To survive and thrive in this new environment businesses need a clear picture of Maryland’s fiscal outlook to make appropriate strategic decisions and pursue effective legislative solutions. To support our clients in this pursuit, we’ve partnered with Maryland Comptroller Franchot for an exclusive Q&A on Maryland’s revenue and budget in light of the COVID-19 pandemic.
Opening remarks from Comptroller Franchot:
In his opening remarks Comptroller Franchot detailed that while there are various sources of uncertainty and challenge for Marylanders and Maryland businesses, we are poised to re-emerge from this crisis stronger than ever.
Further, Comptroller Franchot outlined three guiding principles for policy guiding recovery efforts in Maryland. All new policy should:
- Keep money in the pockets of Marylanders
- Make Maryland small businesses more competitive
- Make Maryland a more attractive place to live, work, and retire.
This approach will help us create a state that is fiscally responsible, empathetic to our citizens, and supportive of businesses, despite the major budget cuts that will be necessary.
The recession of 2008 was a tutorial for some forward- thinking businesses. They understood the State needed goods and services, the recession notwithstanding. Revising their business plans and efforts they competed as first-time vendors for state contracts. How will the reduction of state revenue as a result of COVID-19 affect state procurement?
Unlike other states, in Maryland we have the ability to vote in real time to reduce any state agency’s budget by 25% outside of the legislative session. Comptroller Franchot explained that this allows the Maryland government to respond to these crises swiftly and efficiently.
However, Comptroller Franchot reported that Marylanders should expect the billion dollar budget cuts that were made in 2009 to be a picnic compared to the current situation. “Once we’re into the new fiscal year we’re going to be doing major surgery on the budget.”
The Comptroller further explained that this budgetary climate means that professional representation for your business is more than ever–because as we know, if you’re not at the table being listened to, you may very well be on the menu. Ultimately, Marylanders can expect a much leaner state budget.
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We have seen a few states like Missouri consider additional incentives for companies interested in expanding or starting a domestic manufacturing presence in the state related to life science products and the related supply chain. Given the interest in domestic manufacturing is the state of Maryland considering additional economic development incentives for new / expanded local manufacturing?
The Comptroller expressed that we need to be supportive of new technologies that are coming into Maryland, and stressed that life science products are a critical part of that growth.
Additionally, in terms of tax rates or incentives, the Comptroller reported that we likely won’t be in a position to offer meaningful incentives within this budgetary period. However, we need to be working toward changing Maryland’s reputation as a state with high tax rates that is unfriendly to businesses. Unfortunately this limits new economic investment in our state, and needs to change. The Comptroller further expressed that right now in Maryland, government is in the front, directing things. However, as we imagine the new world we will be living in as we emerge from the next 6-12 months, the private sector needs to be out front with government acting as a constructive junior partner.
Watch the full webinar below: