Maryland's economy may be humming along these days, but the state's business leaders are looking for reassurance of more good times to come as the General Assembly convenes today in Annapolis.
Tax breaks, regulatory reform and job training are on executive wish lists for the annual 90-day session. While not wild about new taxes, they also have plenty of ideas about how to "invest" the state's money -- on new highways, higher education and even drug treatment.
At the top of almost every business leader's agenda, though, is an arcane bill that would allow Baltimore Gas and Electric Co. to set up a financial holding company.
Though the measure would help only one company, it is widely considered a litmus test on Maryland's business climate for the governor and the Assembly.
"It is very much a test," said Donald P. Hutchinson, president of the Greater Baltimore Committee. "Here you have a home-based company that's looking to do nothing more than its counterparts in every other state have done. It gives them a chance to compete."
The bill would make it easier for BGE to raise capital for new ventures without having to get regulatory approval from the Public Service Commission. Maryland is the only state in the country where electric utilities are barred by law from forming holding companies, and BGE is the only one of the four utilities selling power in the state to be chartered here.
Innocuous as it may seem, the holding company bill failed to pass last year as it got tangled in a fractious debate over how to deregulate the electric power industry in Maryland. BGE is so intent on getting its holding company that the utility has threatened to shift its corporate charter -- along with some of its employees, tax revenue and even charitable donations -- to a state that will allow it.
The message was not lost on political leaders. The governor and House and Senate leaders are now publicly committed to early passage of emergency legislation.
The Glendening administration wants to send pro-business signals of its own, with bills extending job creation tax credits and erecting new hurdles to hostile takeovers of Maryland companies.
"It's important that we do everything in our power to make sure that these companies stay and grow here in Maryland," said Richard C. "Mike" Lewin, Gov. Parris N. Glendening's new secretary of business and economic development. Lewin replaces James T. Brady, who resigned last year and endorsed Glendening's Republican opponent after criticizing the governor's commitment to economic development.
While business leaders might worry that they have lost political influence because some backed Republican candidates in last year's elections, at least one lobbyist is unfazed.
"Everyone wants a healthy and strong Maryland economy," said D. Robert Enten, who represents bankers and health maintenance organizations, among others. "Notwithstanding politics, the election is over, and people have a way of pulling together for the good of the state."
These are some of the major business issues likely to dominate the legislative session.
Utility deregulation: Lawmakers plan to take up the debate again over whether to let electric companies compete for customers. Proponents say the cost of power might drop by as much as 10 percent if customers could choose their supplier. But consumer advocates worry that if the existing regulated monopolies are broken up, homeowners will see their bills rise.
Job training: The Maryland Chamber of Commerce wants a new state training tax credit for workers acquiring certain needed skills, such as machining and welding. It would piggyback on a similar federal income tax break enacted two years ago.
"No matter where you turn in the state, businesses are concerned about the shortage in skilled people," said the chamber's president, Champe McCulloch.
Taxes: The chamber and other business leaders face an uphill fight to accelerate the five-year, 10-percent income tax reduction passed in 1997. Though the state's coffers are bulging, and Glendening has proposed raising taxes on tobacco and gasoline, he opposes speeding up the income tax cut. Democratic legislative leaders seem similarly reticent.
Transportation: Business leaders have coalesced around the need for increased state spending on highways and public transit. There is less agreement, though, on how to pay for it. Mass transit projects are gobbling up a growing share of the state's transportation trust fund, financed by the sales tax on gasoline.
"Ultimately it's in the best interests of the state to maintain a very high-quality transportation system," said McCulloch. "You can't do it on good wishes alone."
The governor says the state needs to raise the gas tax either this year or next to pay for more roads and mass transit, but House Speaker Casper R. Taylor Jr. has proposed reserving gas tax revenue for highways and paying for transit with a bump upward in the general sales tax.
Regional economic development: The Greater Baltimore Committee is pushing for state spending on bricks and mortar -- $1.8 million in design funds for renovating Baltimore's Hippodrome Theater, for instance, which city officials tout as the key to reviving downtown's west side. But the group also wants state financing for projects to combat crime and drug abuse.
"It does have an impact on the business climate," Diane Hutchins, the committee's director of government relations, said of crime. "If people don't feel safe coming to businesses, it's not conducive to having good customer relations."
Labor: Business leaders are preparing, without a lot of passion, to fight the governor's bid to write collective bargaining rights for state employees into law. They tried in vain two years ago to block the governor's executive order authorizing bargaining.
Business also will spar with unions over their quest for a boost in the state's unemployment benefits. Any increase likely would be paid for by employers.
Health care: Streamlining regulation of the state's health care industry will be high on lawmakers' agenda this year as hospitals seek more flexibility to merge and reduce size. Prospects are less certain for proposals to reform or eliminate the state's hospital rate-setting process, as well as for efforts to make HMOs more accountable.
Pub Date: 1/13/99