The political momentum exists to make the changes everyone wants to improve Maryland, and now is the time to come together to make that happen. But it will take more than highway signs and campaign slogans to turn that momentum into policy changes needed to make Maryland economically competitive. We need to define our own success, and this election helps us do that.
Gov. Larry Hogan's campaign message was among the most focused of any statewide race in the country: Lower taxes, improve the business climate and create jobs. What he needs now is cooperation from the General Assembly.
Political and policy developments are setting the stage for what will define the next four years. Foremost among them are emerging disagreements between the governor and the General Assembly on the budget and taxes and the expected release of findings from Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch on how to improve the business climate.
Nobody said this election was a mandate for gridlock, so let's determine what success is by examining what it is not. Success is not replacing auto factories and steel plants with casinos and call centers. Success is not propping up Baltimore City with politically-derived artificial spending supports that mask its true problems.
As planning took place for the governor's inauguration events, Hertz was building its new headquarters in Southwest Florida, and Georgia economic development officials sealed the deal for Atlanta to be the new home for Mercedes. Meanwhile, the Maryland Lottery and Gaming Control Commission was hard at work approving requests by the state's largest casinos to reduce slot machines and add more profitable table games.
One of Maryland's casinos tells customers that it will "make your poker dreams come true." While Hertz, on the other hand, manages a global fleet of automobiles and industrial equipment. Which company do you think has more of a need for coveted, high-paying IT jobs? Which ones will bring in more cash from customers using its products and services around the world? This election was based not on poker dreams, but on the American dream, which many see slipping away from Maryland.
Governor Hogan's Change Maryland organization detailed how high taxes affect job creation and accelerate the deterioration of the tax base. In one telling statistic, Baltimore City clearly has a problem. Despite the valiant efforts of Mayor Stephanie Rawlings-Blake, no U.S. city can expect to maintain essential services on its own as its tax base slips away at nearly 1.5 percent between tax years, as Baltimore saw according to a Change Maryland analysis of IRS data. In dollar terms, that equates to nearly $125 million in incomes that vanished. Overall, the state's tax base is declining as well.
The General Assembly for years has missed key economic indicators such as the declining tax base. According to Maryland Business For Responsive Government, only 18 percent of state delegates and senators are business owners. The organization's annual Roll Call report lists key business votes and chronicles years of open warfare that have made national headlines. Anti-business legislators have caused great damage to Maryland's perception among the financial media, site selection consultants and main street retail establishments. Now is the time to fix that.
The economic development commission will be releasing two reports. The first one, on the business climate, is slated for release this month. The Senate president and House speaker wisely adjusted the time frame to allow the committee to examine tax policy in a second report to be released later this year. This commission has an opportunity to define success by taking a serious look at the tax burden and making recommendations on how to improve our state's competitive position. Fortunately, their review will go beyond taxes.
Serious efforts to improve the business climate must go beyond tax policy to reduce regulations and cut bureaucratic tentacles that impede government approvals for routine processes such as licensing and permitting. The governor has a great deal of control to simplify regulations and direct state departments and agencies to improve outcomes for business dealing with the government.
The commission has been on a listening tour with Maryland businesses in which the feedback is not flattering. Of course it's not. After decades of harmful tax and regulatory policy, much work remains. Political momentum creates opportunities, and that moment has arrived. Now that Maryland is "open for business," we must invite businesses back in and encourage them to stay. When they start coming and stop leaving, we will know what success is.
Jay Steinmetz is CEO of Baltimore-based Barcoding Inc. and a member of the Governor's Commission on Small Business. His email is firstname.lastname@example.org.