State beefs up effort to draw industries; $2 million budgeted to advertise Maryland


For the first time in years, Maryland economic development leaders are making sure the state has a good story to tell -- and then they intend to passionately tell it.

The Maryland Department of Business and Economic Development has about $2 million budgeted for an advertising-and-promotion campaign to attract companies in key industries to the state -- up from $375,000 a year ago.

And, to bulk up the state's message, economic development officials and business leaders are fostering studies they believe will put an end to two Maryland business myths: Taxes are too high, and it costs too much to live here.

"We want to try and dispel these myths or we want to know the truth," said Richard C. Mike Lewin, secretary of the DBED, in a meeting with The Sun.

With Maryland, Lewin believes, economic development officials have the raw material for a great marketing message. For instance, Maryland is first in the nation in the percentage of high school students reaching graduation; second in the percentage of those with a college degree; second in the number of doctoral degrees awarded; and first in the percentage of its work force in professional or technical professions.

Partly because of its proximity to federal laboratories, and partly because of the universities in the area, Maryland has become a haven for biotechnology and telecommunications-technology companies -- fast-growing businesses that pay well and "seed" the surrounding economy with technology, job skills and commitment to research that can attract even more companies.

State officials have said they want Maryland to build on these franchises -- which means attracting companies from other parts of the country, or from abroad.

That's the philosophy behind a portion of the marketing campaign, which Lewin said remains in the formative stages. DBED has picked out a part of the country that "contains high densities of critical industries to Maryland," Lewin said, declining to identify the area or the types of businesses that will be courted.

A print advertising campaign will target the area, and a team of state business development specialists will start telephoning relocation consultants, company chief executives and other officials involved with the companies there, Lewin said.

DBED has started making the calls, he said.

The second part of the ad campaign will "specifically target [desirable] industries all over the country and Western Europe," Lewin said. "A good deal [will be seen] in Maryland itself, to tell corporate CEOs here all about Maryland" and what the state offers.

Even at $2 million, the state's advertising-and-promotions budget remains more hope chest than war chest when compared with the ad money arming rivals: Pennsylvania has $3 million, North Carolina $5 million and Virginia $6 million, according to DBED.

Nonetheless, "it's certainly a pro-active approach to get their message put out in the marketplace," said James A. Schriner, a site-development expert with Deloitte & Touche Fantus in Princeton, N.J.

But the state needs a good story to tell.

Maryland has a widespread reputation as being an over-regulated, super-costly "tax hell" that's unattractive to business, Lewin said. Two studies under way seek to uncover the truth about Maryland's tax burden and cost of living -- crucial issues for businesses that might want to move here.

The tax study is being overseen by the University of Maryland, Baltimore County and is being paid for by state businesses, Lewin said.

After raising financing from the private sector, UMBC plans to hire a national accounting firm to conduct the study. The goal is simple: Look at the tax burdens faced by individuals of different income levels, and companies of different sizes and types, in a number of locations throughout Maryland; then compare these findings with the taxes those people and companies would pay in rival markets nationwide.

In terms of individual taxes, the accounting firm will probably create one hypothetical person who owns a $5 million company, another who is a CEO making about $500,000 annually, a manager making $150,000 and an employee making $50,000. Certain assumptions will be made about contributions, exemptions, deductions and capital gains for each person. Then each financial profile will be held constant as the fictitious wage-earner is transplanted from one tax locale to another.

The same holds true for the hypothetical companies -- a service firm, manufacturing company and headquarters location, each of them in small, medium and large sizes. Each will be placed in about five locations within Maryland and in 15 to 25 around the country. The exercise will include at least one state -- such as Texas or Florida -- that has no personal income tax, though any fees or one-time taxes consumers there pay will be included as part of the financial model, DBED said.

The objective: Give prospective businesses a look at what they, their boardroom executives and their workers would face in taxes in Maryland markets, compared with what they face in their home markets and in other areas to which they might move.

Lewin suspects that tax curmudgeons might find the results surprising. That's because the nonpartisan Maryland Budget and Tax Policy Institute concluded that state and local taxes paid as a percentage of Maryland's economy are in the lowest third of the 50 states.

Nearby jurisdictions, including Washington, Pennsylvania, West Virginia and North Carolina, all have higher tax burdens, though Virginia's is lower than Maryland's, the policy institute concluded. Even if the UMBC study concludes that Maryland is a high-tax state, Lewin said, the findings can be used to lobby state lawmakers for tax cuts. "It's a win-win situation," he said.

In addition to taxes, DBED wants to prove or disprove the cost-of-living issue. In partnership with RFA Dismal Sciences of West Chester, Pa., DBED is studying how costs of housing, food and apparel in Maryland compare with the costs in Virginia. DBED looked at six Maryland counties and Baltimore City to see how these jurisdictions stack up against three Virginia counties: Fairfax, Loudoun and Prince William.

The preliminary findings: Most of the Maryland counties reviewed compare very favorably with rival areas in Virginia, and most have significantly cheaper housing. Compared with Fairfax, which has become Maryland's economic-development nemesis, all the Maryland counties surveyed -- including pricey Montgomery and Prince George's -- are cheaper.

Next, DBED intends to compare these Maryland jurisdictions with others in such expensive environs as California's Silicon Valley and greater Boston, with its concentrations of computer and biotechnology companies, Lewin said.

When the studies are finished, Lewin, armed with more marketing money, believes that he'll have a big advantage when he starts calling on executives who are searching out new homes for their companies.

Pub Date: 10/10/99

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