From Del. Mary-Dulany James:
Legislative Wrap-Up Part 2
My biggest focus this year revolved around three main goals: creating jobs, growing the economy and funding education. That’s why in this session I worked to boost private sector investment and fund education. Looking ahead, I will focus most of my energies on helping the citizens of Maryland secure those goals and that starts with everyone getting a good education. That is why I have worked so hard on the Appropriations Committee for 16 years to see that the State has done its part and spent 6.1 billion on education in Maryland.
Boosting Private Sector Investment in Maryland
A major focus of the 2014 Session was a joint business and economic development legislative package that draws on the strengths of our State and places Maryland in the best position to compete in the innovation economy of the future. The President and CEO of the Greater Baltimore Committee noted that it was “ground-breaking” to see the legislature “come together to support an agenda that is so heavily focused on economic development.” According to the President of the Maryland Chamber of Commerce, “this package of bills will make Maryland more competitive in technology, innovation and entrepreneurship.”
Private Sector Commission – During the 2014 Session, the General Assembly established a private-sector led commission to review the State’s economic development programs and business climate. Led by Norman Augustine, the former CEO of Lockheed Martin, the commission will, among other things, (1) examine the strengths and weaknesses of existing economic incentive and investment programs; and (2) make recommendations about the structure of the State’s economic development agencies, including interaction between the agencies and the private sector.
Improving Government Responsiveness – Other initiatives that were announced as part of the joint legislative business and economic development package will: coordinate sustained, one-on-one mentoring to Maryland’s entrepreneurs through an executive-level network and skill development program; enhance front-line, public and private sector interactions through additional agency customer service training opportunities; and improve transparency on State tax forms by disclosing how taxpayer dollars are spent.
Leveraging public and private sector capital for higher-education research endowments (Maryland E-nnovation – HB 741) Maryland is home to world-class research universities, national federal laboratories and multinational corporations. To recruit and retain top university researchers and encourage further collaboration among State research universities and federal agencies, the legislature passed the Maryland E-nnovation Initiative to enhance the economic competitiveness of the State and build on existing clusters of research and innovation.
The bill leverages the impact of over $50 million of State funds by requiring 1:1 matching private sector capital ($100 million overall program) from the support of corporations, foundations and private donors to establish university professorships and endowed chair positions in specified areas of technological and scientific research. The E-nnovation Initiative will serve as an internationally renowned recruiting tool that will bring clusters of technology and job growth – along with the best minds in the world – to the State of Maryland.
Establishing reduced Tax Zones to support investment around Anchor Institutions (RISE Zones – HB 742) A new program establishes the Regional Institution Strategic Enterprise (RISE) Zone Program, to be administered by the Department of Business and Economic Development (DBED). RISE Zones are designed to leverage the strength of institutional assets that have a strong and demonstrated history of commitment to economic development and revitalization in their surrounding communities. Beginning on July 1, 2015, anchor institutions may apply jointly with a local government to DBED for designation of an area as a RISE Zone. Businesses in RISE Zones may qualify for 5-year income and property tax credits and priority consideration for a variety of financial assistance and State economic development programs.
Fostering private-sector investment in early-stage, innovative Maryland startups (HB 740) – Maryland’s elite cybersecurity network includes 12 major military installations, 400 federal, academic and private research centers and 50 federal agencies with sophisticated research and development activity. The State, through the Maryland Technology Development Corporation (TEDCO) has leveraged $43 of private sector investment in early-stage, innovative Maryland companies for every State dollar invested through the highly-successful Technology Commercialization Fund (TCF). House Bill 740 created a new Cybersecurity Investment Fund within TEDCO to meet the growing demand from the State’s cybersecurity industry. The Fund will provide seed and early-stage funding (via strategic investments of up to $100,000) for emerging technology companies in the State that are focused on cybersecurity and cyber technology product development.
Gradual recoupling of Maryland’s estate tax exemption to the Federal level (HB 739) – This year, with the support of 55 Democratic co-sponsors, Maryland will gradually recouple its $1 million estate tax exemption to the federal exclusion amount (currently $5.34M) over a 5-year period, by calendar 2019. The legislature heard testimony from members of the business and nonprofit community as well as certified public accountants about the regional competitiveness of Maryland’s existing tax policy. These professionals noted that Virginia does not impose either estate or inheritance taxes, while Delaware’s estate tax is tied to the federal exclusion amount. As a part of growing a positive economic climate more in line with other States, adjusting the Maryland estate tax will encourage those with large estates to remain in Maryland, to invest in Maryland to donate to universities, hospitals and nonprofits in Maryland.
