Maryland Lawmakers Question Massive Incentives Being Offered to Amazon

by Nena Perry-Brown

Maryland Lawmakers Question Massive Incentives Being Offered to  Amazon: Figure 1
A planned redevelopment at White Flint.

Last month, word got out about the significant incentive package that Maryland had offered Amazon to entice the company to bring its second full-sized headquarters to the state. Yesterday, the state's Senate Budget and Taxation Committee as well as the House Ways and Means Committee held hearings on a bill that outlines $3 billion of the $5 billion in incentives being offered to Amazon.

The Promoting ext-Raordinary Innovation in Maryland’s Economy (PRIME) Act of 2018 contains a suite of tax cuts and credits that include a credit of 5.75 percent of wages per new qualifying job and an exemption from state sales and use taxes for construction materials or warehouse equipment. These offerings are coupled with claw-back provisions if Amazon fails to meet certain benchmarks. The remaining $2 billion in incentives not included in the bill would be geared toward implementing transportation improvements.

Members of both state committees seemed amenable to the Act (or at least to the idea of hosting Amazon in the state); however, while the Senate committee members asked a handful of softball questions, the conversation was more lively in the House.

The plan for the new headquarters hovered over the House hearing, even coming up during the discussion of a proposed bill that would lower the state corporate tax rate by 0.25 percent annually for a period of nine years to bring it in line with Virginia's rate of 6 percent.

"There are a lot of complaints that the governor is offering Amazon a huge revenue enhancement package to persuade them to locate their facility here in Maryland," testified Delegate Chris West. "We have to do that because our tax rate is so much higher than other states that Amazon might be looking at."

Once the conversation turned toward the PRIME Act specifically, the necessity of those "revenue enhancements" was still questioned by multiple committee members. Delegate Jay Walker walked down each of the incentive points and their monetary values one by one, arriving at a price tag of $7 billion-plus. "We're talking $2 billion for transportation, we're talking, basically $5.5 billion," Walker concluded. "Are there any other costs that we're not disclosing right now that we need to know about?"

"I know those numbers are large, but you have to look at the return, which is even larger," Montgomery County Executive Ike Leggett tesified in response.

"How far above and beyond did we go?" Walker asked, citing reports that Maryland's incentive package is second in dollar amount only to that of New Jersey. 

"I don't know what the other jurisdictions are offering," Leggett continued. "What I am confident in is that the package that we have, both from the state and from the county, is reasonable, and that it will pay off big-time in a way that, I think, will be startling to many people in this room."

The anticipated return on such an investment has been reinforced in recent days by a report by Sage Policy Group that enumerates what the potential benefits would be for the state. Sage CEO Anirban Basu, also of the Maryland Economic Development Commission, testified in favor of the Act. No one in either committee asked Basu to justify anything written in the report, but members did inquire as to whether WMATA needed to be shored up before the arrival of the headquarters, and how HQ2 would affect the existing quality of life of residents and the livelihood of the small and minority-owned business sector.

Maryland Commerce Secretary R. Michael Gill was on hand to represent the governor's office; he declined to respond when asked whether Amazon needs incentives in order to break even. However, when asked why Amazon needs tax credits, he stated that today's business climate is all about competition.

"What we put together was a great package. I believe we're going to get Amazon."

See other articles related to: maryland, amazon second headquarters

This article originally published at https://dc.urbanturf.com/articles/blog/general-assembly-of-maryland-disassembles-amazon-incentive-act/13626

DC Real Estate Guides

Short guides to navigating the DC-area real estate market

We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!

Northern Virginia

Profiles of 14 neighborhoods across Northern Virginia

Looking to Give People A Reason to Stay Past 6pm
Happily Straddling the Line Between City and Suburb
Columbia Pike
Arlington’s Neglected Stepchild is Getting a Makeover
Crystal City
Turning Lemons into Lemonade
Lyon Village
Developing An Air of Exclusivity?
Hitting Its Growth Spurt
An Urban Village Hitting Its Stride
Del Ray
Virginia’s Small Town Near the Big City
Eisenhower Avenue
The Vibrancy Might Take a Few Years
The Quiet Neighborhood By the Beltway
Old Town
Mayberry By The Potomac
132 Commerical-Free Acres
Downtown Falls Church
Staying the Same in the Midst of Change
Tysons Corner
Radical Change Could Be On The Way

