discovery,” he said. “But we are in the middle of the pack in terms of turning that research into commercial ventures. The ecosystem to do this is here.”

Doug Schmidt, an investment banker focused on tech companies, said the state’s fund would help meet the demand for early-stage venture funding as private investors focus on more developed firms.

“The low man on the totem pole is early-stage venture,” said Schmidt, CEO and managing director of Bethesda-based Chessiecap Securities Inc. “It’s the killing fields of venture. It’s very hard to figure out who the winners and losers are.”

DBED will also seek to spur tech sector growth with other, less costly methods. The department is preparing a report on the space industry — DBED released similar reports this year on strategies to nurture cyber security and “green” businesses — to identify strengths and opportunities to grow in that sector.

Johansson said DBED will work with private groups and other government agencies to promote Maryland’s cyber security sector, which is buoyed by federal dollars and jobs flowing from installations like Fort George G. Meade in Anne Arundel County and the National Institute of Standards and Technology in Montgomery County.

“We have to recognize that we can’t do this alone,” Johansson said. “We need the private sector in this.”