By Megan Poinski
Maryland is one of the best states in requiring quantifiable job creation and employee wage and benefit data for business tax subsidies, the authors of a new study found, but they still gave the state a grade of C+ for its efforts.
“That means states have a long way to go to make themselves accountable,” said Philip Mattera, research director for Good Jobs First, a policy group focusing on economic development accountability. He is the principal author of “Money For Something,” a new report from the policy group that tracks how much accountability states have in place to ensure that money spent on economic development subsidies is wisely used.
The study ranks Maryland as the fifth best state for accountability, with a score of 68 out of 100. Nevada, with a score of 82, was on top. Rounding out the top five are North Carolina, Vermont and Iowa.
The report looks at several subsidy programs across the U.S., and whether they have any requirements that recipients meet standards for job creation, training or retention; pay workers above a certain level; or provide health care and benefits to workers.
“Extra credit” points were added to a program’s score if it had requirements to pay employees at least 5% more than the market rate; gave benefits to employees like vacation time, retirement pay and family or sick leave; apply wage and benefit standards to part-time or temporary employees; have local hiring preferences; and do not have policies that undermine unions.
How the study was done
Thomas Cafcas, a research analyst at Good Jobs First and co-author of the report, said that five most-used programs that give out the largest amounts of subsidies were studied: Maryland’s Enterprise Zone Real Property Tax Credits, the Job Creation Tax Credit, Maryland Economic Development Assistance Authority Fund – abbreviated as MEDAAF –, the One Maryland Tax Credit, and the Sunny Day Fund.
Each program got numerical value out of 100 based on how much accountability it has. The Sunny Day Fund and MEDAAF both scored 95. The One Maryland Tax Credit scored 75, and the Job Creation Tax Credit got 60. The Enterprise Zone Real Property Tax Credit received a score of 15.
Cafcas said that for a property tax credit, there are typically construction jobs that go with it. The program has few job or wage requirements, which is why it scored low.
“They’ve done a good job with three out of five of the programs we studied,” he said. “There is no reason those provisions cannot be extended to all of the programs.”
Program requirements set by law
Jim Henry, program director of the Office of Finance Programs at the Maryland Department of Business and Economic Development, said that the state is mostly pleased with its ranking. However, there’s not much more that can be done without legislation to change the requirements and metrics for programs, since the programs with the lowest scores are all set by law.
He also disagrees with targeting the Enterprise Zone Real Property Tax Credit as part of this study. That tax credit, which the report states has more than $38 million in its budget for the current fiscal year, targets contractors to fix up dilapidated properties. Henry said that the credit is great for accomplishing that goal.
“If the target of the credit is something else, it should not be included in a study looking for job creation,” Henry said. “If we’re looking at a rebate the state gives you for buying a car, we shouldn’t then look at any increases in your property value. We should be looking at car sales.”
After the holidays, Henry said that he plans to get together with the study authors at Good Jobs First and discuss the rankings and what can be done to improve them. Both Henry and Cafcas said that Maryland and the policy group have a good working relationship.
After a Good Jobs First report last year that gave Maryland a D+ in online transparency for business subsidies, the state and the agency had meetings about it, which resulted on Maryland making information easier to find on websites.