Tax Credits Help Advance Maryland's Innovation Agenda

Maryland often has been at the forefront of innovation with a longstanding reputation for investing in science and technology to capture new opportunities for economic growth. This year's legislative session was no different. Lawmakers backed Gov. Martin O'Malley's proposals to support the state's bioscience sector, expand the R&D tax credit, enhance workforce training, and promote measures to establish the state as a leader in cybersecurity.

While level funding was approved for many of the state's current technology-based economic development initiatives, lawmakers dedicated additional money to establish or expand tax incentives focused on the governor's Jobs and Opportunity agenda. Maryland is one of several states hoping to attract private funding for early stage companies focused on cybersecurity technology. To this end, lawmakers passed HB 803, which establishes the Maryland Cybersecurity Investment Tax Credit Reserve Fund and provides a 33 percent refundable tax credit for qualified investors in seed and early stage cybersecurity companies. The approved FY14 budget includes $3 million for the tax credit program.

Lawmakers also agreed to expand the state's allowable R&D tax credit from $3 million to $8 million annually and increase the Biotechnology Tax credit by $2 million ($10 million total) to encourage investment in the biotechnology industry. Another bill, SB 70, makes changes to the InvestMaryland program, a state-run venture capital fund that invests in startups. The measure clarifies ownership restrictions and alters the use and allocation of program funds.

To better connect workforce training collaborations between business, government and nonprofit organizations, lawmakers passed a bill establishing the Maryland Employment Advancement Right Now (EARN) program and provided $4.5 million in the FY14 budget for competitive grants to bridge the gap between employer needs and worker skills through education and training.

Within the Department of Business and Economic Development, level funding of $18.6 million was approved for the Maryland Technology Development Corporation (TEDCO), of which $10.4 million is slated for the Stem Cell Research Fund and $3.2 million is for Technology Development, Transfer and Commercialization. Another $5 million is for the Maryland Innovation Initiative launched last year to accelerate technology commercialization at the state's universities (see the Oct. 24, 2012 issue of the Digest).

The FY14 budget is available at: http://mgaleg.maryland.gov/2013RS/bills/hb/hb0100e.pdf.