Please ensure Javascript is enabled for purposes of website accessibility

Delegates push for data on tax credits

ANNAPOLIS — When Del. Herbert H. McMillan began drafting legislation to end a long-standing tax credit on the purchase of coal, the Anne Arundel County Republican was met by a troubling impediment.

“We had wanted to find out what companies received the subsidy,” McMillan said. “The State Department of Assessments and Taxation said they couldn’t release the information to us. We don’t have access to who’s getting it.”

That makes it difficult, McMillan said, for policy makers to make educated decisions on whether business tax credits — hundreds of which are offered by the state for a variety of industries and actions — are achieving their purpose. Usually, businesses that apply for and receive the credits say the tax giveaway allows them to keep their work in Maryland or hire extra people.

The state Department of Business and Economic Development keeps some data on the effectiveness of various tax credits and economic development funds operated by Maryland. But McMillan is not alone in thinking DBED and other state agencies do not do quite enough.

In fiscal 2012, the state provided more than $4 billion in tax breaks to various corporations and other entities.

House Bill 1231, cosponsored by McMillan, Del. Andrew A. Serafini, R-Washington and Del. Jon S. Cardin, D-Baltimore County, would require a business that receives more than $25,000 in government handouts to disclose data, including how many jobs it created in the previous year and some executives’ compensation numbers.

Similar legislation, H.B. 1315, would force businesses receiving a public subsidy to disclose less information than McMillan’s proposal, but would still require DBED to collect data from various state agencies on how effective tax credits were in creating jobs and generating revenue for the state. Both bills are scheduled for hearings, in separate committees, on Thursday.

The bills were conceived through the same thought process — businesses receiving public money ought to make more information about their business publicly available.

“It’s hard to get a handle on what programs are working,” said Del. Galen R. Clagett, a Frederick County Democrat who was just appointed co-chair of a new business climate workgroup in the House of Delegates. Clagett, the lead sponsor of H.B. 1315, said he was open to working with DBED officials on creating an effective evaluation program.

But the state agency is wary of the costs associated with either bill, though only Clagett’s legislation specifically requires DBED to collect data from state agencies that award business tax credits.

“We don’t necessarily disagree with the spirit of the bill. We’re all about transparency,” said Karen Glenn Hood, DBED’s spokeswoman. “But most of what they’re looking to do with this bill is already accessible in various forms, and it is going to be onerous for our department to collect data from other state agencies. … It would put an undue strain on our department.”

Clagett said he’s willing to work with DBED to craft legislation that is friendlier to the department. Ultimately, though, he said the money and time need to be spent.

“We need to clean up the way the state does business,” he said. “If we’re serious about helping business, that’s the cow that provides the milk. We may need to bite the bullet and pay for it.”

McMillan, who met recently with DBED officials, was even more direct.

“When you come to the government and you ask for money, we’re entitled to know how it’s being spent,” McMillan said. “There should be some metric and some commonality. … If you want your business information to be private, then don’t ask for money.

“We need to make sure the juice is worth the squeeze. I’m rather tired of hearing businesses say they create so many jobs. I need to put my hand in the wound.”

Having more information available on the effectiveness of business tax credits could benefit small businesses in the state, according to a spokesman for small businesses advocacy group Maryland Business. The organization convinced Clagett and Del. Craig J. Zucker, D-Montgomery, to sponsor business reporting legislation.

“It’s going to bring more transparency to the entire system,” said Andrew Feldman, the spokesman. “If big business is not coming through on the amount of jobs they said they would, then it will create an opportunity for a small-business owner to apply for these funds. Right now, it’s not that simple to know about these tax credits.”

Either bill could also help lawmakers when tax credit expiration dates come up, McMillan said.

“Maybe you can spend the money better somewhere else,” he said.