Raise annual cap on the Research and Development Tax Credit from $6 million to $18 million and allow not yet profitable companies to participate. The R&D Tax Credit is a highly effective incentive that is oversubscribed at the current $6 million cap. Companies can do their R&D virtually anywhere in the country, so incentives count. Surrounding and competitor states have been steadily increasing their R&D incentives while Virginia just passed their first R&D incentive this year. Maryland needs to raise the cap on this important incentive while also allowing not yet profitable companies to utilize the tax credit. Such a change allows smaller and younger innovative companies, particularly in the life sciences, to use this incentive for the first time.
Increase funding for the Biotech Tax Credit from $8 million to $16 million. Increase funding for the Maryland Biotech Tax Credit to $16 million (Governor Martin O’Malley's Bio2020 Initiative recommends this program eventually be funded annually at $24 million). The Biotech Tax Credit program provides income tax credits for investors that invest in seed and early stage Maryland biotechnology companies. This program is a critical economic development component for creating and maintaining life science companies, employment and tax revenue in Maryland.
Expand programs that enhance tech-led economic development such as InvestMaryland and the Maryland Innovation Initiative. The InvestMaryland program, passed during the 2011 session, is an investment vehicle that expands capital available to start-up and early-stage innovative companies in Maryland. These programs create a strong foundation for innovative job creation and help make Maryland a leader in the knowledge economy. Policymakers need to continue to rally around these programs as we partner together to make Maryland a great place to live and work. The Maryland Innovation Initiative, passed during the 2012 session, is a new incentive that creates stronger partnerships to promote tech transfer and commercialization of technologies from Maryland’s research universities to commercial industries.
Establish an incentive to further develop Maryland’s information technology industry. Policymakers should establish an incentive for Maryland’s technology companies. A possible incentive includes a tax credit for off-setting preparation costs incurred while accessing the General Services Administration (GSA) schedule. For some Maryland companies, these costs are prohibitive. Great opportunity exists with the GSA as they establish long-term contracts with companies that provide access to over 11 million commercial products and services at volume discount pricing.
Maintain stem cell research funding for FY2014. Policymakers should continue to fund stem cell research for FY2014, which helps meet the needs of current stem cell funding beneficiaries while continuing important research and job creation. The State of Maryland is one of the biggest supporters of advanced stem cell research in the nation. Policymakers also need to ensure that private sector businesses are participating in this fund so Maryland realizes tangible job creation benefits.
Increase funding for the Maryland Venture Fund. It is important that policymakers maintain or increase funding for the Maryland Venture Fund and its two investment vehicles, the Challenge Fund and Enterprise Fund. While the InvestMaryland program provides increased funding over the next five years, the Venture Fund remains one of the most important incentives for innovative companies to start, grow and create jobs. The Venture Fund makes direct equity investments in emerging technology and life sciences companies.
Increase funding for MIPS to $3 million in FY2014. The Maryland Industrial Partnerships (MIPS) program is a critical resource for product development funding for Maryland companies working with university researchers. MIPS’s economic impact of $23 billion in product sales and the direct return on investment is a compelling argument for growing this fund. Specifically, the MIPS program accelerates the commercialization of technology by jointly funding collaborative R&D projects between Maryland companies and University System of Maryland faculty. MIPS provides funding, matched by participating companies, for university-based research projects that help companies develop new products.
Establish NOL (net operating loss) incentive for innovative companies. Legislative leaders should consider establishing a tax transfer program whereby innovative Maryland companies could benefit by selling unused net operating losses to profitable corporations. Profitable corporations could also benefit by purchasing these tax benefits and thereby reduce their own tax liabilities. An NOL occurs when a company’s business costs and expenses are greater than its taxable income in a given year. Having such an incentive would boost competitiveness and long-term viability of some start-up and early-stage companies, which often incur losses over multiple years before becoming profitable.
Support legislative, budgetary and regulatory actions advancing incentives for continued biomedical innovation benefiting patients. Policymakers should oppose efforts including permissibility of drug importation, advancement of price controls, excessive regulation of clinical trials, barriers to biomedical research, limitations on responsible marketing practices, mandates regarding manufacturer responsibility for the disposal of medications and restrictions on the physician-patient relationship limiting access to innovative medicines. By supporting a positive environment for biomedical innovation, Maryland can continue to grow jobs in this industry sector.
Make Maryland a leader in the development of nanobiotechnology and nanotechnology. Maryland should support funding for the growing field of nanobiotechnology and nanotechnology research. This includes funding for the Coordinating Emerging Nanobiotechnology Research (CENTR) in Maryland Program. New technologies like nanobiotech and nanotech hold great economic development potential for the State of Maryland.
