Council pushes amendment for small business program

To spur growth, city would steer government contracts to Baltimore companies

Voters will decide in November whether to allow the city to steer contracts for office supplies, chemicals and other business to Baltimore-based companies in an effort to spur economic growth.

City Councilwoman Helen Holton — lead sponsor of a charter amendment that would authorize a new program to help small local companies — said the measure would build Baltimore’s economy and reward business owners who stay in the city, despite taxes and fees that are higher than in surrounding areas.

“What are we going to do to help businesses in Baltimore?” Holton said. “If you can hire a few more people because you’re getting more contracts, it’s helping you to create capacity and to grow.”

The charter amendment, if approved, would do little more than allow the city to create a program. Holton has filed a separate, wide-ranging bill before the council that lays out the specifics, including how contracts would be approved.

The proposal also calls for agencies to create work for which only small and local companies can compete, and waive certain insurance and bond requirements.

Mayor Stephanie Rawlings-Blake said she has concerns about the proposal but will not veto the charter amendment. She wants to leave the decision to voters and has not taken a position on Holton’s companion bill.

Rawlings-Blake said she is not convinced the legislation guards against “unintended consequences” that could come from authorizing a program without fully evaluating the long-term impact on city commerce. A greater review of how the proposed program fits into other initiatives is needed, she said.

“The reason why we’ve been able to reduce unemployment by more than a third under my administration is because we understand small businesses are where the jobs are being created in this new economy,” she said. “We continue to take a look at it.”

The program would be open to businesses that generate at least half of their sales out of Baltimore offices. Companies also must have no more than 50 employees to qualify, among other requirements.

It would be run by the Minority and Women’s Business Opportunity Office, which says the program would cost the city at least $250,000 a year to administer. Contracts for the small local companies would not be determined based on race or gender.

City lawyers argue the program violates constitutional protections for open commerce and could encourage retaliatory laws in other places, according to the solicitor’s office.

Before the city moves forward, the lawyers say, officials should study what remedial programs, if any, are necessary to ensure local businesses can compete.

Holton dismissed suggestions that the program is not on sound legal footing, or that the city should further study the matter.

“The law department’s report really is speaking to a highbrow constitutional issue that’s served better in a classroom,” Holton said. “We’re dealing in reality.”

Local governments across the country, including in Washington and San Antonio, have similar programs that take varying approaches to bolstering small businesses, according to Holton.

The city should not wait around or engage in more study before acting on the plan, said Holton, adding that she had worked on the proposal for at least three years. She is retiring this year after 20 years on the council.

A series of work sessions will be held in the community later this year, she said. A council hearing on the legislation that would create the program has not been scheduled.

Council President Bernard C. “Jack” Young backs the program.

“It would open up a level playing field,” Young said. “Our local and small businesses are the ones that create jobs. This would give people more opportunities to work.”

Daraius Irani, an economist with Towson University, said governments often overlook local firms when searching for companies to provide catering, trash collection or telecommunications.

“The city spends millions of dollars a year on procurement,” he said. “If it carves out some for local businesses, it builds a tax base.”

Attorney Robert Fulton Dashiell, an advocate for minority business development, said traditional government contracting operates on one basic principle: finding the lowest price brings the best value to the public. “That isn’t true,” Dashiell said. Programs that look at price alone do not always generate the best results for the public, he said.

“If it is successful, it would reduce the need for other social-economic programs,” he said.

Holton said Maryland Chemical Co., a 63-year-old family business in South Baltimore, is one that could benefit from the proposed program.

Jeanette Glose Partlow, the company’s president, said that since the recession more large companies are bidding on government contracts, and it has been harder for her business to compete. