Ehrlich Vetoes Health Care Bill Aimed at Wal-Mart

By John Wagner and Michael Barbaro
Washington Post Staff Writers
Friday, May 20, 2005

PRINCESS ANNE, Md., May 19 -- Gov. Robert L. Ehrlich Jr. vetoed legislation Thursday that would have effectively forced Wal-Mart Stores Inc. to spend more on employee health benefits in Maryland, a measure that has unnerved the retailing giant and prompted other states to consider similar approaches.

Ehrlich's action came during a tightly choreographed ceremony in which he was joined by a top executive from the Arkansas-based company, which has been on the defensive on several fronts nationwide.

"We are here to enthusiastically veto a bad piece of public policy," Ehrlich (R) said, arguing that the measure would have a chilling effect on businesses considering locating or expanding in Maryland. He was greeted by a high school band playing on a blocked-off downtown street lined with American flags. About two dozen protesters turned out, but were forbidden from displaying signs.

The bill would have required for-profit companies with more than 10,000 employees to spend 8 percent of their payroll on health care benefits or to the state's health program for the poor.

As written, Wal-Mart is the only known company operating in Maryland that would be affected. Officially called the Fair Share Health Care Bill, the legislation was commonly referred to in Annapolis as the "Wal-Mart bill" and drew national attention.

Ehrlich's position, which he made clear weeks ago, drew heavy criticism Thursday from leading Democrats, union representatives and health care advocates.

"Governor Ehrlich should be ashamed for literally standing with big corporate interests rather than Maryland's working families," said AFL-CIO President John J. Sweeney.

Ehrlich chose Somerset County to announce his veto because it has one of the state's highest unemployment rates, and the fate of a planned Wal-Mart distribution center here has become entangled in the controversy over the bill.

The company is moving ahead with the facility, which could employ more than 800 people. But Eduardo Castro-Wright, the second-ranking executive at Wal-Mart's U.S. division, said before the ceremony that Wal-Mart might reconsider its plans if lawmakers overturn Ehrlich's veto when they convene again in January.

"It singles a company out in a way that is discriminatory," he said of the legislation, which passed with wide margins in the heavily Democratic legislature.

The presence of Castro-Wright underscored how seriously the chain is taking the bill and the precedent it might set. Lawmakers in Pennsylvania and New Jersey are moving in a similar direction, and Wal-Mart's opponents have rallied around the health care issue as they try to slow the chain's growth.

Wal-Mart's business model, which produced a $10 billion profit last year, is designed to hold down labor costs. The company offers a wide range of health care plans, but the cost to employees is far higher than in plans provided by unionized grocery chains such as Giant Food LLC.

Wal-Mart has questioned the motivation behind the legislation, which is supported by Giant, a Wal-Mart competitor, and United Food and Commercial Workers Local 400, the grocery workers union trying to slow Wal-Mart's growth in the Washington region.

"It's clear Wal-Mart is worried," said Chris Kofinis, a senior adviser at the UFCW who attended yesterday's ceremony. "They realize public opinion is against them."

Terry Lierman, chairman of the Maryland Democratic Party, said the legislature's passage of the bill had been "the right thing to do," given that some Wal-Mart employees now must rely on Medicaid, the state-run insurance program for the poor, for health care.

P. Franklin White, president of the Princess Anne Town Commission, said he hopes the General Assembly does not revive the bill in January.

"It's a bad bill for business, and it's a bad bill for Somerset County," White said. He praised Ehrlich for taking "a very courageous step."

The legislation is certain to factor into next year's governor's race. Wal-Mart hosted a fundraiser for Ehrlich last year, and the two leading Democrats seeking to replace him both issued statements condemning his veto.

Barbaro reported from Washington.

© 2005 The Washington Post Company