Gov. Martin O’Malley unveiled legislation Monday designed to spur investment in alternative energy and high-tech startups and bring Maryland in line with the federal health care overhaul passed last year.
The legislation would “make and protect strategic investments for a stronger future,” the governor said in a statement three days after detailing his plan to bridge a $1.6 billion budget deficit.
“While cutting and balancing are important, they are not enough by themselves to create jobs in the new economy,” O’Malley said. “Our legislative agenda focuses valuable resources on job creating initiatives, and harnesses Maryland’s competitive strengths to make this new economy ours.”
Chief among his proposals is a $100 million venture fund called Invest Maryland. The program would be funded by selling tax credits to insurance companies, with the money invested in early-stage companies.
The legislation is O’Malley’s top economic proposal and economic development Secretary Christian Johansson has been personally lobbying lawmakers in recent weeks.
The proposal has been tweaked since O’Malley announced it over the summer. Insurance firms would be allowed to buy the tax credits, the first of which take effect in 2015, for as little as $1 million. They then would be permitted to resell the credits, Johansson said.
Nationwide Mutual Insurance Co. “would consider investing in Maryland due to the benefits to our company,” said Elizabeth Giannetti, spokeswoman for the Columbus, Ohio-based insurer. “We commend the governor on this new approach.”
Half of the fund, or $50 million, would be invested by venture capital firms that would return 100 percent of the principal and 80 percent of the profits to the state. The rest would replenish the state-controlled Maryland Venture Fund, and be invested by a third-party consultant.
“We want to put Maryland on the map as a place for early-stage companies and for venture capitalists to seriously consider,” Johansson said. “We hope a number of VC firms, some of whom may not be in the state today, may look at the state as a result of this.”
The Maryland Venture Fund, which was created in 1994, has invested $25 million in high-tech startups and returned $61 million to the state.
Douglas M. Schmidt, CEO and managing director of Bethesda-based Chessiecap Securities Inc., said venture capital for early-stage companies dried up during the recession as investors sought safer bets.
“It’s a difficult part of the market. The market needs some help there. And Maryland needs this,” said Schmidt. “I wouldn’t underestimate what $50,000 or $100,000 can do for a young company. It can be life or death.”
O’Malley will also introduce a range of green energy bills, including a mandate for utilities to buy wind power generated off Maryland’s coast.
The state’s five electric utilities would have to contract for 400 megawatts to 600 megawatts of offshore wind power per year, for at least 20 years.
A spokesman for Constellation Energy Group Inc., parent of Baltimore Gas & Electric, said the company would not comment until it has reviewed the legislation.
Federal regulators have designated 207 nautical square miles off the coast for wind power generation and the state expects to see the first turbines spinning in 2016.
“We don’t have a specific project yet,” said Maryland Energy Administration spokesman Ian P. Hines. “We have a great deal of interest in the private sector in developing this.”
Under another set of O’Malley proposals, owners of electric vehicles could receive incentives to charge their vehicles during off-peak hours and tax credits for charging equipment. Last year, the General Assembly passed a $2,000 tax credit for the purchase of electric vehicles and allowed electric vehicles to drive in carpool lanes.
O’Malley will also push legislation to bring Maryland law into compliance with the federal health care overhaul, including bans on lifetime limits and requirements for insurance companies to cover preventative measures such as flu shots and mammograms.
Another bill would create a public health insurance exchange for individuals and small businesses and subsidize coverage.
O’Malley spokesman Shaun Adamec said the exchange would be “an independent state agency” like the Injured Workers’ Insurance Fund, the quasi-public workers compensation insurer that is overseen by a board of gubernatorial appointees.