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Md. businesses conquer sick leave, but tax cuts slip away



Despite passage of a new tax credit and the defeat of a much-feared bill requiring paid sick leave, Maryland’s business community ended this year’s General Assembly session without many clear victories or defeats.

“Overall, it was a mixed bag,” said Mike O’Halloran, Maryland State Director from the National Federation of Independent Businesses.

While lawmakers gave county governments the power to create a 50 percent property tax credit for new and small businesses, the most important wins may have been the measures that didn’t pass, O’Halloran said.

Paid sick leave, which passed the House earlier in the session but seemed to have died in the Senate, crawled from the grave Monday and was briefly poised to pass the Senate as part of a deal that included House approval of a tax cut package.

Representatives of the business community once again voiced their concerns to the Senate Finance Committee, including that paid sick leave could place an unfair burden on some restaurants and retail stores, which would need to pay both the sick employees and the employees called in to cover those shifts.

When the chambers ultimately couldn’t reach an agreement – the House wanted to raise taxes on large corporations, the Senate did not — both measures failed.

“The [sick leave] bill that passed the House was fatally flawed,” O’Halloran said. He lamented the failure of the Senate’s tax cut package, which would have provided some relief to small business owners. It became a victim of the “political posturing” of House and Senate negotiators, he said.

But paid sick leave is likely to rise again. The Maryland Chamber of Commerce, which historically opposes bills with mandates, still wants more time to hash out a paid sick leave bill and is looking to work on the bill again this summer.

“There’s still a lot of unanswered questions for the business community,” said Deriece Pate Bennett, vice president of government affairs for the chamber. Among those unanswered questions are how the bill would affect businesses with 15 or more employees and whether seven days of sick leave was too many, she said.

Overall, the session’s impact on business remained unclear, Bennett said. “I’m still trying to figure out where we landed in all of this,” she said.

Lawmakers also took steps toward requiring 401(k)-style retirement plans for private-sector employees, but the legislation that ultimately passed contained no mandates or penalties.

Instead, it establishes a state Small Business Retirement Savings Program, which many business are nominally required to offer their employees, but only incentivizes them to do so by offering a waiver of the $300 annual filing fee for several reports required by the state.

While lawmakers’ efforts to soften the blow of the bill were appreciated, the government should not be the one choosing the eligible retirement plans for private businesses, O’Halloran said.

The legislature brought good news to some larger companies.

A five-year, $37.5 million tax credit for aerospace and defense companies – for which only Northrop Grumman will actually qualify – made temporary allies of some Republicans and liberal Democrats who opposed it.

Prince George’s County Democrat Jimmy Tarlau, a retired labor union official, argued on the House floor Monday evening that the proposal did nothing to create new jobs. Anne Arundel County Republican Herb McMillan wondered why Maryland was offering this gift to a company that didn’t appear to have any intention of leaving the state.

The measure passed both chambers and now goes to the governor for a signature. The fiscal 2017 budget also includes a $20 million conditional loan for the defense contractor, which is based in Virginia but houses its mission systems division in Linthicum; the loan won’t need to be repaid if the company keeps at least 10,000 employees in the state and invests at least $100 million.

A bill making sure publicly financed construction projects in Baltimore don’t affect the funding formula for the city schools also passed the legislature, a temporary fix for an ongoing concern that comes as the city weighs a proposed $535 million tax increment financing plan to support Sagamore Development Company’s redevelopment of Port Covington. That plan is accompanied by the relocation and expansion of Under Armour’s headquarters in the peninsula.

 Staff writers Anamika Roy and Bryan P. Sears contributed to this report.