My Baltimore Business Problem
What it’s like to operate a
company 150 yards from the burned out liquor store—and why it’s hard to create
jobs.
By Jay Steinmetz in the Wall Street Journal
Baltimore
The supply-chain management company
I started in the late 1990s and lead today is in downtown Baltimore. On the
night of the worst violence last month, there were more tempting targets than
our cement, nondescript building, like the liquor store 150 yards away that was
looted. Yet on any given day what takes place in this neighborhood is a
slow-motion version of recent events. Graffiti, which anyone with experience in
urban policing will affirm is the first sign of trouble, regularly appears on
the exterior of our building. From there the range of crimes escalates to
burglarizing cars in the parking lot, and breaking and entering our building.
City policies and procedures fail to
help employers address these problems—and make them worse. When the building alarm
goes off, the police charge us a fee. If the graffiti isn’t removed in a
certain amount of time, we are fined. This penalize-first approach is of a
piece with Baltimore’s legendary tax and regulatory burden. The real cost of
these ill-conceived policies is to the community where we—and other local
businesses in similar positions—might be able to hire more of those
Baltimoreans who have lost hope of escaping poverty and government dependency.
Maryland still lags most states in
its appeal to companies, according to well-documented business-climate
comparisons put out by think tanks, financial-services firms, site-selection
consultants and financial media. Baltimore fares even worse than other Maryland
jurisdictions, having the highest individual income and property taxes at 3.2%
and $2.25 for every $100 of assessed property value, respectively. New
businesses organized as partnerships or limited-liability corporations are
subject, unusually, to the local individual income tax, reducing startup
activity.
The bottom line is that our modest
14,000-square-foot building is hit with $50,000 in annual property taxes. And
when we refinanced our building loan in 2006, Maryland and Baltimore
real-estate taxes drove up the cost of this routine financial transaction by
$36,000.
State and city regulations overlap
in a number of areas, most notably employment and hiring practices, where
litigious employees can game the system and easily find an attorney to
represent them in court. Building-permit requirements, sales-tax collection
procedures for our multistate clients, workers’ compensation and unemployment
trust-fund hearings add to the expensive distractions that impede hiring.
Harder to quantify is the difficulty
people face who want to live here. Our employees reduce their tax burden and
receive better public services in the suburbs. I live in the city, however, and
it is a challenge to stay here. My two children attend a public elementary
school where classrooms are filled beyond capacity with 30 or more students. Bathroom
stall doors and toilet-seat lids are missing. The heat goes out in the winter
and the air-conditioning goes out in hot weather. It’s hard to explain the
importance of developing science and math skills to students wearing winter
coats in the classroom.
Contrary to President Obama’s
suggestion in a news conference following saturated television coverage of the
riots, lack of urban “investment” is not the problem. The Maryland state and
Baltimore city governments are leveraging funds to float a $1 billion bond
issue to rebuild crumbling public schools. This is on top of the $1.2 billion
in annual state aid Baltimore received in 2015, more than any other
jurisdiction and eclipsing more populous suburban counties. The financial
problem Baltimore does face is a declining tax base, the most pronounced in the
state. According to the Internal Revenue Service, $125 million in taxable
annual income in Baltimore vanished between 2009 and 2010.
Leadership can change this. Maryland
last fall elected a new governor, Republican Larry Hogan, who campaigned on
improving the state’s business climate and bipartisanship. Baltimore’s mayor
since 2010, Stephanie Rawlings-Blake, says she is committed to rebuilding the
city. Despite some minor jabs at each other in the past few months, both showed
an effective working relationship during the crisis of the past few weeks.
Their political futures will now be linked as the real work begins to repair
Maryland’s largest city.
They will be building on perceptions
of the Baltimore area that go far beyond the 24-hour, instant-news cycle. We
have corporate success stories to tell the world about, including Under Armour,
a global leader in sports apparel, and McCormick, the classic American spice
company founded here in 1889. But these companies succeed despite the business
climate, not because of it.
The simplest, most direct way to
offer hope to discouraged people is to hire them. The Baltimore business
community has a simple message to law enforcement and elected officials: “Help
us help you.” People making good wages, working at jobs they are proud of don’t
destroy themselves or the place where they live. We have the political and
business talent to rebuild one of America’s great cities, once we focus on
creating the conditions for job growth.
Mr. Steinmetz, a former member of
the Maryland Small Business Commission, is the CEO of Baltimore-based Barcoding
Inc.
Here’s three comments about this story
Why are you still
there. You pay confiscatory taxes for mediocre services. You risk getting
robbed, beaten, murdered . Your kids go to terrible schools where they get a
lousy education. Explain to me why you are still there. Plenty of other
places in this country which would welcome you. So, move already.
I ready can't
sympathize with him. He needs to speak with his money and his feet. Close
the business and move it somewhere else preferably below the Mason Dixon line
which is usually much more business friendly.
Mr. Steinmetz's
company is doomed it he elects to stay in Baltimore. The tax base is
shrinking and the liberal mentality is to tax what is left until they tax it
out of existence. In his place, I would be gone, and probably out of
Maryland as well
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