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Norman Augustine
Norman R. Augustine, chairman of a panel examining the state’s business climate. (File)

Frustration builds as tax panel review slowly moves forward

Members of a panel charged with looking at how taxes affect the state’s business climate are expressing frustration about the pace of their work.

The Maryland Economic Development and Business Climate Commission met last week for the second time this summer. As with the first meeting in July, most of the session was spent in hours of detailed briefings on taxes and incentives that even analysts said was complicated. Members, who have two more public meetings in September and October, have yet to hear from business owners about how the state’s policies make it difficult to expand or hire.

Mary Ann Scully, president and chief executive officer of Howard Bank and a commission member, called the recent meeting “a frustrating day.”

“Taxes are not about stories,” Scully said. “Taxes are about credible analysis of where we differ and if we want to move the dial in a certain direction, what must we do and what would the advantages and disadvantages of that be. I just don’t feel right now that we’re making any progress on that front.”

It’s a far cry from last year, when the commission was formed by House Speaker Michael E. Busch, D-Anne Arundel and Senate 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.

The panel, chaired by Norman Augustine, was asked to continue its work in an effort to determine the impact of the state’s tax policy on the business climate. But many members have acknowledged completing the task will not be easy.

“I think as hard as our first phase of the commission was, this phase is going to be much more difficult.” Scully said. “This is where the heavy lifting needs to be done.”

And so far that heavy lifting has included dense briefings on various, complicated corporate and personal tax policies and antiquated and sometimes redundant, contradictory or archaic tax incentive programs.

“I do think it would be a good idea to have some businesses that are willing to come here,” said commission member Joshua C. Greene, a partner at Squire Patton Boggs in Washington, D.C. “That’s the perspective we need in this second phase.”

Unanimity difficult

Sen. Edward J. Kasemeyer, D-Howard and Baltimore counties, and a member of the commission, said he also senses the frustration among some on the panel.

“I think if we keep going on and meeting for four or five hours a day with people talking, I’m worried things get lost, subject matter gets lost,” said Kasemeyer, who is chairman of the Senate Budget and Taxation Committee. “I don’t want us the last day saying, ‘What are we going to do?’”

Augustine said he understood that some members are anxious to move beyond the hours of briefing.

“We needed an education period, particularly for people like myself,” said Augustine. “I personally think we are about where I thought we’d be at this point in time. I think we’re now shifting from education to answers.”

Some of those answers may be hashed out in private meetings. Augustine said the group needs time to discuss a number of potential ideas that could lead to recommendations in a final report due in December.

“We need some executive session time among ourselves to go through some of these thoughts,” he said. “My hope would be that we can find a way that we can mutually compromise and come up with a set of principles to work from and come as close to unanimity as possible.”

But Augustine, whose name has become synonymous with the commission, acknowledged that answers won’t come easy and, in the end, the second phase might not have the same impact as in the first phase. A number of current and former legislators have already questioned calls for reducing corporate or personal income taxes saying such a move would endanger priorities such as education and healthcare spending.

“I think one of the reasons we had impact with phase one was we were unanimous,” Augustine said.  “This is a topic that is going to be very hard to get unanimity. The further we are from unanimity, the less impact we have. By the same token, if our conclusion is we’re unanimous that there’s nothing you can do, that wouldn’t be very helpful.”