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COLUMNS OPINION Mike O’Halloran, Cailey Locklair and Christine Ross: Maryland small businesses can’t afford plans to pay for Kirwan school reforms

From the Capital Gazette – February 29, 2020

We read a recent online opinion piece entitled “Business Leaders Want Kirwan Plan Fully Funded.”

That may be true of the well-connected individuals who signed the column, but we promise you it doesn’t hold for Maryland’s job creators, its small businesses, which make up 92 percent of companies in the state and employ more than a million people.

The reality is that such a substantial investment of $32 billion to pay for the state legislature’s education overhaul nicknamed the “Kirwan Commission” will almost certainly require massive tax increases that would inevitably hurt our state’s economy.

The idea that Maryland may raise taxes by $2.6 billion with a new sales tax on professional services to fund the Kirwan Commission’s school-funding recommendations creates uncertainty for small business owners. They won’t invest in jobs or new equipment or a larger facility if they’re worried about the possibility of an increased tax burden.

If we’re being honest with ourselves, Maryland is already a costly state to run a business. According to CNBC’s Top States for Business in 2019, we ranked 31st overall but came in 46th when it came to the cost of doing business.

We finished 43rd on the nonpartisan Tax Foundation’s latest Business Tax Climate Index. We’ve ranked near the bottom of the foundation’s list for years — unlike our neighbors. Pennsylvania, in case you’re wondering, is 29th, while Virginia is 25th. West Virginia is ranked 23rd. Delaware is 11th.

Maryland’s business tax climate already puts us at a disadvantage when it comes to attracting and keeping businesses and jobs. The $2.6 billion tax to fund the state’s portion of the Kirwan Commission’s recommendations would only make things worse.

Notice we only said the state’s portion. The annual cost of the Kirwan Commission will reach $4 billion by year 10. The state’s portion is $2.8 billion. Local governments will be on the hook to come up with the rest — a whopping $1.2 billion tab for our cash-strapped counties.

Nationwide, federal tax reform has churned up unprecedented small business activity across the nation, according to a recent survey of our National Federation of Independent Business members.

The report shows American small business owners took the money saved in taxes and invested it back into their companies. They gave workers raises, expanded their operations, or bought new equipment, and hired new employees.

That sense of optimism, though, will be tempered by the prospect of the Kirwan tax increase.

Proponents say that funding the commission’s recommendations would result in stronger schools and a better-educated and –trained workforce. Indeed, small business owners say finding qualified job applicants is their No. 1 problem.

But merely throwing $32 billion at the problem won’t solve anything.

The General Assembly promised us a world-class education system when it passed the Bridge to Excellence in Public Schools Act in 2002 — The Thornton Commission. Now, champions of the Kirwan Commission’s report are asking for billions of dollars more – with absolutely no guarantee the investment will pay off.

Worse, we could see even more un- and under-employed young people who don’t have the skills needed for the openings that would exist.

That’s an outcome the state really can’t afford.

Mike O’Halloran is the National Federation of Independent Business’ state director for Maryland. Cailey Locklair is president of the Maryland Retailers Association. Christine Ross is the president and CEO of the Maryland Chamber of Commerce.