First in the Nation Tax Jeopardizes 750 Jobs on Eastern Shore, More Statewide
ANNAPOLIS, MD (May 19, 2005) Governor Robert L. Ehrlich, Jr., vetoed SB 790/HB 1284, the Fair Share Health Care Fund Act, in accordance with Article II, Section 17 of the Maryland Constitution.
This bill directly threatens jobs and economic development in Maryland, said Governor Ehrlich. This irresponsible legislation sends a terrible message to employers who consider relocating and creating jobs in Maryland. This tax could cost our Eastern Shore hundreds of jobs in the foreseeable future and put thousands more at risk statewide if other large employers move out of Maryland to avoid new taxes.
If enacted, this measure would hurt Maryland's business image that the Governor has worked so hard to elevate, said Department of Business and Economic Development Secretary Aris Melissaratos. The legislature has flirted with economic disaster by passing this tax. This new business tax would drive large companies out of Maryland.
The Fair Share Health Care Fund Act requires employers in the state with more than 10,000 employees to spend at least 8% of its payroll on health care benefits. The only employer to currently fall into this category is Wal-Mart. The passage of this bill directly threatens Wal-Mart's plans to build a distribution center in Somerset County, as Wal-Mart officials have said they would reconsider their plans for the Princess Anne center if the bill passed.
The opening of this distribution center will provide Somerset County up to 750 jobs at an average of $12 an hour, $2.50 more than Somerset County's current average wage. The opening of the center has the potential to lower the unemployment rate of Maryland's three Lower Eastern Shore counties, three of the highest in the state, by one full percentage point.
It is absolutely critical to get this distribution center on the lower Shore, said Governor Ehrlich. Most importantly, it will provide hundreds of lower shore residents the opportunity to earn a living wage that exceeds the local average.
Along with providing hundreds of jobs, the distribution center would provide an increase of personal income tax of nearly $450,000 and increased property tax revenue of more than $200,000 annually to the state and county. In addition, construction materials will generate an estimated $62,600 in state retail sales tax. O ver a 12-month period, 125 construction jobs will be created, with $5.6 million in wages generating more than $375,000 in personal income tax revenue.
In total, the Somerset County center would bring in $650,000 annually in tax revenue over the life of the project. This legislation would make Maryland the only state to impose a payroll tax on companies to provide health care.
To read the Governor's veto messages on all bills, visit http://www.governor.maryland.gov/billvetoes/2005/veto_list_2005.html.