ANNAPOLIS – A Senate panel approved the governor’s top economic proposal Saturday but added a provision seeking to reduce the $100 million price tag attached to the state-run venture fund plan.
The changes added by the Budget and Taxation Committee would push Gov. Martin O’Malley to revise the plan this fall when the legislature returns for a redistricting session.
If the state’s revenue outlook has improved over figures reported in March, O’Malley could opt to appropriate funds directly to the Invest Maryland program rather than pay for it with the sale of tax credits that would be redeemed from 2015 to 2019.
“One of the most significant concerns was the out-year costs,” said Sen. Richard S. Madaleno Jr., D-Montgomery. “You’re borrowing against the future.”
If the revenue projections do not improve or the governor opts to leave the program intact, the funding mechanism would remain as crafted by the House of Delegates.
That chamber cut the amount of credits from the $142 million O’Malley proposed to $100 million. Auctioning those tax credits with a floor of 70 cents on the dollar would yield the state at least $70 million under the House plan as opposed to the $100 million in the governor’s bill.
The funds raised would be used to make investments in small, high-tech Maryland companies. One-third of the money would be controlled by the Department of Business and Economic Development, which would focus its investments on entrepreneurial and early-stage companies. Two-thirds would be invested on the state’s behalf by private venture capitalists, with a focus on larger, growth-stage firms.
O’Malley’s proposal included a 50-50 split, with all the money targeted at early-stage firms.
Despite the changes, DBED Secretary Christian Johansson said the “capital still really plays to our strengths.
“This is the right bill for the right time,” he said. “Our biggest charge is how do we create the next Microsoft, the next Google, the next Under Armour in Maryland.”
The bill, HB 1039, will now head to the full Senate for approval. If the changes are adopted by the Senate, the legislation would be sent back to the House as the legislature works toward a Monday midnight adjournment.