The Maryland General Assembly passed legislation exempting Lockheed Martin from paying about $450,000 a year in hotel taxes to Montgomery County, a measure that the Montgomery County Council shot down a year ago.
The nation's largest defense contractor offers a training center at its Bethesda headquarters and has argued that lodging at the center is not a hotel since it is used for employees only.
After winning final approval from the House of Delegates on Monday, with a 102-35 vote, the bill now heads to Gov. Martin O'Malley's desk for his signature.
The bill, sponsored by Sen. Nancy J. King, D-Montgomery, originally would have given a refund retroactively to Lockheed Martin, which county officials estimated could cost up to $1.4 million. It has since been changed to apply proactively to any company that operates a lodging facility in Maryland to support a training or conference center but is not open to the public. In Montgomery County, Lockheed Martin would be the only company eligible for exemption. Lockheed Martin's center, which opened in 2009, has 180 guest rooms.
County Councilman George Leventhal, D-at large, said he is disappointed that state lawmakers pushed the bill through even after the County Council opposed the bill.
Montgomery County Executive Ike Leggett supported a similar initiative in March 2012 that would have given the defense giant a proposed $900,000 tax rebate, but the council voted the bill down.
Leventhal said the assembly's approval is an affront to home rule, with the state telling the county which local taxes it can impose on residents and businesses. He also said that while he is glad Lockheed Martin calls Montgomery County home, it uses publicly funded amenities to run its center.
"There's a draw on the public treasury, which they will now not contribute to," he said. "The county does incur costs by having their private hotel here."
Lockheed Martin Vice President David Heywood told the council last year that it is not appropriate for Lockheed Martin to pay the hotel tax because more than 99 percent of the center's guests in 2011 were company employees.
County Councilwoman Nancy Floreen, D-at large, said though she initially opposed the bill in 2012, she said Lockheed Martin's facility is not a hotel, and therefore should not be taxed as one.
"I think it's the right call," she said, adding that she thought county staff might have misinterpreted the bill when it was in front of the council.