A state senator is pushing legislation that likely would keep Montgomery County from granting a tax break to a major defense contractor for a lodging facility at its Bethesda campus. "Everyone believes in the free market except when they want a special deal," said state Sen. Jamie Raskin, D-Silver Spring, who is trying to repeal a Maryland law that gives tax breaks to corporate hotels. "In these dark days of fiscal austerity, we cannot afford this corporate welfare. I don't think we need to continue to pay them off in order to stay here."
County Executive Ike Leggett says Lockheed Martin's Center for Leadership Excellence should not be taxed as a hotel since it houses company workers instead of providing rooms to the general public -- and he modeled a proposal to exempt the facility from the county's lodging tax after state regulations sparing such facilities from the sales tax.
However, such a tax break would cost the cash-strapped county $450,000 every year, and Montgomery is facing at least a $300 million shortfall next fiscal year.
Without the state law, the county executive would have no legal backing to justify the incentive to already-skeptical County Council members. Leggett argued that Lockheed Martin, one of the county's major employers, needs incentives to stay within county lines.
Under Leggett's regulation, lodging facilities that are used exclusively by a company's staff, contractors, vendors and "other invitees" would be exempt from the tax. The Lockheed facility is the only building to meet that standard.
Since Raskin's bill was filed late, it must be approved by two-thirds of the county's state delegation -- traditionally allies of Leggett -- before receiving a public hearing.
Between April and December 2009, the Lockheed center brought 9,000 workers to the county and generated 6,000 spillover room nights in county hotels, according to county Budget Director Joseph Beach. The facility has created 175 new jobs, he said.
The defense company said its operations had a total economic effect of $7.1 billion between 2007 and 2009 in the county, and as such, critics say about half a million dollars annually would hardly keep the defense contractor from leaving Montgomery.