Advocates for programs spending state dollars on stem cell research or investment in technology companies were nervous about what Gov. Larry Hogan's budget would hold for them, given warnings of "strong medicine" to cure fiscal woes.
But after Hogan's spending plan was unveiled Friday, they were relieved to find that the Republican's business-friendly message spared several economic development programs that were popular under Democratic Gov. Martin O'Malley.
The budget matches O'Malley's for a tax credit encouraging investment in biotechnology companies, and only trims the prior administration's commitment to stem cell research by a tenth. As part of efforts to close an $800 million state deficit, there are significant proposed cuts to tax credits for film productions and cybersecurity companies in the state.
Business advocates said they were relieved that cuts weren't deeper given the fiscal challenges, though they still plan to fight to maintain if not increase allotments for popular programs. But many said they see the budget overall as confirmation of Hogan's pro-business campaign message.
"I think you see that in the fact that there were not extremely large cuts," said Mathew Palmer, senior vice president for government affairs for the Maryland Chamber of Commerce. "In these tough fiscal times, it's going to be hard to make any huge increased investments."
One Democratic lawmaker said he was "pleasantly surprised" to see so many programs linked to O'Malley's Democratic administration well-funded — particularly the state stem cell fund, which Republicans frequently target for cuts and restrictions.
"It's hard to imagine Anthony Brown's budget would look much different," said Sen. Richard Madaleno, referring to O'Malley's presumptive heir who lost the election in November to Hogan. Madaleno represents Montgomery County and is vice chairman of the senate's Budget and Taxation Committee.
In general, Hogan's budget proposal was austere. The roughly $40 billion plan would take away cost-of-living raises for state workers and cut state agencies' budgets by 2 percent across the board, the latter an extension of action O'Malley took before leaving office.
The General Assembly is allowed to make further cuts or, to a limited extent, rearrange budgets, but it cannot add to Hogan's proposal.
Given warnings of budget pain to come, supporters of many programs feared worse. The balance of the Maryland Stem Cell Research Fund, which provides grants to researchers at universities, institutions and companies across the state, had fluctuated over O'Malley's two terms and frequently was targeted by Republicans seeking to limit its use to research on adult stem cells — including some tapped to serve in Hogan's administration, Madaleno noted.
But Hogan proposed $9.4 million for stem cell research, only $1 million less than O'Malley allotted a year earlier.
A Hogan spokeswoman did not respond to a request for comment.
"We are incredibly pleased that Gov. Hogan and his team recognize the substantial value of the Maryland Stem Cell Research Commission's work and the critical funding it is able to provide for best-in-class scientists who choose to do their groundbreaking life science research in the State of Maryland," said Dan Gincel, the fund's executive director, in a statement.
Hogan's budget proposal includes $12 million for a popular tax break provided to investors in biotechnology companies — same as O'Malley's plan for the current fiscal year — but would cut a new tax credit for cybersecurity companies' investors from $4 million to $2.5 million.
The budget also provides $9 million for an existing tax credit for businesses' investments in research and development.
Philip Schiff, CEO of the Tech Council of Maryland, said those choices were encouraging. The biotech tax credit perennially sees overwhelming demand in a claiming process that used to prompt long lines and camp-outs but now takes place online. The cyber security credit, on the other hand, saw limited demand when it was first offered up last year.
"I think the message in this first round is, 'I believe in the business community and the tech and life sciences,'" Schiff said. "We knew everyone would have to take a hit somewhere."
Still, legislative battles over Hogan's budget are ahead. The Democratic-majority legislature is expected to resist proposed cuts to the state's Medicaid health insurance program and to school systems in Baltimore and in Prince George's and Montgomery counties.
A tax credit for film productions in the state, which have included shows like Netflix's "House of Cards" and HBO's "Veep" in recent years, meanwhile sparked intense debate last year after "House of Cards" producers threatened to take their filming elsewhere if credits were cut.
Hogan is seeking no new money for the tax credit this year, proposing to spend only $6.8 million in unallocated funds from last year. That's less than the $7.5 million O'Malley asked for and significantly less than the $15 million that legislators appropriated to appease producers.
Hogan administration budget officials, who spoke on the condition they not be identified, said no new money was added to the tax credit because of the unallocated funds from last year.
The officials said no decision has yet been made on the long-term future of the tax credit. They said that if a request came in from a production company for further credits, the administration would be willing to consider it.
Officials with the productions could not be reached for comment.
Meanwhile, there could be efforts to add a new program that would give tax breaks to angel investors, wealthy individuals who support startup companies that are too young to secure venture capital or other institutional investment. The Greater Baltimore Committee is advocating for such a tax credit, planning to argue that the program wouldn't require any up-front funding because applicants would seek the credit after their investments have been made.
"It's the type of investment we still think is needed to really move along efforts to create new jobs and economic development in these new emerging businesses," said Don Fry, the committee's CEO.
Business advocates are hopeful they will have a friend in Hogan, whose inaugural address included a declaration that "Maryland is open for business." Hogan has pledged to introduce tax cuts but has not offered specifics.
Going forward, they also expect to have a supporter in Hogan's designee to lead the state Department of Business and Economic Development, R. Michael Gill. Gill is chairman emeritus of Evergreen Advisors, a Columbia-based investment banking firm, which is a Tech Council of Maryland member, Schiff said.
Baltimore Sun reporter Michael Dresser contributed to this report.