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Commissioners consider research and development tax credit


The Carroll County commissioners are considering a tax break next year for businesses doing research and development, at the urging of the Economic Development Commission.

Yesterday, the commissioners directed the county attorney's office to draft an ordinance giving businesses a personal property tax credit for equipment and supplies purchased for research and development. The proposal is based on a state law signed by Gov. William Donald Schaefer on May 27, allowing jurisdictions to grant the credit.

"It's a selling tool," Office of Economic Development Administrator William E. Jenne told the commissioners. "We may lose $50,000 to $70,000 [in tax revenue], but I believe that will be more than offset by the jobs and industry created."

Officials in Montgomery County, which has the highest concentration of research and development businesses in Maryland, estimated the tax credit would cost that county about $700,000 the first year, Mr. Jenne said. Carroll's research and development loss would be much lower because most county businesses are manufacturers, he said.

"Down the road, we might have quite a few businesses [that qualify]," Mr. Jenne said.

Legislators who pushed for the state law argued that Maryland is losing industrial prospects to other states that offer the research and development tax credit as an incentive. Also, tax credits are already offered to manufacturing firms for new equipment, forcing research and development firms to compete on an uneven field, he said.

"Prince George's County has already adopted an ordinance, Montgomery County is in the process and Anne Arundel County is very close," Mr. Jenne said, adding that the Greater Baltimore Alliance is pushing member counties to adopt the tax credit.

"Within the last three months, four such companies looking for up to 200,000 square feet of space and a potential 150 jobs have expressed reservations about moving their operations to the area [because the credit doesn't exist]," Mr. Jenne said, quoting from a Greater Baltimore Alliance working committee letter to the Baltimore Metropolitan Council.

Carroll County is a member of both organizations.

The credit will show up on business tax bills for up to 75 percent of the cost of new research equipment, Mr. Jenne said.

Under state law, if a Carroll County ordinance were adopted by March 1, businesses could claim a tax credit for any equipment purchased after Jan. 1, 1994, he said.

But county Budget Director Steven D. Powell recommended that the proposed ordinance not take effect until fiscal 1995, which starts in July, because his office has planned for research and development equipment tax revenue in the 1994 budget, Mr. Jenne said.

Before adoption, Carroll's commissioners would sponsor public hearings for comment on the proposed ordinance, Mr. Jenne said.

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