Mont. County not business friendly enough

Local,Rachel Baye
Montgomery County is not business friendly enough to compete with Northern Virginia for new businesses, a panel of industry leaders told the Montgomery County Council Tuesday.

In particular, the county's congested roadways, state and local regulations and tax rates that are higher than Virginia's all stand between the county and job growth, said the Montgomery Business Development Corporation board members, who are all business leaders in the county.

"Montgomery County has real job losses, even while other jurisdictions around us have grown the number of jobs," said Montgomery Business Development Corporation Vice Chair Deborah Harrison, pointing to Fairfax and Howard counties. Those job losses mean less tax revenue.

Harrison cited Forbes magazine's annual ranking of the "Best States for Business," which consistently ranks Virginia in the top three. In 2010, Virginia was number two, while Maryland was ranked 14.

But officials said they can't change some of the factors behind Montgomery County's relative weaknesses.

Part of the difference between Montgomery and Fairfax results from higher taxes and tougher regulations in Montgomery, said Department of Economic Development Director Steve Silverman. "We're not going to eliminate our local income tax. They don't have a local income tax in Virginia."

Maryland has proposed a "millionaire's tax," which will drive away big business said Harrison.

She also pointed to the county's energy tax -- increased by 150 percent for residents and 60 percent for businesses before the start of the last fiscal year -- as an impediment to business. Though the spike is due to expire at the end of June, lawmakers have begun eyeing it as a way to fill an anticipated $140 million budget gap.

Without that extra revenue, the council can't fund transportation improvements or balance the budget, said Councilman George Leventhal, D-at large.

But extra revenue would also result from building the tax base by recruiting new business, Montgomery County Chamber of Commerce President and CEO Gigi Godwin told The Washington Examiner.

The panel warned the council members that they need to change the way they think about development.

"The old ways of doing things will not be sustainable in the future," said Harrison. "We must do a better job of competing in the regional, national and international marketplace."

In the past, the county has benefited from its proximity to the federal government, which employs 45,000 residents in the county, not including the residents who are employed by companies that receive federal funding through contracts, said Harrison. But as the federal government cuts back on spending, Montgomery

County needs to protect its tax base by actively recruiting new businesses.

Recruiting new businesses should be like dating, said Godwin. "You don't want to limit yourself to the guy who knocks on your door. You have to go out [and meet people.]"

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