Legislation with wide support in the General Assembly would allow the state to offer generous incentives to lure new manufacturing companies, but some established Maryland manufacturers are crying foul over a provision they say would hurt their business.
Two similar bills, one introduced by Gov. Larry Hogan, would establish zones around the state where manufacturing companies from out of state could relocate and reap incentives including property and income tax breaks. The sticking point, some manufacturers said, is a provision in both bills that also would give income tax breaks to the employees of the relocating companies.
Certain manufacturers relocating into the zones would be eligible for a 100 percent property tax break for 10 years and a 100 percent state income tax break for 10 years. Employees making less than $65,000 a year at the companies would be exempt from state income tax for the same period.
The manufacturers fear their existing employees would jump ship to work at one of the new companies because of the financial boost from the income tax break.
"Existing Maryland manufacturing companies will be depleted of key talent because they'll drive a couple miles away from their current job and get a tax-free job," said Drew Greenblatt, the owner of Baltimore-based Marlin Steel and a regular spokesman for American manufacturing. "This is basically picking winners and losers, and the winners will be newbies that move to Maryland, not people who have been here for years or generations."
A Hogan spokesman and state Sen. Roger Manno, the Democratic sponsor of the similar Senate bill, said they were willing to work with the manufacturers on a compromise. But both said the final legislation must include some benefit for the workers as well as the companies.
Manno, of Montgomery County, said the matter was one of "economic fairness" in a tough economy for blue-collar workers.
"For me, the notion that workers would not be eligible for the same assistance that's being extended to the companies, I think is wrong, and it's one of the fundamental provisions of the bill," Manno said. "It's never been done before, but we've never had a big push for manufacturing before."
Doug Mayer, a spokesman for Hogan, said the governor's office was willing to hear the manufacturers out.
"The governor's office has been very clear from the beginning that we are willing to work with the legislature and all interested parties to make the bill and the program the absolute best it can be," he said. "The ultimate goal here is to put people back to work, so any way we can do that we're going to be interested in pursuing."
Gene L. Burner, president of the Manufacturers' Alliance of Maryland, said he was supportive of the bills and was less concerned with the income tax provision for workers.
"I would think that it would be a relatively easy thing to overcome," he said. "You could put a provision that this does not apply to employees coming from existing manufacturing companies. That would be a relatively easy way to get around the problem."
Manno's bill, which has 42 co-sponsors and a pair in the House of Delegates, would give municipalities the power to apply to the state to establish the special manufacturing zones. The governor's bill would put the onus on the state to designate the manufacturing zones, based on criteria such as proximity to transit and the unemployment rate.
Both versions of the bill will be heard in committee in the House of Delegates on Tuesday, while the governor's version will be heard in committee in the Senate on Wednesday.
Manno's bill would restrict the incentives to heavy manufacturers, which doesn't include makers of apparel, food, home accessories or electronic devices. The governor's bill does not have that restriction.
A similar bill filed by Manno last session did not pass, but Manno said the legislation was studied by the Maryland Economic Development and Business Climate Commission after the session ended, where it gained support from the governor's office.
State Sen. Gail H. Bates, a Republican representing Carroll and Howard County who is co-sponsoring the governor's version of the bill, said a similar approach has been successful in other states.
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"It is working in New York and bringing jobs and helping to reduce some of the red tape and so forth to allow manufacturing jobs to come back, and we certainly need that in Maryland," she said. "I think this is a good approach since we know it does work."
The state's manufacturing base has been eviscerated with the loss of operations such as the steel mill at Sparrows Point, which closed in 2012. Tradepoint Atlantic, the current owner of Sparrows Point that is trying to redevelop the site, filed testimony in favor of Manno's bill.
"While we are hoping to attract manufacturing back to the site, we are finding that it is no easy task," wrote Aaron Tomarchio, Tradepoint Atlantic's vice president of corporate affairs. "Many companies that could bring good manufacturing jobs back to the state often self-select out of coming to Maryland in favor of lower-cost states."
Two dozen other groups and municipalities filed testimony for Manno's bill, with all in favor save a few that wanted tweaks to be more friendly to existing manufacturers.
Mike Galiazzo, president of the Regional Manufacturing Institute of Maryland, said lawmakers should amend the bill to either take out the workers income tax provision or extend it to the employees of existing manufacturing firms.
"Obviously I want to support a bill that supports growth," he said. "But I also don't want to support a bill that hurts existing manufacturers."