By Sue Fernandez
ANNAPOLIS – Legislators want companies held more accountable for the jobs and capital investment they are supposed to bring in exchange for state loans or grants — but they’re torn over just how much accountability.
Two bills before the Senate Budget and Taxation Committee Friday propose making companies keep their promises of jobs and investment or risk losing their state money.
A bill sponsored by Sens. Paul G. Pinsky and Ulysses Currie, both Prince George’s County Democrats, would require specific promises in exchange for state incentive money, while a bill supported by the state’s Department of Business and Economic Development is less restrictive.
“If we’re going to allow Sunny Day Fund money to be given out,” Pinsky told the committee, “there have to be strings attached.”
The state’s Economic Opportunities Fund, better known as the Sunny Day Fund, was set up in 1988 to attract new businesses and to keep expanding businesses here. The fund has grown from $5 million for grants and loans in fiscal year 1993 to $20 million in fiscal year 1996.
As of November 1995, $30 million in Sunny Day funds have been used to finance 26 projects. The Department of Business and Economic Development decides who receives money, subject to approval by the Legislature’s Legislative Policy Committee.
But Sen. John A. Cade, R-Anne Arundel, who sits on the policy committee, said it rarely disputes the department.
“Ninety-five percent of what’s been put in front of that committee in the last five years has been a total rubber stamp,” he said.
The bill supported by the Department of Business and Economic Development, sponsored by Sen. Clarence Blount, D- Baltimore, came out of a Joint Committee on Economic Development that looked at the Sunny Day Fund and other measures.
It would include “performance requirements” in contracts between the state and the company getting aid — for instance, a minimum number of jobs and level of capital investment.
But the bill allows for exceptions. It says that if the company doesn’t meet its performance requirements, the department could simply provide an explanation in its annual report to the governor and General Assembly.
Pinsky’s bill permits no exceptions, and would make companies agree to stricter requirements in exchange for Sunny Day loans or grants.
His bill says that a project could not be approved unless the company agrees to:
-hire at least 100 employees within two years after receiving a grant or loan.
-pay a minimum wage rate equal to at least two times the federal minimum wage rate.
-provide a health care benefits package to its employees.
-continue to recognize any collective bargaining agreement in effect at the facility at the time of relocation, if it’s a company that’s buying an existing business or relocating here.
Finally, the measure says that no money should be given to a company before the state knows how many workers will be displaced in the firm’s home state, as well as whether the company has a history of breaking environmental laws or contracts with other states.
“If a company dropped chemicals in St. Louis and they applied to Sunny Day, we should know this,” Pinsky said.
Pinsky said penalties need to be explicit for companies that don’t comply. “I don’t think this should be a blank check,” he added.
Pinsky pointed out that the state gave $2 million in Sunny Day money to Royal Quality Foods (a.k.a. Mountainaire) in fiscal year 1994, only to see the company leave Maryland in December 1995.
But James Fielder, deputy secretary of the Department of Business and Economic Development, said the state was negotiating with Mountainaire to retrieve the Sunny Day money.
Fielder said many of the safeguards Pinsky called for have been put into department policy. Making them law, however, would make the fund inflexible, he said.
“You could have cases when a company doesn’t meet the requirements, but would still be a benefit [to the state’s economy],” Fielder said.
He said flexibility is needed for Maryland to compete with other states, many of which have much larger incentive programs.
“Our bill is a reporting mechanism,” he said. “Theirs is a mandate.” -30-