Enhanced tax credits to foster economic development – The legislature reauthorized a number of tax credit programs to fuel community revitalization and job creation throughout the State.
• The Sustainable Communities Tax Credit (HB 510), which supports the redevelopment of historic residential and commercial properties, has evolved into one of the State’s largest economic development programs and has been one of the State’s largest business-related income tax credits. This year, the General Assembly extended the tax credit through fiscal 2017, for at least $10 million for the overall program, and authorizes the Maryland Historical Trust to award up to $4.0 million annually in credits for small commercial projects.
• Film Production Activity Tax Credit – Under current law, approved film production companies in Maryland may qualify for a Film Production Activity Tax Credit equal to 25% of the production costs incurred in the State (or 27% of the costs incurred for a television series). The House wanted to ensure greater accountability in the program by giving DBED more ability to recapture funds and establish multi-year agreements to give legislators predictability through the State budget process. As part of the Budget Reconciliation and Financing Act (SB 172), the legislature authorized the Department of Business and Economic Development (DBED) to use $7.5 million in film production tax credits, in addition to the $7.5 million already budgeted, if the Department, in their professional judgment, believes additional funding is necessary to retain film productions in the State. The film production tax credit has primarily been used by DBED to retain the filming of two television series: House of Cards on Netflix and VEEP on HBO.
• Research and Development (R&D) Tax Credit (SB 570) increased from $8 million to $9 million. Maryland’s program mirrors the federal R&D tax credit, which was created in 1981 to encourage business investment in research and development activities.
• Biotechnology Investment Tax Credit increased from $10 million to $12 million.
• CyberMaryland Investment Incentive Tax Credit Program increased from $2 million to $4 million.
Supporting Education and Educators
Pre-kindergarten Expansion Act of 2014
Maryland was one of the first states in the country to establish a public pre-kindergarten program, starting with pilot programs in 1980. Today, public prekindergarten is available to all four-year-olds from families making less than 185% poverty ($43,500 for a family of 4).
This bill (HB 297) represents the first step in expanding Maryland’s public pre-kindergarten programs to provide full-day public pre-kindergarten for all four-year-olds in the State. The bill establishes a competitive grant program through which local jurisdictions can apply for additional funds to expand and supplement their existing prekindergarten programs. The General Assembly funded $4.3 million in the fiscal 2015 budget to fund the Program, which is expected to support half-day or full-day pre-kindergarten programs for roughly 1,600 children.
Implementing Maryland College and Career Ready Standards
Beginning with the 2012-13 school year, Maryland became one of over 40 states to begin implementation of a new statewide curriculum based on the Common Core State Standards. The new curriculum, known as the Maryland College and Career Ready Standards, is designed to align K-12 educational standards with the state’s college and career readiness expectations of students. Beginning in the 2014-15 school year, most of the Maryland’s current standardized exams will be replaced by tests designed to assess student progress against the new curriculum – the Partnership for Assessment of Readiness for College and Careers (PARCC) assessments. Implementation of the new standards and accompanying assessments is a large undertaking and represents a challenge for school systems including administrators, teachers, students and parents alike. This session, the General Assembly passed a package of bills designed to ease this transition and provide maximum stakeholder input as the process moves forward, by:
• Delaying the use of State assessment-based student growth measures in teacher/principal performance evaluations until the 2016-17 school year unless otherwise agreed to by the school system and the teachers’ representative, giving educators and students time to acclimate to the new PARCC assessments. The bill also clarifies that State developed evaluation criteria take effect in a jurisdiction ONLY if a school system and the teachers’ representative fail to reach an agreement on locally developed evaluation criteria. (HB 1167)
• Establishing a legislative oversight process that must occur prior to the State Board requesting a waiver of the U.S. Department of Education from federal education standards. Specifically the bill requires that the State Board seek review and comment from the Legislative Policy Committee on any such proposed waiver, providing an opportunity for broader input. (HB 1001)
• Establishing a formal workgroup to review and provide guidance on the implementation of the PARCC assessment. This 20-member workgroup will begin meeting in June of 2014 and is charged with a number of responsibilities including: identifying how the State Department of Education plans to assist local school systems in preparing parents and students for the PARCC assessments; assessing the professional development and ongoing support needs of teachers and principals related to the PARCC assessments; assessing the technological readiness and needs of our schools; and recommending a plan to meet the technological infrastructure needs of public schools related to PARCC assessments. A preliminary report is due August 15, 2014 and a final report must be submitted by December 31, 2014. (HB 1164)