The Maryland legislature received a bill last week suggested by Baltimore Mayor William D. Schaefer to create enterprise zones in Maryland.
The bill, similar to a law passed last year in Connecticut, would use tax abatements and preferences for existing state loan funds and create a $1 million fund for loan guarantees to interest businesses in expanding or locating in impoverished, high unemployment areas.
If the bill passes, Schaefer will try to use the incentives to help develop the Park Circle Industrial Park, located in the Park Heights section here. Companies that have already located there would only receive the zone's benefits for expansion of their facilities, according to a Schaefer aide.
The bill was introduced in the Maryland legislature Friday after changes requested by Gov. Harold Hughes were made, according to John Griffin, and aide to Lt. Gov. Sam Bogley. Hughes endorses the legislation, he said.
The measure would empower the Maryland Department of Economic and Community Development to designate six areas each year for special treatment. Any of the 23 counties and Baltimore City could apply for the help.
Schaefer said at a press conference here last week that a state program would put Maryland--and Park Circle--close to the head of the line for federal enterprise zone benefits if Congress passes a pending bill. Schaefer has said he wants Park Circle to be the first area designated an enterprise zone if the federal measure, sponsored by Reps. Jack Kemp (R-N.Y.) and Robert Garcia (R-N.Y.), becomes law.
However, the Maryland bill is needed regardless of the fate of the federal bill, Schaefer said. "The federal enterprise zone [plan] was just not moving fast enough," Schaefer said. "We can't wait a year."
David Smick, Kemp's chief aide, confirmed that the measure would probably put Maryland near the top of the list if federal legislation is passed as written. The Kemp-Garcia bill calls for competition by localities for designation as enterprise zones. The more state and local incentives available, the better chance an area has of being awarded that designation. "We want to make sure the local level will make the zones work," Smick said.
Schaefer sees an uphill battle for the proposal in the Maryland legislature. Some of the lawmakers resent Baltimore's frequent requests to the state for help, he said. But the enterprise zone measure is for all of Maryland, he stressed. Seven counties in the state had higher unemployment than Baltimore in December.
Areas picked for the program are expected to cut property taxes in their zone by 80 percent for five years, but would get back half of the lost revenues through a state rebate. The areas also would be given preference for state economic development loans and grants, either for businesses, or for improvements to help attract firms.
In addition, the bill calls for $1 million in loan guarantees for venture capital. "There has to be money up front," Schaefer said, in order to coax some small businesses into a zone.
The enterprise zone concept has been criticized because tax incentives alone might not be enough to get a business to build in a zone.
Employers in the zone would be given a $1,500 tax credit against state income tax for each disadvantaged person employed, and $500 for all other employes. The disadvantaged would not have to live in the zone in order to qualify an employer for the higher tax credit, Schaefer said.
Under the bill, urban zones with 4,000 persons, or rural zones with 1,000, are the smallest areas that can apply for designation. There is no upper limit on size. They would also have to have an unemployment rate 50 percent higher than the Maryland or national average, or be defined by the census as "low-income," or have had a 10 percent decrease in population as reported by the census.