Maryland Gov. proposes $56 million for Opportunity Zone programs

Maryland Governor Larry Hogan’s FY 2020 budget proposal includes $56.5 million in new funding to attract businesses to Opportunity Zones. Other new innovation funding would support manufacturer hiring credits and a seed fund for minority entrepreneurs. Under the governor’s proposal, TEDCO, the state’s primary innovation agency, would see its spending increase from $27 million to $45 million.

The Opportunity Zone proposal is likely to garner the most attention from other states, as regions throughout the country are still attempting to make sense of how to leverage the incentive to encourage positive growth. Details are still forthcoming on the exact nature of the proposed programs, but highlights show a multi-faceted approach to encouraging development in the zones:

• A technology infrastructure fund, operated by TEDCO, would have $16 million to “promote technological development;”
• A $6 million tax credit fund would incentivize companies to locate or expand in the zones;
• The state’s Employment Advancement Right Now (EARN) training program would have an additional $3 million for businesses in zones; and,
• Housing and community development would see $31.5 million tagged for projects in the zones.

This mix of companion incentives seems designed to combat a common concern about Opportunity Zones: that development will push out current residents instead of helping them. If this the governor’s intention is to protect current residents and businesses, the details will be important. For example, will the training dollars be awarded with an equal weight to companies hiring from inside and outside of the zone, or will they prioritize current residents? The details of the programs could also help address a second concern about Opportunity Zones, that the incentive will mostly benefit projects that would have happened anyway, but this is not clear from the level of information that is currently available.

Although not specifically limited to Opportunity Zones, the governor’s proposal would also provide an additional $8 million for the state’s tax credits for manufacturers that create jobs in high unemployment areas.

Another proposal would provide TEDCO $1 million for its Builder Fund, which provides pre-seed funding for minority entrepreneurs. Although the program launched last year, this would be the state’s first investment in the program.

The Maryland legislature is now in session and is required to pass a balanced budget by April 1, 2019.