By Sue Fernandez
ANNAPOLIS – A bill raising the standard of accountability for businesses that receive special state loans or grants in exchange for bringing Maryland jobs and capital investment passed a hurdle in the General Assembly Friday.
The Senate Budget and Taxation Committee gave a unanimous, favorable recommendation to the measure, which adds “performance requirements” to contracts between the state and companies getting money from the Economic Opportunities Program fund.
The proposal represents a compromise between two bills originally before the committee, one supported by the Department of Business and Economic Development and a more stringent bill sponsored by Prince George’s Sens. Paul G. Pinsky and Ulysses Currie, both Democrats.
It includes a “clawback” provision that would ensure the state gets its money back if a company closes or leaves Maryland, and specifies the economic impact a company is supposed to have on the state.
If the measure passes the Senate, where a vote is likely next week, it will then be considered by the House, most likely by the Economic Matters Committee.
The Economic Opportunities Fund, better known as the Sunny Day Fund, was set up in 1988 to attract new firms and keep expanding businesses in Maryland. The fund has grown from $5 million for grants and loans in fiscal year 1993 to $30 million in fiscal year 1996.
As of November 1995, $30 million in Sunny Day funds have been used to finance 26 projects. But some of those projects haven’t delivered the economic goods they guaranteed, state studies have shown.
Pinsky’s bill would have placed strict requirements on companies receiving Sunny Day funds: They would have had to hire at least 100 employees within two years, and the jobs would have to pay at least twice the federal minimum wage. The bill advanced Friday doesn’t include those strict requirements.
However, it requires that companies receiving state funds make a capital investment equal to five times the grant or loan offered by the state, and retain “substanial” employment.
The bill allows for exceptions governed by the Department of Business and Economic Development.
Pinsky said he was happy that a bill holding companies accountable for Sunny Day funds is getting to the Senate floor, but wishes it were stricter. “It’s not as strong as it needs to be,” he said, “but it’s a step forward.” -30-