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Hogan proposes expanded job tax credit, state writes down revenue

Gov. Larry Hogan wants to spend $6 million a year to expand a tax credit program that gives certain job-creating businesses a decade-long reprieve from some state taxes.

Hogan announced his plan Wednesday, saying that the existing job creation program has been so popular in its inaugural year that he thinks Maryland should expand it. He wants more areas of the state to qualify, to increase the program’s funding by 65 percent and widen the types of industries that could benefit from it.

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“We are continuing our focus on jobs, jobs, jobs,” the Republican governor said during an Annapolis news conference detailing the expansion idea, which requires General Assembly approval.

The original program set aside $9 million a year to give tax breaks to manufacturers that create new jobs in three areas of the state hard-hit by unemployment — Western Maryland, Baltimore and the Eastern Shore.

It took effect in July, and Hogan said that since then, 70 manufactures wrote to state economic development officials seeking to participate in the program, and that 17 companies have formally applied.

The governor’s proposal would put $15 million a year into the program and allow companies in Caroline, Kent, Wicomico and Garrett counties to apply. Additionally, each jurisdiction in the program could pick three industries to be eligible for the money. Currently, only manufacturers qualify.

Hogan announced the new plan on the same day that state forecasters said this year’s $43 billion budget will come up $73.2 million short, an estimate that does not take into account how tax code changes being debated in Washington may impact Maryland.

“We're doing the best we can with the information we have,” Democratic Comptroller Peter A. Franchot said in a Wednesday statement announcing the revenue reduction, which he said will be reviewed after Congress enacts tax changes.

The tentative prediction for next year is that the state will take in $17.6 billion in tax revenue, about $566 million more than this year.

“The fact of the matter is that thousands of Maryland working families and small-business owners who were affected the most by the economic crash nearly a decade ago haven't fully recovered,” Franchot continued, describing wage and salary growth as “lackluster at best.”

“Even those who are employed with good-paying jobs have — in more cases than not — elected to put their disposable incomes in their piggy banks instead of putting money back in our local economy,” he said. “And who can blame them?”

Franchot’s assessment stood in contrast to Hogan’s description of Maryland’s economic conditions. The governor, who ran on pocketbook issues in 2014 and is facing re-election next year, said “we had the best year for business in Maryland in 15 years, we had the best year for job growth in a decade.”

Hogan spokesman Doug Mayer later pointed to Bureau of Labor statistics that showed Maryland’s private sector gained 41,900 jobs in 2015.

Democratic Sen. Richard S. Madaleno, vice chair of the Senate Budget Committee and a candidate for governor, criticized Hogan’s expansion idea as offering little more for the state’s economy than the existing program passed earlier this year.

“With state revenues being revised downward yet again just today, Governor Hogan should be focused on why working Marylanders are struggling instead of jumping on the shopworn Republican bandwagon of more corporate tax giveaways,” Madaleno said.

Hogan also announced that the University of Maryland system will invest $33 million in the near future into churning out enough college graduate to meet the needs of cybersecurity, bioscience and engineering jobs. He also proposed another state program that would give companies up to $3,000 as a stipend for providing paid internships.

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