Thursday, Feb. 7, 2008

DBED budget could grow 18 percent

Increased spending proposal follows reduction last year

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A year ago, David W. Edgerley, as the new secretary of the Maryland Department of Business and Economic Development, faced a declining budget. This year, his budget could shoot up almost 18 percent, one of the largest proposed increases among state departments.

If the legislature does not make any substantial cuts, the $145.5 million proposed for DBED’s fiscal 2009 budget by Gov. Martin O’Malley (D) would put department spending close to its level in 2002, when the budget was about $153 million. The DBED budget dropped drastically in subsequent years to some $84 million in 2005 before climbing back.

In most recent years, the legislature has trimmed a few million dollars off the governor’s proposed DBED budget. Edgerley, who formerly was Montgomery County’s economic development chief, said he was happy to see the proposed increase and looked forward to dealing with the budget process in the legislature.

‘‘We have seen a tremendous amount of support for our programs from House and Senate members,” Edgerley said.

Much of DBED’s new funds would go toward additional financing and grants to businesses that relocate or expand in the state, with the financing program division proposed to jump by 36 percent in fiscal 2009.

That program has helped companies such as telecommunications giant Comcast Corp. expand in Maryland. Comcast, which received a $500,000 conditional loan from DBED for costs such as equipment and fixtures, plans a 92,000-square-foot call center in Largo that will employ up to 500 people. The facility is expected to be ready by the end of March.

DBED also has a Challenge Investment Fund to assist small high-tech startups. That program recently invested $50,000 in Neuronascent, a Clarksville molecule drug development company. Such aid is greatly appreciated, said Judith Kelleher-Andersson, Neuronascent’s president and chief scientific officer.

‘‘We are proud to be the recipient of this valuable Challenge investment, enabling our continued progress toward an Alzheimer’s therapeutic and allowing us to participate in the significant opportunities afforded early-stage companies in Maryland,” Kelleher-Andersson said in a statement.

About $18 million of DBED’s financing division’s proposed $72.5 million would go to help small, minority-owned and economically disadvantaged businesses. The tourism, arts and film division is another growing segment that would see a rise of 6 percent to $35.6 million. In fiscal 2007, 16 feature films and 13 national television productions were made in Maryland, up from seven and five, respectively, in fiscal 2006, according to state figures.

While DBED’s budget increase would be one of the largest among departments percentage-wise, other departments would see bigger jumps dollar-wise. DBED’s budget is less than 1 percent of the state’s total budget.

The Department of Health and Mental Hygiene, for example, would see its budget leap by $743.6 million in fiscal 2009 under O’Malley’s proposal, compared with DBED’s increase of $21.9 million. The health department accounts for about one-quarter of the state budget.

New secretarypleased with progress

Edgerley, whom O’Malley appointed about a year ago, said he was pleased with how the year has progressed. He particularly noted economic development wins such as financial services firm Morgan Stanley expanding its Baltimore operations, with plans to add up to 900 new jobs over the next decade, and a department reorganization that increased staff in the field and started a new small-business development division.

The Morgan Stanley expansion will not only greatly contribute to Maryland’s economy in the near future, but it validates the state’s importance in the financial services industry, Edgerley said.

‘‘This was a competition that other states were pursuing,” he said.

With the reorganization, Edgerley made it a priority for DBED to work more closely with local economic development officials. Assistant secretaries have been busy meeting with key local officials to further that goal, he said.

Other DBED accomplishments in the past year include helping to form the state’s first Life Sciences Advisory Board, which is developing a comprehensive strategic plan for Maryland’s life sciences industry.

Besides expanding the beefed-up financing program, DBED’s work this year will include helping prepare for the infusion of jobs to the state through the Pentagon’s Base Realignment and Closure process and supporting the work of the Maryland Stem Cell Research Fund, Edgerley said. That fund is operated through the Maryland Technology Development Corp. and received full funding of $23 million in O’Malley’s proposed 2009 budget.

DBED also plans to move its headquarters to the World Trade Center building along Baltimore’s Inner Harbor by October. The move will save the agency more than $100,000 over the lease term, according to a DBED statement. Some 250 of DBED’s 315 employees will occupy seven of the building’s 30 floors.

The slowing national economy will have some impact on Maryland, especially in housing and construction, but the state continues to enjoy a lower unemployment rate than the national one, Edgerley noted.

‘‘There is optimism in every corner of the state,” he said.

This report originally appeared in The Business Gazette.

Business boost

The Maryland Department of Business and Economic Development's budget is boosted by almost 18 percent under Gov. Martin O’Malley’s fiscal 2009 proposal, more than most other state departments. The figure for fiscal 2007 is the amount spent; for 2008 the appropriation; and for 2009 the proposed budget. Figures are in millions of dollars.