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County Executives Discuss Economic Realities

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Anne Arundel County Executive Steve Schuh, Howard County Executive Allan Kittleman and Montgomery County Executive Ike Leggett presented an overview of inter-jurisdictional challenges and cooperation during the 2018 Regional Economic Forum, which was held April 26 at the Sheraton Columbia Town Center Hotel.
“The counties represented are really becoming a core driver of this state in terms of business, commerce and employment,” said Baltimore Metropolitan Council Executive Director Michael Kelly, who moderated the forum, adding that the event was intended to focus on “what this legislative session meant and what they see … as the future drivers in the state of Maryland.”

Hosted by the Howard County Chamber’s Legislative Affairs Committee, the forum also provided a wrap-up of significant business-related legislative activity during this year’s Maryland General Assembly.

Larry Richardson, vice president of government affairs for the Maryland Chamber of Commerce, said passage of the Small Business Relief Tax Credit represented one of the bigger victories for businesses this year.

Accordingly, businesses with 14 or fewer employees that offer paid leave to employees whose earnings equate to 250% (or less) of the Federal Poverty guideline (approximately $30,000) are eligible for a refundable tax credit of $500, with the program capped at $5 million.
“It was pared down tremendously during session, but this is a positive step forward, and we hope to use the next session to expand on this,” Richardson said.

The chamber was also successful in helping to get bills passed that increase the subtraction modification from $10,000 to $15,000 for retired military service members and reduce their eligibility age from 65 to 55.

“Their retirement is taxed [in Maryland] unlike a lot of other states, which chases them away,” Richardson said. “There are businesses in the private sector that want to hire these people, and we want to keep them in the state.”

Another positive, from an affordability standpoint, was defeat of the $15 minimum wage proposal, he said.

State Support

According to Kittleman, an increase in state highway user revenues paid to the counties is one of the most positive results to come out of the most recent legislative session. “In Howard County, we’ll be getting about $1.6 million in highway user revenue,” he said, “and next year we should be up to $3.5 million.”

That’s particularly good news for Anne Arundel County, said Schuh, where a lack of roadway funding in recent years has meant the county couldn’t even maintain its current roadway conditions.

“We are going to go to the point where we’re actually improving our system of roads,” he said. “We’ll probably take the budget up from $26 to $30 million; that’s never happened in our county before.”
Additionally, Schuh said, the governor and the General Assembly did much this year to increase the level of predictability for Maryland’s business climate.

Meanwhile, Montgomery County has made the short list of 20 contenders aiming to provide the location for the Amazon HQ2, Leggett said. Selection of Montgomery County would mean at least 50,000 and possibly up to 100,000 well-paying jobs for central Maryland.

That, Schuh said, is symbolically important for the Greater Baltimore region and central Maryland, which have seen an outmigration of jobs over the past few decades.

“We’re in a much better position than we have been in for a long time,” he said.

Federal Factor

With approximately 30% to 35% of Anne Arundel County’s economy either directly or indirectly tied to the federal government, Schuh said the transportation network around Fort Meade remains the biggest challenge in the county’s efforts to support that partner. The county is also focused on making its business climate attractive for federal contractors through favorable tax and regulatory policies.
In light of the threat of a more decentralized and shrinking federal government under the current Trump administration, “We’re fortunate that the aspects of the federal government that we see in Anne Arundel, Montgomery and Howard counties are ones we don’t see being diminished as much,” Kittleman said. “The military and cyber areas are actually growing.”

Still, he said, Howard County is making a conscious effort to diversify its reliance on federal partnerships by working to build up the commercial cybersecurity industry in the Columbia Gateway Innovation District.

That’s also a tack being taken by Montgomery County, Leggett said, where the focus is on the biotechnology industry and exploring economic relationships with South Korea, China and India.

“There are great opportunities we can leverage from abroad that can help us diversify our economy,” he said. “Growth in the federal sector in the foreseeable future will either be flat or go down; it’s not going to keep up with the demands we have for enhanced jobs and all the other things we need for our economy.”

Transportation

According to Kelly, 80% of Baltimore’s job growth during the next 10 years is projected to lie outside the Central Business District.
“We’re seeing growth of suburban job centers all over the state,” he said. “It puts strains on our transportation system, and transit-dependent workers have problems getting to these job sites.”
It’s a growing problem that Howard County is trying to address in partnership with Anne Arundel County through the Regional Transportation Agency, and with Montgomery County through Bus Rapid Transit.

“Our goal is to have routes change so they are more efficient,” Kittleman said. “Headways are too long. I think we can also work with our employers to figure out how we can do shuttles better. We need to look externally, not internally, within our counties.”

From Leggett’s perspective, “it’s going to get worse before it gets better. The first thing we need to do in our region, especially as it relates to Metro, is make sure what we already have is working.”
Bus Rapid Transit and the Purple Line will help, he said, “but we have to get people out of cars to solve this problem. We need help and support at both the federal and state level.”

While Anne Arundel County is working with the Maryland Transit Administration to reconfigure the state-owned bus lines, “the problem [here] is very different, because we are the land of peninsulas, with eight major peninsulas,” Schuh said. “Headway issues and the expense of a fully built-out system is almost unachievable, which means Anne Arundel County will always be reliant on roads.”

Budgets

As the chief administrators, county executives are responsible for budgetary planning, yet they really only control a small amount of their budgets in terms of flexible spending. That makes for some difficult decision-making.

Schuh said his county takes a business approach, with five broad priorities: reducing taxes and fees, improving public education, improving public safety, reforming county government operations and improving quality of life.

“Budget and programmatic proposals that fit with our business plan get priority,” he said.

In Montgomery County, Leggett was able to increase county reserves from only $79 million to approximately $500 million during his tenure by making some tough decisions.

Kittleman faced a similar situation at the start of his term, turning around a $15 million mid-year deficit by making structural changes.
“As a result, we were able to pay for recovery [from the Ellicott City flood] without getting into our rainy day fund and without doing anything that would hurt services,” he said. “You can’t just fix it for one time. You have to fix it for the future.”