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Agencies, businesses fearful of Md. General Assembly’s tax tinkering

LARGO — Antiquated tax incentive programs for businesses have not been updated or improved for fear of what would happen once the legislature got involved, according to one top official at the Department of Business and Economic Development.

Ursula S. Powidzki, special assistant to the secretary of the Department of Business and Economic Development, told the Maryland Economic Development and Business Climate Commission that even though changes are needed to old programs or outdated laws, there is a hesitance to go to the General Assembly to seek updates.

“To change them means going back to the legislature and particularly triggering a much bigger change that neither we nor the folks who are interested in the credits want to get into,” Powidzki said.

Del. C. William Frick

Del. C. William “Bill” Frick (File photo)

Jon Laria, a commission member and land use attorney at Ballard Spahr in Baltimore, said his clients have similar concerns.

“It’s Katie bar the door,” Laria said of legislative involvement. “No one knows what will happen”

Some lawmakers on the commission, however, took exception to the comments and said the attitude was not conducive to rehabilitating programs that are outdated to the point they no longer function effectively.

“That’s a disturbing message to me,” said Del. C. William “Bill” Frick, D-Montgomery County. “If we’re going to get better we need to be partners rather than view the legislature with suspicion.”

The commission is tasked with reviewing the state’s tax structure and how that affects business climate. Some of that review will include the more than 48 business tax credit programs described as “a grab bag” by Sen. Edward J. Kasemeyer, D-Howard and Baltimore Counties and chairman of the Senate Budget and Taxation Committee.

A majority of the programs — 29 — were created between 1995 and 2002. The oldest of them is the Enterprise Zone tax credit, launched in 1992 when Ronald Reagan was president.

Other programs, such as a biotechnology tax credit, have been criticized for creating few jobs. In 2012, the state provided about $8 million for that program, which essentially created 33 jobs.

Norman Augustine, chairman of the panel that has come to be known as the Augustine Commission, said he was “underwhelmed” by such results.

Powidzki said the agency is looking at revamping some incentives, including the Enterprise Zone credit.

“How do we rationalize these three programs and yet not throw the baby out with the bath water?” she said of the review.

The commission was formed last spring by House Speaker Michael E. Busch and Senate President Thomas V. Mike Miller Jr. to look at how to improve the state’s business climate. The legislature passed five bills earlier this year based on the panel’s recommendations. Those bills were signed into law by Gov. Larry Hogan.

Following that, the commission was asked to continue its work and look into how the state’s tax structure affects the business climate and offer recommendations on how to make the state more competitive.

Frick, who is also co-chair of the legislative Tax Evaluation Committee, said a long overdue overhaul of older tax programs is needed.

“Underwhelmed is an understatement,” Frick said. “We need to face up to the fact that some of these just aren’t working,” Frick said. “Continuing to perpetuate programs that don’t work because we’re afraid of the alternative is not helpful.”