HOW MUCH are 3,700 jobs worth? At what point does a government aid package to retain a business become corporate welfare?
These are not easy questions, as is illustrated by the state's current negotiations with Marriott International Inc., which has outgrown its Bethesda headquarters and is weighing bids from both Virginia and Maryland for a new corporate headquarters.
Losing a Fortune 500 company headquarters of Marriott's esteem would be a crushing blow for Maryland's economic development efforts. Those 3,700 jobs (expected to grow by another 750 within five years) pay, on average, more than $60,000 a year. That's an annual payroll of at least $222 million that could disappear from the state.
Yes, Marriott is a thriving corporation. Its just-released quarterly report showed a net income of $114 million on revenue of $2.5 billion. The company has aggressive expansion plans for its hotel business and its senior living communities that could mean far greater employment at a new headquarters.
Maryland and Montgomery County officials are preparing what they concede will be their largest-ever incentive package to keep Marriott in-state -- though they maintain it is less than the $50 million mentioned in news articles. Most of the money comes from the Sunny Day economic development fund and will be tied to future Marriott employment levels. Other sweeteners involve road improvements near a new $144 million headquarters, job-creation tax credits, long-term county property tax credits, income-tax credits and money to train workers.
It will be a hefty total. Yet state and county officials insist it would be money well spent.
Economic development aides say the state's Sunny Day contribution will be recouped through new jobs in less than two years. Montgomery County calculates that if Marriott left the county, it would lose $8 million a year in economic benefits.
The competition between states for corporate headquarters is fierce. Maryland has tried to avoid crossing the line into corporate welfare giveaways. Still, major companies know they have the clout to press states for big subsidies.
As long as state and county officials can show a reasonable return on the incentive package -- in job growth and in sales, income and property tax revenue -- such proposals are defensible.
There are also important intangibles to consider, such as Marriott's significant charitable giving in Maryland, its substantial civic involvement, the role its workers play in the social fabric of Montgomery County and the prestige of having a major corporate headquarters in your backyard.
State leaders must continue to pursue Marriott while striking a balanced economic deal that helps the company build its expensive, new headquarters in Maryland and ties the company's future growth to the state's. Retaining good-paying jobs, while encouraging companies to expand employment, is a sound economic-development strategy and a solid investment in Maryland's future.
Pub Date: 2/07/99