Accountable USA - Maryland

Maryland is not a big subsidy giveaway state, but when the home team calls, it has a large checkbook.  This was especially true in the 1990s: the Baltimore Orioles and the Baltimore Ravens together received some $300 million in public financing for new stadiums (see below); and in 1999, Marriott International extracted a $44 million retention package with a questionable threat to move its headquarters a short distance to Virginia (see below).

During that same period, Maryland tried to sharpen its toolkit. Governor Parris Glendenning’s Smart Growth Priority Funding Areas Act of 1997 sought to counteract suburban sprawl by making certain subsidies available only in areas containing high unemployment and counties already containing existing infrastructure investments. In 2000, the state consolidated numerous programs under the umbrella Maryland Economic Development Assistance Authority Fund (MEDAAF). At the same time, fiscal pressures prompted policymakers to downsize the economic development budget. As a result, most subsidies now occur as special discretionary packages or non-appropriated tax credits like the One Maryland Tax Credit.

In recent years, there has been greater focus on targeted high-tech subsidies, such as those to biotechnology start‐ups. Though these programs represent sizeable sums, they tend to focus on strategies that nurture new firms.

Despite the shift in focus, Maryland sometimes competes for company‐specific relocations using its Sunny Day Fund and MEDAAF. A recent example involved the movement of Northrop Grumman's headquarters from California. The state, competing with Virginia and the District of Columbia, offered the military contractor an undisclosed deal reportedly valued at $25 million. In the end, the company chose Virginia for its “strategic real estate locations,” i.e., proximity to the Pentagon.

Currently, the largest individual subsidy program is the Enterprise Zone Real Property Tax Credit, which is estimated to cost the state $38 million in 2012.

The state discloses deal-specific information in annual reports posted on the Department of Business and Economic Development’s website. Out of the five major programs we looked at in our Show Us the Subsidies report, three had such online disclosure (Job Creation Tax Credits, MEDAAF and Sunny Day Fund). The reports include information on job creation but not the wages or benefits of those jobs; nor does the state systematically report on the use of clawbacks.

In January 2012 the stated introduced an interactive database called Finance Tracker, which provides info on the programs listed above plus several others, including the One Maryland Tax Credit (though there are no dollar amounts for the tax credits).

Key Subsidy Programs

Subsidy Program Recent Annual
Cost
Online Recipient
Disclosure
Recipient Disclosure
Score
Job-Creation/
Job-Quality Score**
Monitoring/
Enforcement Score***

Film Tax Credits

a rapidly growing program providing tax credits for 27% of production costs

$25 million (FY 2014)
46/100
not included
not included

Job Creation Tax Credit

a corporate income tax credit for companies creating new jobs

$2.2 million (FY 2012)
34/100
60/100
65/100

Maryland Economic Development Assistance Authority Fund (MEDAAF), Capabilities 1, 2 & 5

a replacement for the controversial Sunny Day Fund used to award lavish subsidies to companies locating or expanding in Maryland

$8.2 million (FY 2013)
69/100
95/100
98/100

One Maryland Tax Credit

two as-of-right industry-specific corporate income tax credits for companies locating in special zones

$13.9 million (FY 2013)
34/100
75/100
63/100

R & D Tax Credit

a tax credit program subsidizing companies for up to 10 percent of R&D expenditures

$6 million (FY 2012)
28/100
not included
not included

* The score is derived from the Good Jobs First report Show Us the Subsidized Jobs (January 2014).

** The score is derived from the Good Jobs First report Money for Something (December 2011).

*** The score is derived from the Good Jobs First report Money-Back Guarantees for Taxpayers (January 2012).

Major Subsidy Deals

Baltimore Orioles  (1992) and Baltimore Ravens (1996)

In 1992 the Maryland Stadium Authority provided virtually 100 percent of the funds needed to build a new $110 million stadium called Camden Yards for the Orioles baseball team. Within a few years owner Peter Angelos was complaining about purported losses, even though his team was enjoying some of the highest attendance levels in Major League Baseball. The stadium was also paying some of the lowest wages to its service workers. In 2007 the United Workers Association launched a campaign demanding that the stadium authority adopt a living wage policy for the people who cleaned the stadium.

After the group threatened to stage a hunger strike, the authority relented. The living wage policy was also applied to another facility, now known as M&T Stadium, that the authority had largely financed ($200 million of $229 million) for the Baltimore Ravens football team in 1996. After the stadium was built, Ravens owner Art Modell clashed with the stadium authority over whether he had to share the proceeds from the corporate naming rights he sold to PSINet for more than $100 million. After an arbitration panel found in favor of Modell at one point, state legislator James Rzepkowski commented: “It’s one raw deal for the taxpayer after another.” (Key sources)

Marriott International (1999)

In late 1998 it became known that Marriott International was considering relocating its headquarters from Maryland's Montgomery County (adjacent to Washington, DC) across the Potomac River to Northern Virginia. Maryland panicked at the possibility of losing a Fortune 500 company and more than 3,500 jobs. “We will do everything in our power to keep them in Maryland,” a state official said. The state offered the company a $35 million subsidy package, but Marriott pressed for $51 million. After contentious wrangling, the state provided a package said to be worth up to $44 million in grants, low-interest loans and tax credits—the largest retention deal Maryland had ever made. The deal was actually worth more, since the state agreed to accelerate plans for tens of millions of dollars of road improvements in the area.

Jay Hancock of the Baltimore Sun later reported that documents in Virginia's economic development files indicated Marriott had eventually decided against moving to Virginia but kept the decision secret as it finished negotiating its deal with Maryland. In 2007 Hancock reported that Marriott had increased its headquarters workforce by only 117, far from the 700-job figure used to justify the subsidies. (Key sources)

Walmart in Maryland

  • At least 1 Wal-Mart location has received subsidies worth about $12 million in Maryland.
  • At least 1 Wal-Mart location in Maryland has challenged its property tax assessment.
  • Many Wal-Mart workers are ineligible for health coverage from their employer or choose not to purchase what is available, because it is too expensive or too limited in scope. These workers often turn to taxpayer-funded health programs such as Medicaid. Maryland is among those states that have not disclosed data on the employers with the most workers or their dependents enrolled in such programs.

For more information, see the Maryland page of Wal-Mart Subsidy Watch.