See more Northern Virginia »


Profiles of 14 neighborhoods in suburban Maryland

Small-Town Living in the State Capital
Bedroom Community Gets Buzzing Cache
Cabin John
In With The New While Maintaining the Old
Chevy Chase
Affluence, Green Lawns and Pricey Homes
Downtown Silver Spring
Experiencing a Resurgence After a Bumpy History
A Suburb on Steroids
Rockville Town Square
Despite the Dynamism, Still Somewhat Generic
Takoma Park
More Than a Little Bit Quirky
A Foodie Magnet on the Verge of Change
Capitol Heights
Kudzu, Front Porches and Crime
Glass Half Full or Half Empty?
Mount Rainier
Artists, Affordable Homes and A Silo Full of Corn
National Harbor
A Development Rises Next to the Potomac
Riverdale Park
A Town Looking For Its Identity

See more Maryland »

Northwest DC

30+ neighborhood profiles for the city's biggest quadrant

16th Street Heights
DC's Sleeper Neighborhood
Where (Almost) Everyone Knows Your Name
AU Park
One of DC’s Last Frontiers Before the Suburbs
DC’s Northern Neighborhood on the Cusp
DC’s 535 House Neighborhood
Cathedral Heights
Do You Know Where That Is?
Chevy Chase DC
Not to Be Confused With the Other Chevy Chase
Cleveland Park
Coming Back After A Rough Year
Columbia Heights
DC’s Most Diverse Neighborhood, But For How Long?
An Island of Serenity East of the Park
Dupont Circle
The Best of DC (For a Price)
Foggy Bottom & West End
Where the Institutional Meets the International
Forest Hills
Ambassadors and Adventurous Architecture
Foxhall Village
350 Homes Just West of Georgetown
Friendship Heights
A Shopping Mecca With a Few Places to Live
History, Hoyas and H&M
Glover Park
One of DC’s Preppier and More Family-Friendly Neighborhoods
A Posh View From Embassy Row
LeDroit Park
A Quiet Enclave in the Middle of the City
Logan Circle
Trendy Now, But Not By Accident
Mount Pleasant
Sought-After Homes Surround Main Street in Transition
Mount Vernon Triangle
From Seedy to Sought-After
The Long, Skinny Neighborhood at the City’s Northwest Edge
Park View
It’s Not Petworth
Penn Quarter/Chinatown
DC’s Go-Go-Go Neighborhood
Getting a Vibrancy of Its Own
The Duke’s Former Stomping Ground
Shepherd Park
DC’s Garden of Diversity
Spring Valley
A Suburb With a DC Zip Code
Not To Be Confused With Takoma Park
Not Quite Like Its Neighbors
U Street Corridor
The Difference a Decade Makes
Woodley Park
Deceptively Residential
Adams Morgan
No Longer DC’s Hippest Neighborhood, But Still Loved by Residents

See more Northwest DC »

Southwest DC

The little quadrant that could

Southwest Waterfront
A Neighborhood Where A Change Is Gonna Come

See more Southwest DC »

Northeast DC

Profiles of 10 neighborhoods in NE

New Development Could Shake Up Pastoral Peace
A Little Bit of Country Just Inside the District’s Borders
Not to Be Confused With Bloomingdale
Fort Totten
Five Years Could Make a Big Difference
H Street
A Place To Party, and To Settle Down
The Northeast Neighborhood That Few Know About
Michigan Park
A Newsletter-On-Your-Doorstep Community
Evolving from a Brand to a Neighborhood
Ripe for Investment Right About Now
The Difference 5 Years Makes
Big Houses, A Dusty Commercial Strip and Potential

See more Northeast DC »

Southeast DC

6 neighborhoods from Capitol Hill to East of the River

Capitol Riverfront
Still Growing
Hill East
Capitol Hill’s Lesser Known Neighbor
Congress Heights
Gradually Rising
Notable for Its Neighborliness
Historic Anacostia
Future Promise Breeds Cautious Optimism
Eastern Market
A More European Way of Living

See more Southeast DC »