ANNAPOLIS – Gov. Larry Hogan’s proposal to attract new manufacturing jobs to the state with a 10-year tax credit is “not ready for prime time” according to the vice chairman of the House Ways and Means Committee.
Del. Frank S. Turner, D-Howard, made the comments Tuesday after almost an hour of testimony and tough questions from lawmakers. At several times during the hearing, Department of Commerce Secretary Michael Gill responded to criticism from lawmakers by expressing a willingness to amend the bill — sometimes heavily.
“A lot of work needs to be done on this bill,” said Turner. “We don’t want to write the bill for the administration. Maybe it’s not quite ready for prime time this year.”
Hogan made the proposal part of his legislative agenda heading into the 2016 General Assembly session. At the time, he said the bill was meant to lure new manufacturing jobs to the state with the promise of 10-year tax credits on property and corporate taxes and for income taxes for employees filling those new jobs.
Between 1990 and 2015, nearly 48 percent of the manufacturing jobs in Maryland have been eliminated or left the state, according to the U.S. Bureau of Labor Statistics and the state Department of Legislative Services.
Hogan said he wanted to focus the effort on western Maryland, Baltimore city and the Eastern Shore — three areas that have some of the highest unemployment and poverty rates in the state.
But members of the Ways and Means Committee expressed a number of concerns Tuesday about the proposal, including the loss of revenue to the state and local jurisdictions, the effect on manufacturing businesses and jobs already in the state and concerns that the tax credit is not targeted to specific types of manufacturing.
The Maryland Association of Counties, which said it was generally supportive of the idea, asked the legislature to consider giving local government input into the location of the special manufacturing zones – rather than leaving it to the sole discretion of the secretary of commerce – and to allow local governments to decide how much of a local tax credit to provide rather than the all-or-nothing language in the legislation.
Gill and other administration officials said they were “not wed” to most particulars in the bill.
“Clearly there is work to be done but the primary intent is to create a bill that will enhance manufacturing opportunities in Maryland,” Gill said.
Change of positions?
Del. Jason C. Buckel, R-Allegany and a member of the committee, told Gill he was happy to add his name as a co-sponsor but that initial excitement turned to disappointment because it does not only apply to the areas highlighted by Hogan in January.
“This isn’t something that’s designed only for rural areas of the state at all which quite frankly when I co-sponsored it I thought it would,” said Buckel. “When you look at it, it’s something that applies with equal force everywhere.”
Chris Carroll, Hogan’s deputy legislative officer, acknowledged that the bill would allow for potentially two manufacturing empowerment zones in every Maryland jurisdiction.
Gill also faced questions about his written position on a similar bill last year in which he told legislators that they should reject attempts to create tax credits to attract new manufacturing to the state and focus efforts to support the 3,674 manufacturers already in the state that employ more than 106,000 people.
The bill, sponsored by Sen. Roger Manno, D-Montgomery, proposed a 10-year tax credit for heavy manufacturing businesses that would move into zones designated by the secretary of commerce.
In his 2015 letter opposing Manno’s bill, Gill said existing manufacturers in Maryland struggled with 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.
A Hogan spokesman said last month the governor was unaware of the letter and that it conflicted with Hogan’s support during the campaign of the manufacturing tax credit program started in New York. Hogan has said his proposal is modeled heavily on the New York tax credits.
Del. Andrew Platt, D-Montgomery, said the letter left him questioning whether he should listen.
“It seemed the advice you gave the legislature last year was that the bill would come at the expense of current businesses,” Platt said.
Gill told Platt he “vaguely remembered” what he said last year but believed his message was consistent.
“The priorities of commerce should be to retain all the existing customers we have now, help the ones who have the ability to grow, grow, and attract new business,” Gill said.