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Commission weighs privatizing DBED programs

QUEENSTOWN — Reforming the business climate in Maryland could include a recommendation to privatize some or all of the programs within the state Department of Business and Economic Development.

The option of privatizing is under discussion as the Maryland Economic Development and Business Climate Commission begins to turn the corner from fact-gathering to drafting recommendations. Those recommendations will be delivered to House Speaker Michael E. Busch and Senate President Thomas V. Mike Miller Jr. sometime before the beginning of the 2015 legislative session.

“That’s clearly on the table,” Norman R. Augustine, chairman of the commission, said of privatizing the current DBED programs. “At this point we have no preferred items. We just haven’t gotten to that point.”

The commission is already starting to narrow its focus in looking at issues related to the state’s regulatory environment, tax structure and vocational education training programs.

Augustine said he is intent on producing a set of recommendations that provide a “menu of options” but cautioned that some of those options, such as creating vocational technical training schools in each county as part of its K-12 education program, could be too expensive to gain widespread support.

But a presentation Wednesday raised the possibility that one of the recommendations could involve privatizing some of the functions of the state agency charged with providing financial incentives to attract new businesses to the state and retain and expand existing businesses.

With more than 70 such incentive programs, Maryland is second only to Oklahoma — though not all the programs are administered by DBED.

Erik R. Pages, president for EntreWorks Consulting, told the commission that some states are looking at new models for economic development agencies because of a lack of state money, political ideology and the thought that businesses are better suited at driving job-creation than government.

A number of states, including Arizona, Florida, Iowa, North Carolina, Ohio, Texas and Wisconsin, have moved to some form of a privatized model. Not all of those moves have been without controversy and some have given rise to criticism about the lack of public transparency or double-dealing, Pages said.

Ultimately, Pages said there is no clear-cut winner when it comes to privatized models over the government model Maryland still uses.

“It’s not a slam dunk on either side that private is better than public or public is better than private,” Pages said. “There is no guarantee things will get better or get worse.”

In the end, Pages said he is “platform agnostic” when it comes to privatized versus public models and said successful economic development comes from having a clear strategy that is guided by strong personalities who run agencies with a clear mandate from state officials.

The commission was formed earlier this year by Busch and Miller. It’s been clear from the first meeting that a number of members were interested in making changes to the state agency.

Some expressed concern about a failure to reduce the growing perception, backed up by rankings from independent business publications, that Maryland is not a business-friendly state.

It is not clear how far the recommendations will go in terms of reorganizing or possibly privatizing the state agency. Top legislators on the commission differed in their opinions on whether or not the legislature would accept a move toward privatization.

Del. John L. Bohanan, D-St. Mary’s County, said privatizing some aspects of the agency could be appealing.

“Maybe some hybrid version — we’ve done that before, like with TEDCO — but one of the problems is that you lose transparency and it becomes someone’s private sandbox, and you give them public money … and all of a sudden the public money becomes ‘my friend has a great project’ and they don’t even solicit from anyone else,” Bohanan said. “That’s what you have to be careful of, that it becomes someone’s private club.”

Sen. Edward J. Kasemeyer, D-Howard and Baltimore counties and chairman of the Senate Budget and Taxation Committee, said he doubts privatization will appeal to most legislators.

“I don’t think it will fly,” Kasemeyer said. “I don’t see the legislature giving up total control.”

About Bryan P. Sears

Bryan P. Sears covers Maryland politics and government affairs for The Daily Record.