July 1 marks the start of a new fiscal year for some businesses. It also marks the effective date of some new laws and regulations in the region. Here’s a look:
Western Maryland scores benefits with new jobs act
A new jobs bill designed to spur manufacturing in some of Maryland’s most distressed counties will offer statewide incentives beginning July 1, but Washington and Allegany counties are among those eligible for the new legislation’s maximum benefits.
The “More Jobs for Marylanders Act” is one of several business-related bills approved by the Maryland General Assembly during this year’s session.
While the legislation provides incentives for manufacturing expansion throughout the state, increased benefits are available to five “qualified distressed” jurisdictions — including Allegany County and the City of Baltimore — with the highest unemployment rates in the state. While Washington County is not among them, the legislation allows Commerce Secretary Mike Gill to choose three more counties for “Tier 1” benefits. Gill named Washington, Baltimore and Prince George’s counties in June.
New manufacturers in Tier 1 jurisdictions will be eligible for the following incentives if the business intends to create at least five qualified positions and offer an approved ongoing training or post-secondary education program:
• A 10-year income-tax credit for up to 5.75 percent of the total wages paid per qualified employee
• A sales tax refund
• A state property tax credit
• No corporate filing fees
Existing manufacturers also would get tax credits for creating new jobs, but also must provide an approved, ongoing training or post-secondary training program. The legislation also includes a workforce-development piece, which includes $1 million for scholarships to eligible students in job-training programs at community colleges.
All other counties, including Frederick, are considered “Tier II” counties. In those counties, a manufacturer must create at least 10 qualified positions and offer an approved ongoing training or education program. In those counties, qualified manufacturers will be eligible for a state income-tax credit of 5.75 percent of new-employee wages.
The act closes program enrollment after June 1, 2020, although Sen. Andrew Serafini, R-Washington, said the window could be expanded if the program is successful.
The act also will let any manufacturer in the state claim increased expensing amounts under the state income tax, conforming to the maximum aggregate costs of expensing allowed by the federal government.
Other business-related legislation taking effect July 1 includes:
• Veteran employees: A small business may claim an income-tax credit that may not exceed 30 percent of up to the first $6,000 of wages paid to the qualified veteran employee during the first year of employment.
• Tax credit extensions: The Employer Security Clearance Costs tax-credit program allows a business to claim a tax credit against the state income tax for certain federal government security clearance expenses. New legislation extends the program’s termination date through tax year 2021.
• An income-tax credit for the cost of registering in Maryland a tractor-trailer (Class F vehicle) that is titled in the state was extended through tax year 2019. The Motor Vehicle Administration is authorized to issue a maximum of $10,000 in tax credits to a single taxpayer and a total of $500,000 in tax credits on a first-come, first-served basis in each tax year.
• New legislation also expands the research-and-development tax credit by increasing from $9 million to $12 million the aggregate amount of credits the Department of Commerce can approve in each calendar year. The cap on basic credits is increased from $4.5 million to $5.5 million, and the cap growth credit is increased from $4.5 million to $6.5 million.
Tax, pension changes focus in Pennsylvania
As of press time, Pennsylvania’s 2017-18 budget was still being negotiated.
But Pennsylvania Chamber of Business and Industry’s Sam Denisco said the governor’s proposed budget caught his attention in two main ways — proposed consolidation of several state agencies and the emphasized need for $1 billion in new revenue.
Denisco, vice president of government affairs, said another initiative of note is the sales-tax exemption being lifted for custom computing (help desk-style) software, warehousing, prepared food for airlines, and aircraft maintenance and repair. Additionally, state Rep. Jason Ortitay, R-Allegheny/Washington, introduced a bill seeking to gradually reduce the corporate net income-tax rate to 4.99 percent.
Discussions have been under way for years in Pennsylvania about shifting the way the state’s 500 public school districts are funded. A leading proposal would ease the burden of property taxes by expanding the sales tax.
Not only would the sales tax probably increase from the current 6 percent to 7 percent or higher, it also likely would be expanded to include currently untaxed services and goods such as financial planning, dry cleaning, some food, haircuts, and newspapers and magazines.
One of the leading cost-drivers for school districts is increased contributions to the Pennsylvania Public School Employees’ Retirement System, a $60 billion unfunded liability.
The General Assembly in June passed a pension-reform bill that Gov. Tom Wolf was planning to sign. That measure would establish a 401(k) and partial 401(k) option for new hires, while not affecting retirees or those currently working.
Labor, workplace issues big in West Virginia
West Virginia lawmakers focused on measures that strengthened the business community’s hiring, labor and broadband. The bills were approved during the state Legislature’s regular session, which ended April 8. They are to take effect in July.
• Senate Bill 222 changes law to prohibit striking workers who are voluntarily on picket lines from being eligible for taxpayer-subsidized unemployment benefits.
• Senate Bill 76, known as The West Virginia Second Chance for Employment Act, allows those convicted of certain nonviolent felonies to petition a court for the expungement of such convictions.
• House Bill 2857, the West Virginia Safer Workplace Act, allows employers to test employees and prospective employees for drugs and alcohol, and outlines policies and procedures related to the collection of samples, scheduling of tests and development of disciplinary procedures.
• House Bill 3093 aims to improve and expand high-speed internet across the state and allows individuals to form nonprofit co-ops that provide broadband service. It also broadens the abilities of the state Broadband Enhancement Council.