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‘Backtracking’ feared in face of state’s fiscal woes

ANNAPOLIS — Business advocates and lawmakers say the pro-business rhetoric at the center of the governor’s race that concluded just two months ago may be rolled back in the face of daunting statewide issues.

Both Gov. Martin O’Malley and former Gov. Robert L. Ehrlich Jr. billed themselves as better for business, jobs and economic recovery. They said they would spur development and business growth and clean up a regulatory climate long viewed by the private sector as a barrier to growth.

“You worry now that they may start backtracking because the election is over and the fiscal challenges they face,” said Donald C. Fry, president and CEO of the Greater Baltimore Committee, addressing a Maryland Economic Development Association conference on Thursday.

Lawmakers returned to Annapolis on Wednesday for the annual 90-day General Assembly session, facing a $1.6 billion budget deficit. O’Malley will take the first shot at closing the shortfall with his proposed budget, due Jan. 21.

“The budget is going to be stark,” said House Speaker Michael E. Busch, D-Anne Arundel. “It’s going to have an impact on every community. It’s definitely going to have an impact on the business community.”

Christian Johanssen

Christian Johanssen

Christian Johansson, secretary of the Maryland Department of Business and Economic Development, said the budget process will be “brutal” for all state agencies, but reiterated the administration’s commitment to the jobs issue.

“We’re facing a huge deficit and I would guess economic development will fare better than others because jobs are the No. 1 issue,” he said.

Busch said he expects cuts to Medicaid payments for health care providers, as well as cuts to local transportation and public safety funding. Senate President Thomas V. Mike Miller Jr., D-Calvert and Prince George’s, added public education to that list, and said a gas tax bump — Miller has been a staunch and outspoken gas tax hike proponent — is possible.

Miller said a renewal of the tax bracket on the state’s top earners that expired Dec. 31 is “not going to happen.”

The “dime-a-drink” alcohol tax increase that would raise about $210 million has gained the most buzz as the legislative session has gotten rolling. Backers of the tax boost have released a string of polls showing support across the state. The tax has held constant for generations.

“The way they want to do it is insane,” Miller said, adding that a smaller increase could pass this year.

Business advocates who spoke Thursday said they’ll be pushing back against tax increases — except for the gas tax, which has strong support among the business community — as well as tightened workplace regulations.

Last year, the General Assembly mandated large retailers give their employees shift breaks, and some worry it could be expanded to cover more companies this year. Others expect more rules governing how employers can investigate the backgrounds of job candidates, and bills that could require union participation in state projects.

Excessive workplace regulation “has been a hindrance to us in attracting major corporate headquarters over the last year, like Northrop Grumman, like SAIC, like Hilton Hotels,” said Kathleen T. Snyder, president and CEO of the Maryland Chamber of Commerce.

There is one proposal on the table already, however, that has earned positive reviews — the administration’s plan to fill a $100 million venture capital fund targeted at early-stage startups by selling tax credits to insurance companies.

“We want to create thousands of jobs. We want to create billions of dollars in follow-on capital,” Johansson said of the venture fund proposal. “We want to create the next Under Armour, the next MedImmune, the next Microsoft and Google in Maryland.”