New law raises cap for small companies

More firms will qualify for set-aside program

‘‘More businesses will be eligible to bid,” Michael C. Rubenstein, an analyst with the state Department of Legislative Services, said in a report. However, ‘‘the increased competition could drive down the value of contracts awarded to small businesses.”

The state program sets aside the value of 10 percent of contracts for small companies. The state fell short of its 10 percent goal in fiscal 2006, the most recent year for which data are available: The state reached 6.2 percent, or $96.1 million, as only nine of 22 agencies hit the target.

The highest percentage was achieved by the Department of the Environment, at 18.9 percent, while the lowest was the Department of Juvenile Services, 1.2 percent.

Among the recommendations in a state report to help more agencies meet the goal was to increase the revenue caps. The measure also adds a new threshold for architectural and engineering firms of $4.5 million.

Tax credit measure hailed

Another new law supported by business groups such as the Tech Council of Maryland and Maryland Chamber of Commerce will improve the administration of the biotechnology investment tax credit and increase the number of companies that qualify, said Julie Coons, CEO of the Tech Council.

One change, which takes effect July 1, raises the maximum age of eligible biotechs from 10 to 12 years.

‘‘We asked for some changes to the program, and we are very appreciative about the flexibility of state leaders in making these changes,” Coons said. ‘‘The program has been very valuable to help companies leverage venture capital dollars.”

In fiscal 2008, the state awarded credit certificates to 203 of 235 applicants, with 131 from Maryland, according to state figures.

Another law will allow for the creation of economic development zones as part of the Pentagon’s base realignment plan so that jurisdictions can apply for state matching funds for infrastructure improvements. There are various effective dates.

About 28,000 households are expected to move to Maryland because of the program, according to the state Governor’s Subcabinet on Base Realignment and Closure. Maryland is expected to gain about 15,500 direct jobs from the federal government, 23,000 indirect positions through federal contractors and 7,300 jobs related to support services.

Some 10,000 new jobs will be located near Fort Meade in central Maryland, with 13,000 positions around Aberdeen Proving Ground in Harford County. Other growth areas are at the National Naval Medical Center in Bethesda, Fort Detrick in Frederick and Andrews Air Force Base in Camp Springs.

Under the new program, a local government will sell bonds to finance road improvements or other infrastructure. The state will return half of the increased tax revenues generated by the ensuing residential and commercial development in that area to the local government.

O’Malley (D) also signed a bill to establish a state task force on the Minority Business Enterprise Program to review how to help minority-owned companies acquire more investment capital. The panel must report recommendations and draft legislation to state officials by Dec. 1, 2009.

The minority business program has a goal of state agencies awarding at least 25 percent of the total dollar value of procurement contracts to minority-owned companies, including 7 percent to black-owned businesses and 10 percent to women-owned businesses.

In fiscal 2007, $1.1 billion — 20 percent of the state’s total procurement dollars that year — was awarded to minority businesses, according to the most recent annual report by the state minority affairs agency. The dollar amount increased by 11 percent from fiscal 2006. But women- and black-owned companies were also below the targets, at 5.7 percent and 3.6 percent, respectively.

Another new law will extend the termination date of the Job Creation Tax Credit Program from Jan. 1, 2010, to Jan. 1, 2014.

Businesses that expand or establish facilities in Maryland that create at least 60 new jobs within two years are eligible for the credit, which most take against the corporate income tax. The jobs must be full-time, permanent, located in Maryland and pay at least 150 percent of the federal minimum wage. The threshold is 30 new jobs if the average salaries meet ‘‘highly paid” requirements.

Credits claimed by companies have fallen from $1.7 million in 2000 to $970,000 in 2005, according to state figures.

Flexible Leave Actstill in limbo

O’Malley did not act on the Flexible Leave Act, which organizations such as the Maryland Chamber of Commerce, National Federation of Independent Business and Maryland Retailers Association have urged him to veto. The measure would require private companies that offer paid time off to allow employees to use it without notice if they have a sick family member.

The Flexible Leave Act could have a ‘‘potential meaningful” effect on businesses that offer paid leave, according to an analysis by the state Department of Legislative Services. The bill would not affect companies that do not offer paid leave benefits.

O’Malley’s final bill-signing day is Thursday.

New state laws

Gov. Martin O’Malley signed a number of business-related bills this week:

SB301⁄HB561 raises the average annual gross sales a business can have in its three most recent fiscal years and qualify for the state Small Business Reserve Program, including from $2 million to $10 million for service companies. Effective Oct. 1.

HB723 increases the maximum age of biotechnology companies to qualify for investment tax credits from 10 to 12 years. Effective July 1.

SB206⁄HB366 allows for the creation of economic development zones as part of the Pentagon’s military base realignment plan so that jurisdictions can apply for state matching funds for infrastructure improvements. Various effective dates.

SB39⁄HB152 increases the membership of the state Joint Committee on Base Realignment and Closure from 12 to 16. Effective Oct. 1.

HB408 lengthens from 18 to 24 months the time in which a county has to qualify as distressed, allowing businesses there to take tax credits. Effective July 1.

HB0721 extends the termination date of the Job Creation Tax Credit Program from Jan. 1, 2010, to Jan. 1, 2014.

SB847 establishes a state task force on the Minority Business Enterprise Program to review how to help minority-owned companies acquire investment capital. The panel must report recommendations and draft legislation to state officials by Dec. 1, 2009. Effective Oct. 1.

SB214⁄HB371 directs the state retirement and pension system to divest from companies doing business in Iran and Sudan. Effective Jan. 1.

Source: Maryland Governor’s Office