April 19, 2012

AT FIRST BLUSH, everyone looks bad in the tax dispute between Montgomery County and one of its biggest private employers, defense giant Lockheed Martin Corp.

County Executive Isiah Leggett (D) looks bad for advocating a tax break that his opponents have derided as “corporate welfare” for a wealthy government contractor headquartered in the county. Lockheed looks bad for making a fuss over a benefit of just $450,000 a year, an amount equal to .001 percent of its annual revenue.

But the most craven by far are Montgomery’s council members who, having alienated some of the county’s biggest employers, are compounding the damage by insisting on an unfair tax for just one.

The argument revolves around Lockheed’s request that it be exempt from the county’s hotel tax for its Center for Leadership Excellence in Bethesda, a three-year-old training and conference facility that includes lecture halls, conference rooms, an auditorium and a restaurant.

The center is not open to the public, but it does have 183 guest rooms used mainly by visiting Lockheed employees, who account for the cost of their lodging by allocating per diem charges to the appropriate federal contract. Based on that, the county treats the center as if it were an Econo Lodge and has levied about $878,000 in hotel taxes on it in the past two years — even though it is not operated on a for-profit basis.

Maryland lawmakers exempted the center from the state hotel tax in 2010. When Mr. Leggett tried to follow suit, council members balked. Now Mr. Leggett is trying again, with good reason.

Last fall, council members flirted with a resolution urging Congress to spend less on national defense. They backed down once it dawned that defense contractors such as Lockheed are among Montgomery’s biggest employers. In effect, council members were advocating layoffs for their own constituents.

Now, egged on once again by antiwar activists, council members are competing with each other to bash Lockheed, suggesting that the company is seeking a free ride while the county’s social services are being short-changed.

The council’s stance is demagoguery masquerading as social justice. The fact is that Lockheed, which created 175 new jobs when it opened the center in 2009, is hardly getting a free ride. As one of the county’s largest taxpayers, it has forked over more than $7 million in property taxes in the past two years, not counting hundreds of thousands of dollars more in energy taxes.

On top of that, the center, whose thousands of annual guests (including contractors and vendors in addition to employees) stay in county hotels, eat in county restaurants and shop in county stores, has generated millions in profits for county businesses and millions in tax revenue.

The county’s hotel tax was never intended to soak a facility like the center, which is neither accessible to the public nor operated for profit. Exempting the center from the hotel tax isn’t corporate welfare; it’s common sense and fairness. And it might start to dispel the cloud of hostility toward private enterprise that has encumbered Montgomery’s economic development for years.