-from the Maryland State Chamber of Commerce
Both the House and Senate have introduced legislation establishing a paid family and medical leave mandate. SB 539 / HB 839 would establish a Family and Medical Leave Insurance (FAMLI) program to be administered by the Division of Unemployment Insurance. The program generally provides up to 12 weeks of benefits to an employee who is taking partially paid or unpaid leave for the following reasons: 1) to care for a child during the first year after the child’s birth or after the placement of a child through foster care or adoption, 2) to care for a family member with a serious health condition, 3) the employee has a health condition that results in their being unable to perform the functions of their job, 4) to care for a service member who is the employee’s next of kin, or 5) because the employee has an exigency arising out of the deployment of a service member who is a family member.
The bill establishes the FAMLI Fund, which will consist of contributions from employees, employers and self-employed individuals. Beginning January 1, 2021, each employee, employer and self-employed individual shall contribute to the fund. The total rate of contribution: 1) may not exceed 0.5% of an employee’s wages, 2) shall be applied to all wages up to and including the Social Security wage base, 3) shall be shared equally by employers and employees, and 4) shall be sufficient to fund the benefits payable.
There are any number of additional nuances and complexities outlined in the language, and the Chamber is very concerned that the implementation of this legislation will result in additional costs and administrative burden to employers and particularly small businesses. Through our MDCC Paid Family & Medical Leave Workgroup, the Chamber has attempted to work with the advocates of this program to outline our concerns and encourage changes to the bill. Unfortunately, these changes, some of which align the bill more closely with federal law and seek to address some of the challenges for small businesses, were not accepted. The Chamber will continue to work with stakeholders toward a better outcome on this issue.
Data centers are secure facilities that house the computer and network equipment that store, process and distribute large amounts of data. They are considered the foundation of today’s digital economy and the backbone of the rapidly growing technology sector.
The economic impact—both direct and indirect—of data centers is substantial. According to a report by the U.S. Chamber of Commerce Technology Engagement Center, during construction, a typical data center employs roughly 1,700 workers, provides $77.7 million in wages for those workers, produces $243.5 million in output along the local economy’s supply chain and generates $9.9 million in revenue for state and local governments. Every year thereafter, the same data center supports roughly 160 local jobs, pays $7.8 million in wages, injects $32.5 million into the local economy and generates $1.1 million in state and local revenue.
However, the positive economic impact of data centers does not stop there. The incremental local taxes paid by data centers directly and indirectly support schools and law enforcement, as well as local public infrastructure, including the expansion of broadband.
Senate Bill 397 would provide a sales-and-use tax exemption for the sale of qualified computer technology—including computer equipment, software, servers, routers, connections and other enabling hardware—for use at a qualified data center. Today, 35 states provide data centers with some sort of sales-and-use tax exemptions for the purchases of required equipment. In 2019, Illinois, Indiana and Alabama passed significant legislation helping to attract data centers to their states. Locally, Pennsylvania has also introduced key legislation to expand existing incentives. Also, within the last five years, no large-scale enterprise data center has located in a state that imposes its full sales tax burden on data center equipment, which underscores the importance of this legislation to states seeking to share in the benefits of the digital economy.
In Virginia, data centers are a main economic driver, and employment and investment have increased as data center incentives have expanded in the state. According to a 2019 report from Virginia’s Joint Legislative Audit and Review Commission, every $1 million of incentive generated 155 jobs, $26.5 million in state GDP and $14.6 million in personal income. In addition, each dollar of sales tax exemption returned 72 cents to the state, not accounting for the impact to local tax revenue.
Senate Bill 397 would level the playing field and attract data center business to Maryland, supporting the state’s mission of being a leader in innovation and investment in cyber and information technology. Frederick County OED Director Helen Propheter strongly supports this legislation, as OED has already had success in attracting this type of business. The addition of this tool will further enhance our efforts to attract large-scale data centers.
On Wednesday, February 12, the House Ways & Means Committee will hold a hearing on HB 565: Income Tax–Business and Economic Development Tax Credits–Termination. The bill calls for the following changes:
- The Secretary of Commerce may not designate or renew a RISE Zone on or after June 1, 2020.
- Sunsets the One Maryland Tax Credit as of January 1, 2023
- Sunsets the Buy Maryland Cybersecurity Tax Credit as of January 1, 2023
- Sunsets the Small Business Relief Tax Credit as of January 1, 2023
- Sunsets the Opportunity Zone Enhancement Program as of January 1, 2023
- Sunsets the Biotechnology Investment Incentive Tax Credit as of January 1, 2023
- Sunsets the Film Production Activity Tax Credit as of June 30, 2023
Securing access to capital and financing is critically important for Maryland’s job creators as they look to grow and expand. As a result, the Maryland Chamber of Commerce opposes any effort to modify or eliminate business tax incentives or lending programs that are designed to spur economic growth and investment. Maryland Secretary of Commerce Kelly Schulz and her team are recognized as national leaders in developing creative strategies to bundle various incentives to attract national and international businesses to Maryland. This bill will restrict Commerce, and therefore the counties, in the important work of making deals that directly benefit our entire state.
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Frederick Chamber Insights is a news outlet of the Frederick County Chamber of Commerce. For more information about membership, programs and initiatives, please visit our website.