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‘I think part of it is that the governor is thinking about business attraction," Commerce Secretary Michael Gill says of Gov. Larry Hogan’s support of a tax break to attract manufacturers to the state after opposing a similar proposal last year. ‘It doesn't mean that existing businesses aren't very, very valuable to the state.’ (Maximilian Franz/The Daily Record)

Hogan administration reverses course on manufacturing tax credits

ANNAPOLIS — A proposal to create a tax incentive for manufacturers to relocate to Maryland represents a change of course for at least some in Gov. Larry Hogan’s administration.

The governor’s announcement earlier this month reverses a position expressed less than a year ago when Michael Gill, Hogan’s recently appointed secretary of what is now the state Department of Commerce, penned a letter urging lawmakers to focus on existing manufacturing in the state.

But late Friday, after The Daily Record posted online a story referencing Gill’s letter, a Hogan spokesman said the governor was unaware of the letter and that it was not authorized.

“It does not represent the views of the governor,” said Douglass Mayer. “The governor has been a long-time supporter of Governor [Andrew] Cuomo’s effort and program in New York.”

In a 2013 post on governor’s Change Maryland website, Hogan pointed to the New York program as an example of good economic development policy.

But Gill, in an earlier interview, when asked to explain the apparent change in support for using tax credits to lure manufacturer to Maryland, said he could offer no insight.

“I think we just want to get more jobs,” he said. “We got some good momentum from where we were. Manufacturing is in a steady state. Jobs have remained flat. So I think the idea is, what can we do to increase jobs, and that’s where the emphasis on new manufacturing comes into play.

“I think part of it is that the governor is thinking about business attraction,” Gill added. “He’s thinking about new business opportunities. …I think it’s market conditions and the governor’s instincts that we ought to focus on new business. It doesn’t mean that existing businesses aren’t very, very valuable to the state.”

Mayer, speaking late Friday afternoon, reiterated Hogan’s support for such credits.

“He didn’t know about that letter or approve it,” Mayer said. “That’s a fact.”

But Hogan’s commerce secretary wasn’t in favor tax credits for new manufacturing businesses last year. Gill’s letter to the Senate Finance Committee last March was in response to Senate Bill 507, which would have established 10-year tax credits for heavy manufacturing businesses who would move into zones designated by the secretary of commerce.

Gill opposed the bill only on the basis that the administration wanted to see efforts focused on supporting the 3,674 manufacturers already in the state that employ more than 106,000 people.

Gill’s letter highlighted the concerns of those businesses in Maryland, including the difficulty in finding financing to expand or keep up with constantly improving technologies.

“Given these findings, the committee may want to consider adopting legislation that supports the growth of Maryland’s existing manufacturing industry,” Gill wrote.

The 2015 bill, sponsored by Sen. Roger Manno, D-Montgomery, is likely to be different from Hogan’s proposal, which is not yet finalized nor in bill form.

Manno this week expressed enthusiasm for Hogan’s newfound support.

“I’m glad to have the support of the governor,” said Manno. “Fact is, I’ve been working for two years with members of his own [party] to try to figure out a way to bring manufacturing jobs to the state of Maryland. I think it’s good public policy, it’s bipartisan.”

Hogan announced earlier this month a 10-year wavier of state taxes for manufacturing companies that move into western Maryland, Baltimore city or the Eastern Shore — the three areas of the state with the largest unemployment rates.

Hogan said the plan would be modeled on a similar program in New York.

“I think the other thing is that though the governor put forth at a high level a vision with some specifics around manufacturing bill, we still have work to do over the next few weeks in getting to exactly the best place,” Gill said. “I think everything is going to be on the table. That final bill is going to be the best bill that could be put forth. I still think there is some stuff that could be considered. I don’t think it was all there in a press conference. The emphasis was there on manufacturing. The emphasis is on you need incentives to attract manufacturing but in terms of the details, we’re not quite there yet.”

Manno said he has been meeting with Gill and other Republicans over the last week.

“I think there’s a way forward,” Manno said. “I would venture to say that if we can’t get this done in 90 days, we’ve got bigger problems.”