Donald C. Fry: Checking Assembly’s business scorecard

Improving Maryland‘s business climate is constantly on the minds of corporate leaders and economic developers. What was promising about the 2010 election cycle was that the topic was also on the minds of recession-wary candidates for office, virtually all of whom pledged to make job creation and economic growth a top priority if elected.

So, as many of those candidates head home from their first post-election session of the Maryland General Assembly, how did they perform collectively to strengthen job creation and our state’s economic competitiveness?

Did lawmakers heed business advocates’ calls to make job creation and economic growth their No. 1 policy priority now and in the foreseeable future?

One way to divine the answer is gauge how actions by the 2011 General Assembly stack up against the eight core pillars for economic growth compiled by the Greater Baltimore Committee last year during a 10-month series of focus groups, discussions, and feedback sessions.

Participants included former secretaries of the Maryland Department of Business and Economic Development, more than 50 Maryland business leaders, and statewide economic development directors.

The eight core pillars are:

-Government leadership that unites with business as a partner;

-A workforce that is highly educated and meets Maryland’s business needs;

-Regulatory policies that are streamlined, stable and predictable;

-A tax structure that is fair and competitive;

-Competitive costs of doing business;

-Superior transportation infrastructure with a dedicated and reliable funding source;

-Strategic and effective state investments in business growth;

-A business marketing strategy that is aggressive, coordinated, long-term and well-funded.

Tax credits are essential

Here are some early observations on the legislature’s performance in these areas:

Maryland lawmakers, who normally are highly skeptical of tax credits, showed signs that they are beginning to grasp that state investment is an essential strategic element for achieving a competitive business environment. It took them until the last day of the session, but they managed to pass an amended version of Gov. Martin O’Malley’s Invest Maryland legislation to leverage tax credits into at least $70 million in investment funding from the private sector to create jobs and promote development of the state’s bioscience and technology industries.

Ironically, while embracing this major tax-credit legislation, the House of Delegates also passed a bill that would have destabilized the state’s entire menu of tax credits. Thankfully, the bill died in a Senate committee.

Contradictions aside, let’s hope Maryland’s lawmakers are ready to embrace, not diminish, what business and economic development experts already know — effective use of tax credits is among the most successful tools for nurturing business growth.

Lawmakers’ proposals to institute policies to increase corporate taxes and personal income taxes on high-income earners never left their respective committees this session. Maryland legislators must continue to resist tendencies to target corporations or particular business segments as the sources of first resort for new revenue.

Lawmakers continued the state’s procurement program for minority business participation and created a task force for cybersecurity innovation. However, a bill to develop a small-business growth initiative died in committee. On balance, however, lawmakers appeared eager to embrace new, collaborative strategies for economic growth.

A bill was moving through the House to expedite permitting processes and remove barriers to construction activity. Action on it, however, was deferred, although it is possible that an executive order implementing the expedited processes will be issued to accomplish the intent of the legislation. Nevertheless, lawmakers’ recognition of the need for regulatory processes that are mindful of businesses’ sense of urgency is welcomed by the private sector.

Miles to go on transportation

While sending a number of positive signals relating to business climate on other issues, legislative leaders chose not to move legislation supported by a statewide coalition of business advocates that would have generated more than $500 million in additional annual revenue to the state’s depleted Transportation Trust Fund and would have protected the fund from future legislative raids.

Most lawmakers say they agree that Maryland must address its more than $40 billion shortfall in funding for highway, transit, port and airport projects that are planned but not budgeted for construction. But a majority cannot, as yet, be persuaded to vote for a measure to raise the magnitude of funding that is needed to rectify two decades of legislative indifference to a seriously eroding transportation trust fund.

On this issue — an unfulfilled critical core pillar for economic growth — one thing is abundantly clear: Strong, active leadership from the governor is required to resolve the state’s transportation funding crisis.

The business-legislative “disconnect” over business climate hasn’t evaporated. But noteworthy encouragement emerged from the General Assembly this session.

The changing of a culture is never easy. In a legislative body, it requires a series of incremental steps and successes. Despite an improving economy and signals that our message is getting through, it is incumbent on the business community to urge elected officials not to lose sight of the election-year mantra they promised to pursue — jobs, jobs, jobs.

Donald C. Fry, president & CEO of the Greater Baltimore Committee, writes a monthly column for The Daily Record. His email address is [email protected].