Maryland's "sunny day fund" was created so the state could lure new companies and retain existing firms with financial inducements. It was not established to bail out a political ally of the governor.
Gov. Parris N. Glendening is setting a dreadful precedent in trying to turn the sunny day fund into a slush fund to assist his business supporters who find themselves in dire economic straits. State legislative leaders, who must approve the deal, should firmly rebuff the governor.
Stephens Engineering Co. of Lanham is owned by a successful black entrepreneur who is president of the Prince George's County Chamber of Commerce. The firm has been a regular political contributor to Mr. Glendening's campaigns. But the company appears to be in such extreme financial difficulty that any state rescue would have only a remote chance of success.
The company is heavily dependent on work from the federal government at a time when such contracts are rapidly shrinking. Its payroll has dropped from 150 to 30. The governor concedes the firm has "virtually no revenue."
An earlier effort to get a state small-business loan was rejected. The company already is in default on a $900,000 loan. Yet the governor wants $1.5 million "to save this company."
But will it?
Legislators have not been given any evidence that Stephens has private-sector contracts in the works or any details as to how the $1.5 million grant will turn the struggling company's fortunes around. In fact, Economic Development secretary James Brady tried to distance himself from the Glendening request. That won't work. He signed the letter seeking the funds.
Never before has the state ridden to the rescue of a troubled business in this manner. It is an attempt to politicize and distort a valuable economic-development reserve fund. The state's sunny-day account is rightly used to lure scientists affiliated with a top-notch research institute to Maryland (Dr. Robert Gallo's AIDS center in Baltimore) or to keep jobs in-state (McCormick's spice warehouse in Harford County) that were about to move elsewhere. These efforts had concrete economic benefits. The Stephens proposal, however, seems based mainly on wishful thinking and a desire by the governor to help a political contributor's minority-owned business stay afloat.