LAST YEAR'S contentious debate about Maryland's historic rehabilitation tax credit program turns out to have been a mere warm-up. Opponents are now going for the kill: They want to abolish this immensely valuable economic development tool.
The first round in this battle is expected to be fought today in Annapolis where Senate Bill 203 is set for a hearing before the Budget and Taxation Committee. Like a similar House measure, it would end the tax credits in June. The bill's sponsors argue the credits cost the state too much in lost tax money.
Yet few such tax incentives have been as productive as the historic rehabilitation credits. Moreover, they actually generate new revenue streams for the state and for local governments.
There is plenty of evidence of their success in Baltimore, where the tax credits have made the numbers work for such celebrated salvage projects as the Montgomery Park and Tide Point office parks and the American Can Co. complex. Additionally, the credits have helped hundreds of city homeowners improve vintage houses.
Benefits have extended far beyond Baltimore, however. The 750 projects undertaken with the advantage of tax credits since the program was enacted in 1997 stretch from Cumberland to Snow Hill. "No single program has worked as effectively as the tax credit program to preserve historic structures throughout the state," reports Preservation Maryland, an advocacy organization.
Far too often, incentive programs fail to produce promised results. In this case, the opposite happened. Thus, when politicians realized in 2002 that the tax credits had skyrocketed from $199,308 to $31.8 million in just five years, they expressed shock about its wide use. But after tightening guidelines, legislators decided to continue the program.
New numbers show that the state last year awarded $28 million in tax credits to developers and homeowners improving historic properties. Those credits, in turn, leveraged $144 million worth of commercial and residential projects, which employed thousands of Marylanders from construction workers to architects.
The bottom line is that although Maryland may sacrifice some initial income in granting tax credits, it gains revenue through increased property and sales taxes. This seems like a good deal all around.
It's only natural for politicians to tighten the budget belt in tough times. But it would be tragically shortsighted to wipe out an incentive program that has proved its value and that actually produces the intended results and revenue.