Subject: [NEXTEL-1] Businesses face mixed prospects

From: Marcel <[email-masked]>
Date: Sun, 12 Jan 2003 04:02:49 -0500

Businesses face mixed prospects

by C. Benjamin Ford*Staff Writer

Jan. 3, 2003

Hopes in new governor
tempered by $1.8B deficit

Business leaders are looking
at the upcoming General
Assembly session with a mix
of optimism over a new,
business-friendly governor
and concern over a state
budget deficit that has
ballooned to $1.8 billion.

"There's the potential it
could have a great impact
on everyone, including all
businesses," said William
Burns, spokesman for the
state Chamber of
Commerce. "With a deficit
as large as we may have,
everything is on the table,
from cuts to new revenue
sources."

Lawrence A. Shulman,
president of Rockville law firm
Shulman, Rogers, Gandal, Pordy &
Ecker, spoke for many in the business
community when he said, "It's going to
be an extremely tough session."

How Gov.-elect Robert L. Ehrlich Jr. (R) and the legislature tame the
budget crisis could have far-reaching effects, said J. Alexander Doyle,
president of Micro Machining Inc. in Baltimore. For example, he said,
higher taxes might mean layoffs, and cuts to education could
necessitate additional on-the-job training.

"The most important issue is balancing the budget without raising
taxes," Doyle said.

With a business-friendly governor in office, business leaders have been
drawing up their wish lists.

The state chamber believes that tax increases are not appropriate
until the state cuts programs, Burns said.

"As the budget gets pushed through, we feel this will be a good year
for Maryland businesses inasmuch as it can be with the whole budget
situation looming," he said. "The one thing we're telling our members
across the state is with change comes opportunity, and it's a totally
new political landscape."

But executives and legislators alike acknowledge that the resources
may not be there to help businesses as well as recipients of public
programs.

"This session is going to be pretty neutral for businesses because
really the main story is the budget," said Del. Kumar P. Barve (D-Dist.
17) of Gaithersburg, the new House majority leader and a businessman
himself.

"In an election year, too much is promised [to] everybody," Barve said.
"Everything has to be cut. That's not good for anybody in the state of
Maryland. But circumstances require it."

Said Sen. Thomas McLain Middleton (D-Dist. 28) of Waldorf, the
incoming chairman of the powerful Senate Finance Committee, "Given
the fiscal nature of the budget, it's going to be hard to sustain
[business investment] programs. There's not going to be a whole lot of
financial incentives to businesses."

Lawrence A. Shulman, president of Rockville law firm Shulman, Rogers,
Gandal, Pordy & Ecker and a member of the state chamber's board of
directors, said, "It's going to be an extremely tough session."

Shulman, whose firm deals with commercial real estate, employment
law and other business law issues, said that getting the state budget
back into the black is not the only critical issue for businesses this
year, but it is the most important one.

"After that," he said, "it's going to be interesting."

Pressing issues

Also vying for attention this session are transportation and affordable
health care, both of which have deep implications for business.

Doyle said that even though an Intercounty Connector highway would
not affect his business directly, improving traffic flow in the
Washington, D.C., suburbs benefits everybody. Trucks carrying parts
and shipping orders cost businesses time and money when they get
tied up on the Beltway, he said, turning a local traffic problem into a
regional one.

"It's a pretty widely recognized problem and most people around the
state are going to be receptive to that," Doyle said.

And the Baltimore area would benefit from an ICC, Shulman said, if it
were easier for businesses to ship through Baltimore-Washington
International Airport, near Linthicum, and for business travelers to pass
through there.

Shulman added that businesses lose money and productivity when
employees sit stuck in traffic instead of making sales and service calls.

The question remains of how to pay for an ICC.

Montgomery County Executive Douglas M. Duncan (D) has made it the
centerpiece of his $10 billion Go Montgomery! transportation plan and
proposed a range of county and state tax increases and new revenue
sources to come up with the money. But the state faces a growing
$29 billion shortfall in the Transportation Trust Fund over the next 20
years.

Carlos Horcasitas, president of Mid-Atlantic Petroleum Properties LLC
of Germantown, said the state should not increase gasoline taxes
unless neighboring states do it first.

"Please keep in mind that the great state of Maryland is not an island,"
he said. "We must keep gasoline taxes in line with all surrounding
jurisdictions so as to avoid losing gasoline sales and therefore tax
revenue."

Another issue important to the business community is the rising cost of
health insurance.

"Health insurance for our company is almost unaffordable," Horcasitas
said. "At this moment, we pay on a monthly basis nearly $700 for a
family of four and over $250 for a single person. Rates continue to
increase at over 25 percent annually. In another year or two, we will
no longer afford to offer this benefit to our managers and our valued
employees. Something will have to change."

Doyle said he has had to pass on some of the higher cost to his
employees. But the state should improve his flexibility in choosing
insurance providers and avoid defining what the premiums ought to be,
he said, referring to the state's existing mandates on health insurance
coverage.

Lobbying for reform

Some in the business community have expressed concern that the
legislature, controlled by Democrats, might make it difficult for Ehrlich
to push through a pro-business agenda, but Burns disagrees. He said
the state chamber enjoyed good relations with new House Speaker
Michael E. Busch (D-Dist. 30) of Annapolis when Busch was chairman
of the key Economic Matters Committee.

The chamber's lobbyists are meeting with Busch and other state
leaders to work with them on the issues, Burns said.

"It's almost always an unknown what is going to happen," Burns said.
"With the new governor, it adds a new element no one has
experienced recently."

Middleton said the state may be able to eliminate some regulations
that have developed over the years where the costs to implement
them outweigh the benefits.

"I'm very willing to work with the business community," Middleton said.

Shulman said regulation reform would hurt his business -- but, he said,
it is needed to help the economy.

"When you look at all of the different steps you need to go through to
start a business, it's mind-boggling," Shulman said. "The consumer
needs to be protected, don't misunderstand me. But we need a
reasonableness test, and we don't have it."

However, Middleton and Barve said, it is an oversimplification to
portray outgoing Gov. Parris N. Glendening (D) as anti-business and
the new governor's as pro-business.

"There was probably a lot of misperceptions about Glendening and the
impact he had on the business community," Middleton said. "... If you
were a poultry farmer, then you did not like him because of his
environmental policies. If you were a developer, then you did not like
his Smart Growth stance.

"But he also put in place some things that helped the business
community: reduction of the state's personal income tax ... and some
of the targeted tax credits for hiring those in welfare-to-work
programs or high-tech business tax credits that helped bring in
high-paying tech jobs."

Said Barve, a chief financial officer at a hazardous waste disposal
company, "Business didn't do poorly in the past. I've never had trouble
making money in Maryland myself."

Although poultry producers said Glendening's environmental policies
hurt their industry, those same policies helped save the watermen on
the Chesapeake Bay, Barve said.

"A dirty bay was bad for the watermen," Barve said. "For every
business impacted negatively, there's another business impacted
positively."

Barve said eliminating environmental regulations and health care
provisions to streamline costs might hurt businesses more than help
them in the long run.

"Business leaders believe that is good for them, but I believe it is
short-sighted to take that position," he said. * *

http://www.gazette.net/200301/business/features/137931-1.html

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