June 7, 2010

Analysis: Hands-on or hands-off? Candidates differ on business outlook

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By Len Lazarick
Len@MarylandReporter.com

Former Gov. Bob Ehrlich today rolls out a small business initiative as he campaigns to get back his old job.

He told reporters the proposals will be a combination of “things that worked” from his first administration, ideas that come from a series of roundtable discussions he’s held with more than 100 businesses, and best practices “we were able to steal from other states.”

Without even seeing the details, Gov. Martin O’Malley’s campaign quickly attacked Ehrlich’s plan as “the same failed policies that caused Maryland voters to fire him four years ago.” These include “record government spending, higher property taxes, increased fees, and more deficits,” O’Malley deputy campaign manager Rick Abbruzzese said in statement.

Putting the spin aside for moment, the two governors showed contrasting approaches to business at events last week that reveal their divergent philosophies.

Republican Ehrlich favors an approach that calls for government to get out of the way of business, cutting taxes and reducing regulations – or at least making them more consistent and business-friendly.

Democrat O’Malley seeks to show what government has done to foster job and business growth by getting involved. He talks about tax credits, spending on education, cracking down on predatory business practices and overcoming the state’s “pathological modesty” about its positive business environment.

At a meeting with a dozen business operators in Carroll County, one of the most reliable Republican bastions in Maryland, Ehrlich heard tales of irrational regulation, inconsistent enforcement, higher unemployment taxes and other woes.

The regulatory environment “has emerged as a major complaint,” Ehrlich said. When business mangers contest unemployment benefits being awarded to unfit workers they fired, “employers lose every time in this state,” Ehrlich said.

“It’s a very different mindset to today,” Ehrlich said. If re-elected, he promised “the attitude and substance of government will improve.”

“It seems like we’re the enemy,” said Mick Schmidt, a former State Highway Administration employee who now runs Carroll Highlands Masonry.”

Ehrlich railed against tax hikes, such as the 20 percent sales tax increase he’s promised to repeal – pols and pundits who agree with the tax call it a “penny” increase. He cited the anti-business impact of the already-repealed computer services tax, and the income tax surcharge on millionaires that expires in December. He says that tax has already driven out entrepreneurs.

Ehrlich promised to continue the business roundtables if elected.

O’Malley implicitly conceded a lack of input from entrepreneurs on Thursday by creating a 26-member Small Business Commission.

“We had no institutionalized seat at the table for small business,” O’Malley told about 60 people at a breakfast organized by the Prince George’s County Chamber of Commerce in Mitchellville, one of the wealthiest African American enclaves in the nation.

The current governor went through his standard list of accomplishments – a top ranking in education, a university tuition freeze, workforce development initiatives, business tax credits and 25 percent participation by minority businesses in state contracts. There were a few complaints from attendees, some of whom asked for more help and more set-asides for minority small businesses.

Typifying a much more positive tone than at Ehrlich’s event, one business person asked, “What can businesses do to support you?”

“Add jobs as soon as you possibly can,” O’Malley. Add jobs, save jobs, and don’t “harp on the negative.”

Rather than rail about the decision by Northrop Grumman to relocate its California headquarters and 300 jobs to Northern Virginia, O’Malley said people should focus on the 21,000 jobs that will be created at Fort Meade by the recently-announced national Cyber Security Command.

O’Malley’s argument got an unusual boost three weeks ago from the U.S. Chamber of Commerce, which ranked Maryland number 4 of the “enterprise-friendly states” in the country, largely because of its “commitment to advanced technology, defense systems, and health science.”  http://www.uschamber.com/press/releases/2010/may/100519_maryland.htm

The chamber study ranked Virginia number 2, but Maryland did much better than it does in other business comparison ratings. For instance, the Tax Foundation ranks the state number 45 for business climate, among the worst of the states. But the Tax Foundation scores were among the factors the chamber combined into its ranking.

The Chamber of Commerce is rarely an O’Malley ally, but it is likely O’Malley will be citing its number 4 ranking often in the campaign, while Ehrlich embraces the small businesses in towns like Hampstead and Manchester throughout the state.