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As Long as We Remember...

March 24, 2011

Leaving Small Business in the Dust

Amanda Haddaway

The Frederick Board of County Commissioners is currently reviewing a proposal that would give tax breaks to companies that open offices within the county, or add employees to their existing businesses. With just that initial information, most citizens would agree that the proposal sounds great.


However, with further analysis, the proposal falls short of really doing good things for local businesses.


The proposal would give a property tax credit to businesses that open or expand by at least 5,000 square feet of space and hire at least 25 full-time employees for at least two years. The credit is phased in and would start with a 52 percent reduction for the first and second years. The credit would be reduced to 39 percent the third and fourth years and then reduced again to 26 percent for years five and six. After year six, the tax credit would expire and businesses would have to pay the full tax rate, which is currently 93.6 cents per $100 of assessed value.


The proposal also outlines an enhanced tax credit for businesses that open or expand at least 250,000 square feet of space, employs at least 2,500 people and adds at least 500 new workers. Companies meeting these requirements would receive a tax credit of 58.5 percent of the assessed value of the new space for 12 years. Alternatively, a business could qualify for the enhanced tax credit by obtaining 250,000 square feet of new or expanded space and employing 1,250 new employees.


It’s important to review these figures in the context of our current employer make-up in the county. Right now our two largest employers are Fort Detrick and the Frederick County Board of Education. Frederick County Government is a distant third place with 2,355 employees, according to the economic development website.


Frederick Memorial Healthcare System and Bechtel might be able to reach the 2,500 employee mark with some minor increases in employees. The next largest employer is SAIC-Frederick with 1,965 employees. Wells Fargo rounds out the larger employer list with 1,500 employees. It’s unlikely that Wells Fargo will add 1,000 employees or increase their space by 250,000 square feet since it recently built a new facility.


The main concern with the proposal is that it doesn’t have any provisions for small businesses. According to the Frederick County Office of Economic Development website, “Frederick County's 9,000+ businesses employ 91,000+ workers; an estimated 98 percent of these businesses have fewer than 100 workers, demonstrating that small business is the backbone of our economy.”


If the Office of Economic Development knows that “small business is the backbone of our economy,” why aren’t the county commissioners developing a plan to help new and existing small businesses?


Frederick County has repeatedly tried to entice large employers to come here with little to no success. In fact, JPMorgan Chase, CitiMortgage and BP Solar closed their Frederick operations and eliminated a combined total of almost 2,000 jobs last year.


Our ability to retain large employers seems to be going in the wrong direction. I know the current commissioners will blame these job losses on the last administration, but it wasn’t all their fault. The reality is that Frederick County has a lot of work to do if it wants to be viewed as a business-friendly location that’s able to attract large-scale employers. It looks like Ron Tobin, the new business development-retention administrator, has his work cut out for him. Let’s hope he earns that salary and then some.


The tax break proposal cites the examples of the Discovery Channel in Montgomery County, and Intel in Washington County, as having taken advantage of a similar tax credit. That’s all well and good, but does Frederick County have enough to entice a large employer who would be wooed to plant roots here based on this new tax credit?


I’m skeptical; only time will tell. Trust me, I’d like to eat crow on this one. I want Frederick County to be an economic super hub, but my realistic side tells me that we have a long way to go.


Perhaps the county commissioners should figure out a way to help existing Frederick County businesses who have smaller employee rosters so they don’t leave for better offers elsewhere.


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