Friday Five
March 14, 2025 | This week's latest on Maryland business and government
1 — Business leaders say they’re tired of being villainized, used as ‘an ATM’ by lawmakers
Business owners gathered in Annapolis on Wednesday said they are tired of being villainized by the same lawmakers who view them as a source of easy money. For the second consecutive year, business arrived at the State House to oppose a proposal to impose a sales tax on services. The late-filed, pared down proposal would raise as much at $940 million next year — and $1.4 billion by fiscal 2030 — by imposing a 2.5 percent sales tax on services provided by a specific set of businesses to other businesses. Several business leaders spoke to the consequences that this bill would bring if passed at a press conference held by a coalition of organizations, including the Maryland Chamber of Commerce.
The costs: The Maryland Center on Economic Policy cited in their testimony that "businesses would respond to this increase in costs in the way they respond to any increase in costs — by raising prices” — if they don't flea the state first.
2 — McCormick executive warns costs of proposed tax could drive parts of business out of state
Spice and flavorings giant McCormick & Co. could be forced to reevaluate its more than century-old presence in Maryland if the proposed 2.5 percent business-to-business sales tax moves ahead and makes operations prohibitively costly, a company executive warned this week. Paul Nolan, vice president of tax, government affairs and strategic real estate at McCormick, and former Maryland Chamber board member, joined business leaders and owners at jammed public hearings Wednesday in Annapolis to oppose the plan. “The work that I do on my laptop every day I can do that anywhere, and I can get that service anywhere,” he said. “We want companies like us to be encouraged to continue to invest and grow as headquarter companies here, and I believe this legislation would do just the opposite.”
Case in point: Other states have seen significant pushback in the wake of increased corporate taxes. In 2016, after Connecticut lawmakers passed several corporate income tax increases, General Electric, which at the time ranked at 11 on the Fortune 500, moved its Fairfield-based headquarters to Boston, seen as more corporate friendly.
3 — How might Maryland politicians raise your taxes and what could it cost you?
So what exactly is on the table to raise more money for the state? The governor’s plan would raise more than $1 billion per year, though some of the money wouldn’t kick in right away. Most of the money would come from the changes to income tax rates and deductions, estimated to be $700 million next year if all the income tax changes are made. Legislative proposals put forward include a 2.5 percent business-to-business services tax, the legalization of online gambling, a tax on sugary drinks, a vehicle tax increase, a tax on firearms, an increase in the state property tax, eliminating tax credits and programs like the Enterprise Zone Tax Credit and tax-free back-to-school shopping week, among many others.
Time is ticking: Less than four weeks remain in this year's legislative session, with the critical opposite chamber bill crossover date ("Crossover Day") occurring this Monday, March 17.
4 — Ferguson warns of ‘Maryland recession’, report says state has greatest risk from federal cuts
Maryland’s Senate President Bill Ferguson warned of a “Maryland recession” Tuesday, after a top bond rating agency released a report highlighting the state’s unique vulnerability to federal budget and employment cuts coming from the Trump administration. The Moody’s Ratings report that Ferguson was referencing said Maryland ranks “at or near the top for risk from changing federal priorities and policies.” Senate Minority Leader Stephen Hershey said Ferguson’s comments obscure a more longstanding policy problem, saying “economists have been warning us for more than two decades that Maryland’s economy was too reliant on the federal government.”
Federal reliance: Federal jobs in Maryland grew 13 percent since 2014, outpacing state and local growth and exceeding Virginia’s 10 percent rise. This growth boosted per capita income, with 7.4 percent of Maryland’s personal income from federal employment — over four times the national median.
5 — Republicans control Congress, but need Democrats to help avert a shutdown just days away
Republicans in Congress will try to pass a stopgap spending bill this week to avert a partial government shutdown and keep the government running through September, though they’ll need Democrats’ help to do it. The 99-page stopgap spending bill, which House Republicans released last weekend, is required since lawmakers haven’t made any progress conferencing the dozen annual government funding bills that were supposed to become law by Oct. 1. The continuing resolution, the third since October, would fund the federal government for the remainder of fiscal year 2025.
Happening now: Earlier this week, the U.S. House of Representatives passed a stopgap spending bill to maintain federal funding at approximately $6.75 trillion for the fiscal year ending September 30. The U.S. Senate is expected to follow suit today, preventing a partial government shutdown after Democrats stepped back from a standoff. Without swift Congressional action, the federal government is set to shut down at 12:01 a.m. tomorrow.
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The Maryland Chamber of Commerce is the state’s leading business advocacy organization — committed to working with our alliance of partners on critical public policy issues. With a focus on economic development and grassroots advocacy, we impact policies that directly affect Maryland business.