Support telecommunications innovation. Maryland is a leader in telecommunications innovation and the industry creates a tremendous amount of high-paying jobs. Policymakers should support the continuation of broadband development by fostering the deployment of high-speed data service to rural and underserved areas, encourage the adoption of information technology services and invest in emerging technologies. Additionally, policymakers should support a modernized, competitively neutral communications tax and fee system that eliminates the disparate treatment of similar communications service providers.
Establish Maryland as a national leader for cybersecurity. Policymakers should support efforts to make Maryland the national leader in cybersecurity. With the average technology job paying over $80,000, this is an important economic development opportunity. Maryland has the assets in place, including federal facilities, military installations and universities to lead the fight against cybercrime. During the 2011 session, legislators passed a bill creating the Commission on Maryland Cybersecurity Innovation and Excellence, which is a great start.
Allow small business more ways to get effective insurance coverage. Policymakers should continue to search for ways to allow small Maryland companies get effective and lower cost health care coverage, particularly for small and growing businesses in technology and life science. Smaller companies do not have the economies of scale to leverage health care costs from providers and therefore may receive less effective health care. In order to boost the prospects for Maryland's most innovative companies, health care and cost options need to increase for small companies.
Create certainty in the business community by opposing new business taxes or changes to the corporate tax structure. It is imperative that policymakers create a climate of consistency and certainty for Maryland’s business community. The mere discussion of major tax policy changes, like the institution of combined reporting on businesses, is harmful to job creation and retention efforts. A myriad of proposed taxes in recent years, including a tech tax, digital downloads taxes, Internet taxes and new taxes on business services, create a more difficult environment for companies looking to expand or grow in Maryland. Policymakers must keep in mind the importance of a fair, consistent and competitive tax climate that balances job creation with budgetary responsibility.
Develop and implement long-term, stable funding solutions for Maryland’s transportation infrastructure. Maryland faces enormous transportation infrastructure challenges and solving this is vital to Maryland's economic development efforts. Innovative companies need a reliable and effective transportation infrastructure in order to create and maintain high-quality economic growth.
Increase in the gas tax to fund vital transportation infrastructure needs. TCM supports increasing Maryland's gas tax, which has not been raised since 1992 and is not indexed to inflation. The gas tax no longer keeps up with important transportation infrastructure needs in Maryland, thereby harming economic development efforts and innovative job creation. Policymakers must also protect transportation monies from fund transfers to ensure the long-term viability of the Transportation Trust Fund.
Ensure reliable power at reasonable costs. Innovative companies, particularly biotechnology companies, require reliable power for their businesses. Certain areas of Maryland are particularly vulnerable to power outages, which causes risk for companies that rely on equipment for their research and development of products. Policymakers should also examine the costs of providing power to ensure Maryland is competitive from an economic development standpoint. Currently, power is more expensive and less reliable, particularly in the D.C. Metro region, than in surrounding and competitor states.
Ensure funding for higher education’s most vital capital needs. It is important that policymakers support capital projects like the University of Maryland’s new 150,000 square feet building to house the Robert E. Fischell Institute of Medical Devices and the Robert E. Fischell Department of Bioengineering. The Fischell Institute was created to inspire innovations that improve human health by integrating the fields of biology and engineering. UMD faculty and students will work together with industrial partners in this building to translate science into commercial products. Similar projects at community colleges are also important including the renovation of Science West, and the new Bioscience Education Center at Montgomery College. The Universities at Shady Grove plan to build a new building to support the biomedical sciences and engineering.
Enhance Maryland’s most innovative education assets. Policymakers should continue to support assets important to workforce creation. These include the University of Maryland BioPark, University of Maryland College Park M Square Research Park, Johns Hopkins Science and Technology Park, Montgomery College Bioscience Education Center, Montgomery College Science and Technology Park in Germantown, Maryland’s technology incubator network and other similar efforts throughout Maryland. Assets like these play a pivotal role in strengthening Maryland’s innovation economy.
Ensure higher education is affordable and available for Maryland’s students. Policymakers must ensure more stable and predictable funding streams for Maryland’s universities and colleges. The Maryland higher education system is vital to providing a strong pipeline of technology and life science workers for Maryland companies. It is also important to support Maryland’s network of community colleges, which play a pivotal role in Maryland’s tech-led economic development engine by training or retraining Maryland workers.
Ensure Maryland schools have the necessary resources to address future workforce needs. Educating Maryland students in STEM (science, technology, engineering and math) is vital for creating a competitive workforce that meets the needs of our knowledge economy. Maryland must encourage students to specialize in STEM disciplines and ensure that educators have the capacity they need to teach STEM-related curriculums.
