Legislature is very kind to business; Major victories raise late fees, keep legal climate friendly; 3% tax credit for R&D; Bigger tax cut fails, as do long-term transportation funds


From "brownfields" to late fees and the state budget bonanza, Maryland's business community scored a string of successes in the 90-day legislative session that ended Monday night.

Though thwarted in their bid for significant tax relief and for a long-term expansion of the state's transportation system, business leaders got most of what they sought from the General Assembly -- marking the second straight year of good legislative dividends for Maryland's economic interests.

Businesses secured one of their top priorities, legislation granting them the right to charge higher late fees when customers fail to pay bills on time. They also preserved Maryland's business-friendly legal climate by foiling bids to expand tort claims in state courts.

"It was a little bit of a roller coaster ride," said Kathleen Snyder, president of the Maryland Chamber of Commerce, especially in the final few weeks.

Business leaders began the Assembly session in January hoping that taxes would be trimmed in view of a state economy that has yielded a $1 billion budget surplus.

But those dreams of big refunds had be scaled back as lawmakers balked at accelerating a five-year reduction in the income tax and managed only a partial repeal of the inheritance tax. "There's no question that we bogged down on some of the tax issues," House Speaker Casper R. Taylor Jr. said yesterday.

Nevertheless, legislators did approve tax breaks for a few targeted activities, notably a 3 percent credit for research and development.

The Assembly also expanded the earned income-tax credit, putting more money in the pockets of the state's working poor. And it agreed to waive sales taxes on back-to-school clothing purchases for one week in August -- though not until 2001.

For the most part, lawmakers opted to spend the state's largess on projects and programs rather than return it to the taxpayers. Economic development got its share in April's money showers.

Baltimore's hopes for revitalizing the west side of downtown got a qualified boost. Legislators earmarked $13 million for the plan's centerpiece: a $56 million renovation of the Hippodrome theater. Lawmakers held back $1 million, though, until city officials do more to minimize the number of historic buildings to be demolished and take steps to help merchants facing dislocation by the redevelopment.

The state Department of Business and Economic Development also corralled more money to dispense in loans and grants to new or expanding companies. The state's Technology Development Corp. got $7 million to invest in commercializing promising new inventions, and the department won legislative approval for streamlining its financing efforts, combining 21 different lending programs into 10.

The Greater Baltimore Committee, one of the region's major business groups, got the funds and approvals needed to start construction of a community court to handle nuisance offenses in the downtown area. Added money for drug treatment also was a top priority.

State and city economic development officials succeeded in liberalizing an underused law promoting redevelopment of potentially polluted industrial land, known as "brownfields." Lawmakers approved letting the state pay for site surveys and in some cases helping property owners clean up contamination.

Business interests successfully petitioned the legislature to reverse several unfavorable court rulings. Responding to a surprising court ruling that forced the cable television company in Baltimore to refund $7 million in late fees, lawmakers authorized a wide variety of businesses to charge monthly late fees of up to $5 or 10 percent of the overdue payment.

Health maintenance organizations also won the right to demand reimbursement from their members if they collected from personal-injury lawsuits. In both cases, lawmakers not only reversed court decisions, but applied the legislation retroactively -- which may prompt court challenges to the constitutionality of the laws.

Business groups helped thwart legislation requiring more advanced septic waste systems for homes and businesses -- one of Gov. Parris N. Glendening's environmental initiatives. But they joined with the administration to squash a perceived threat to the port of Baltimore -- a grass-roots bid to stop Chesapeake Bay disposal of the muck dredged from the shipping channels.

On the transportation front, House Speaker Taylor, an advocate of economic development in the state's poorer rural areas, won a state subsidy for commuter air service to Western and Southern Maryland and the Eastern Shore.

Legislation increasing the state's subsidy for mass transit also passed. But one of the business community's lingering disappointments was the legislature's failure to ensure adequate long-term funds for the state's growing transportation needs.

"That's a huge gorilla looking over our shoulders," said Snyder, of the Maryland Chamber of Commerce.

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