The Annapolis and Anne Arundel County Chamber of Commerce (AAACCC) held its 2015 Economic Forum in early November at the Crowne Plaza Hotel in Annapolis.
The forum provided local business leaders with an update on Federal Reserve monetary policies, efforts targeting business tax reform within Maryland and a general overview of factors affecting the local business atmosphere.
With a present-day economy approaching $40 billion, “Anne Arundel County has never been better positioned or more open to business than it is today,” said County Executive Steve Schuh. “With the growth of our workforce, transportation network, our economy and the presence of … national assets, I believe Anne Arundel County is on the brink of statewide economic leadership.”
Among the policies his administration is pursuing to sustain its position are reduced taxes and fees to encourage more business startups; smaller neighborhood schools and an accelerated construction schedule for new education facilities; and government streamlining to create efficiencies, particularly in terms of permitting and new business formation.
“We want to cut in half the time it takes to get a permit in this county,” Schuh said.
The Big Picture
Kartik Athreya, director of research for the Federal Reserve Bank’s 5th District, acknowledged the shock the global economy received from the unexpected slowdown of China’s economy this year, but said the end result might not be as bleak as many fear.
The growth miracles of China and other several other Asian countries arose from substantial changes to their institutional arrangements that allowed the absorption of technology and productivity from the United States, Europe and other economic leaders, he asserted.
“You can view that growth as being catch-up growth,” he said. “[It] was a great thing to see, but … the longer run trajectory for China is expected to tail off. You can argue that this is what’s happening now.”
The ongoing technology disruption in our own nation should have marginal consequences for the workforce, he said. “One of the most robust features of market economies is their ability to reallocate labor fairly seamlessly over long enough periods of time. It’s not going to manifest itself directly in unemployment rates.”
Even so, life could become more difficult for those with low-level skills, projected through the next two generations. “In the short run, the macro economy is gathering strength, consumption is strong, employment gains have been sustained and poor inflation is moving the right way,” Athreya said.
In the long run, “Skills are really important, not just for maximum employment, but for productivity growth,” he said. “Preparedness and good information are critical for that and I think the U.S. is facing, for the first time, some clear bottlenecks in the supply. That’s something, I think, for everybody to be worried about.”
Julie Lenzer, director of the Office of Innovation and Entrepreneurship (OIE) for the U.S. Department of Commerce, discussed her organization’s strategy for promoting new business creation and innovation.
OIE takes a regional approach, with six offices around the country focused on local development and providing aid along a continuum of needs. “We fund ecosystem builders, economic development organizations, incubators and accelerators,” Lenzer said. “Since 2008, we put more than $200 million in incubators and accelerators across the country.”
Last year, OIE’s new Regional Innovation Strategies program awarded $15 million to 39 grantees. Among the recipients was the Maryland Technology Development Corp. (TEDCO), which received $499,000 for its mdSTEPP program, which brings medical device expertise to medical device startups for the purpose of commercialization.
The Department of Commerce and the White House are also pursuing joint efforts to help bridge the nation’s skills gap.
“We’re working with community colleges to do employer-driven tech training, working really closely with the business community,” Lenzer said, acknowledging a renewed emphasis on the roughly 18,000 apprenticeship programs across the United States.
“Our goal is to double the number of registered programs by 2020,” Lenzer said. “We’ve also contracted with a firm to do a Return on Investment [study] for apprenticeship programs, to look at the case for business.”
The downside in the numbers can be found in funding statistics surrounding minorities. “Less than 5% of funded businesses are women-owned, and it’s even a smaller percentage for African-Americans,” Lenzer said. “In essence, we’re leaving the brains and brilliance and ideas of a good majority of our population untapped, underutilized.”
For that reason, the Regional Innovation Strategies program assigns extra credit for communities that reach out to underserved demographics or geographic populations.
Moving on to local challenges to business sustainability, a panel of local experts reviewed region-specific conditions and discussed possible legislative solutions. Chief among these topics was the issue of taxes and the efforts of the Augustine Commission, which has moved on from its public policy study to focus on the state’s tax structure.
“We’ve told them we will support a decrease of both the corporate and the personal tax,” said Maryland State Chamber of Commerce President and CEO Brian Poffenberger. “But [we want to ensure that what] we do is both fair to the state’s expectation of revenue, [while] at the same time enhances the business environment.”
Pass-through entities that report income on personal returns pay tax rates higher than the corporate tax rate, he said, putting them at a particular disadvantage.
Poffenberger also took issue with a tax structure that takes capital investment and the number of employees into account.
“We are taxing the very things we want to encourage, and that seems counterproductive,” he said. “We did away with that for manufacturing a long time ago; maybe it’s time to look at that for all businesses.”
Bill Cole, president and CEO of the Baltimore Development Corp., said growth in the region is stunted, compared to growth in other metropolitan areas around the country.
“[W]hat’s missing is a reliable connection from job centers to housing centers,” he said. “As a region, we need the state to invest more in effective, connected public transportation.”
The panel also discussed what’s going right in the region in terms of recognizing and acting on opportunity.
According to Cole, developers haven’t turned away from Baltimore as a result of the April riots. “In fact, developers are trying to figure out how to get shovels in the ground faster,” he said. “We’ve also seen retailers and money coming from places that have never looked at Baltimore as an opportunity; [they want] to come in and be a part of the solution.”
Anne Arundel County Economic Development Corp. President and CEO Bob Hannon pointed to the benefits of a new partnership formalized between Anne Arundel County and the City of Annapolis.
“With two new administrations talking to each other as partners, [they] have identified ways to create more productivity, more cost savings and better services for both the city and the county,” Hannon said. “We are sharing resources, making sure that marketing research and graphic productions are shared with the city and we interact with their loan programs to support small businesses in the City of Annapolis.”
The panelists pointed to the need for a similar expansion of formalized partnerships between education and business.
“Thirty percent of Anne Arundel public school seniors have an internship with business before they graduate,” Hannon said. “The goal of the Anne Arundel County Board of Education is to make that 80%, there’s another opportunity for businesses extending internships.”
“I think it all starts with a redefinition of education,” Poffenberger said. “The old models need to morph into new models.”