Two of Maryland’s most prominent unions, representing hundreds of thousands of workers across the state, have thrown their support behind a proposed state task force designed to study the widespread use of tax breaks and incentives to spur economic growth and subsidize development.
The powerful labor organizations also sought to expand the scope of the planned task force, proposing amendments to the legislation that would add incentives tied to job creation to the list of tax credits the task force is authorized to study.
The AFL-CIO of Maryland and the Service Employees International Union (SEIU), which represents hospital workers throughout the state, urged legislators to pass a bill introduced by State Senator Jill Carter that would authorize the task force to gather data and recommend processes to increase transparency and accountability for how tax breaks are used. It would also seek ways to measure how effective the subsidies are and if they deliver equitable—or even quantifiable—outcomes.
“Maryland SB 733 injects sunlight into an opaque process and finally allows legislators to understand the ways that our tax incentives interact with state revenues and economic outcomes,” Maryland AFO-CIO head Donna Edwards said in written testimony before the Senate’s Budget and Taxation Committee.
“Despite strong support for the aims and purpose of this bill, which seem to largely focus on real estate and commercial development incentives, we believe that its scope of what it defines as a tax incentive is too narrow,” she added.
The Budget and Finance committee heard testimony on the bill Wednesday. State Senator Jill Carter said the legislation would provide data to the public that has yet to be made available.
“The public has the right to know how these incentives are delivering for the people,” Carter said.
“The public has the right to know how these incentives are delivering for the people,” Carter said.
Carter also shared The Real News Network’s investigative documentary Tax Broke with the committee. The film—produced by the authors of this article—documents how redlining, racial segregation, and laws restricting the city’s ability to expand have trapped Baltimore in a cycle of population loss, with the highest percentage of residents living below the federal poverty line in the state. To address these challenges, the city has offered an array of tax credits and subsidies to lure developers to build in Baltimore, assuring residents that the money deferred from the city coffers would reap rich rewards stimulating economic development, e.g. job creation. But, as Tax Broke details, Baltimore’s tax breaks for developers have yet to deliver on many of the promises that were made, and it is virtually impossible to validate the claims of success made by city leaders due to the lack of publicly available data. The stated goal of this task force would be to change that.
The list of tax credits the task force will focus on includes TIFs (Tax Increment Finance), which allow developers to invest future property taxes into construction costs and infrastructure, and PILOTs (Payment in Lieu of Taxes), a tax credit that phases in taxes over time, gradually increasing the percentage of taxes owed.
Other credits that will be scrutinized include the Brownfield Tax Credit, which gives developers 5-10 years’ worth of tax credits for remediating otherwise polluted property, and the Enterprise Zone program, which grants tax breaks to companies that build or invest in impoverished communities.
The proposed amendment would add to that list the Job Creation Tax Credit, which offers a $3,000 tax deduction for each new job created in the state. It would also add the One Maryland Tax Credit, an incentive that reduces taxes for businesses that create jobs in counties that struggle economically. In total, the amendment would add seven tax credits to the list of incentives the task force would be empowered to study.
A review of the bill by the office that drafts legislation determined the tax credits included in the bill had yet to be analyzed recently, save for a 2021 report on the use of Enterprise Zone Credits. The task force would not need additional funding to operate, a fact that Carter said made the legislation a must-pass.
“We are constantly looking for new sources of funding; I think this might be a good place to start,” she said.
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