By Sue Fernandez
ANNAPOLIS – A bill raising the standard of accountability for businesses that receive special state loans or grants in exchange for bringing jobs and capital investment to Maryland moved a step closer to final passage Thursday.
The House of Representatives gave tentative approval to the measure, which would add “performance requirements” to contracts between the state and companies that receive money from Maryland’s Economic Opportunities Program fund. The Senate has passed similar legislation.
The proposal also includes a “clawback” provision that would ensure the state gets its money back if a company closes or leaves Maryland.
The Economic Opportunities Fund, better known as the Sunny Day Fund, was set up in 1988 to attract new business and to 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 has been used to finance 26 projects.
But some of those projects haven’t delivered the economic goods they guaranteed: The state gave $2 million in Sunny Day money to Royal Quality Foods (a.k.a. Mountainaire) in 1994, only to see the company leave the state in December 1995. And according to a report by the state’s Department of Fiscal Services, six companies have retained or brought in fewer jobs than promised. Only one company brought in the exact number of jobs it said it would, and one company brought in more than expected.
The House bill is less stringent than the Senate’s. The Senate version includes “extraordinary impact” requirements, language asking a company to make a capital investment equal to five times the state’s grant or loan, and to retain “substantial” employment in Maryland. -30-
