Cumberland Times-News

September 10, 2013

Franchot concerned about business climate

Comptroller says political agenda is not fiscally responsible

Matthew Bieniek
Cumberland Times-News

— CUMBERLAND — State officials need to take a time-out for a few years on changing the tax code, raising taxes and changing regulations, all of which combine to hurt Maryland’s business climate, said Maryland Comptroller Peter Franchot.

While the progressive political agenda in the state is well intentioned, “it is not fiscally responsible,” Franchot said. The state’s financial condition cannot support that agenda, Franchot said. And leaders in Annapolis often make the situation worse.

“The state does not have a good business reputation,” Franchot said.

“If the House (of Delegates) wants to fund a program at $1 million, and the Senate wants to fund it at $2 million, they compromise and fund it at $3 million,” Franchot joked. Despite the state’s enormous economic strengths, the economic recovery in Maryland has been “anemic,” Franchot said. That’s showing in tax collections.

Franchot met with members fo the Allegany County Chamber of Commerce Tuesday afternoon at chamber headquarters on Frederick Street. He also provided an interview at the Times-News offices Tuesday.

The low level of taxes coming in from wage withholding “really concerns me,” Franchot said. Withholding receipts fell $171.3 million short of the state’s modest estimates, increasing just 2.5 percent versus an estimate of 4.0 percent growth, according to the comptroller’s office.

And General Fund revenues totaled $14.9 billion in the fiscal year ... $62.4 million below the official state forecast, according to statistics from the Comptroller’s Office.

The revenue data reflected sustained weakness in wages, salaries and consumer spending.

“Wage growth is like oxygen for our people ... and we’re almost dead last in the county,” Franchot said. “Success is too often equated with how much money we’re spending, not on how many people we are employing.” Franchot said public sector spending will never create as many jobs as a vigorous private sector.

The focus needs to be on job growth in the private sector, Franchot said.

“We tend to take our eye off the ball and get involved in a lot of expensive, altruistic projects,” Franchot said. What the business community needs is stability and predictability, not the constant tinkering with the tax code seen over the past few years.

Chamber members agreed with Franchot. ”Businesses can’t handle uncertainty,” one member said. “You can’t plan for the future when you don’t have any idea what’s ... coming down the pike.”

Another chamber member involved in the construction industry was concerned by the slow turnaround time in state contracts. It takes three to four months, the member said, while neighboring states can turn a contract approval around in 30 days. “We joke about West Virginia, but West Virginia can do it,” the chamber member said.

Franchot cited increases in the gas, alcohol and sales tax, all very regressive taxes, he said. “It’s more damage to the average person’s pocketbook,” Franchot said. For someone in his income bracket, the tax increases have little impact, “but for people making $50,000 or less, your talking about taking money out of their pocket ... money that could be spent at local restaurants and stores,” Franchot said. Franchot suggested a five year “holiday” from tax changes. Organized labor can also play an important role in job growth and state politics, Franchot said.

Maryland’s unemployment rate is at 96 percent of the national unemployment rate, and the highest it has been relative to the U.S. rate since the late 1990s, Franchot said.

On Tuesday, Franchot also visited the Queen City Creamery to recognize, by an official proclamation, the business for its contribution ot the community and toured Western Maryland Distributing, the only completely solar-powered business in the state.

Franchot also said that the comptroller’s local satellite office would remain in downtown Cumberland, despite losing their current site on Baltimore Street and a request by some employees to consider moving out of downtown.

The landlord for the property cannot renew the lease because he needed the space for his own business. Franchot said he was committed to keeping the office in downtown Cumberland. A new location has not yet been found.

Contact Matthew Bieniek at mbieniek@times-news.com.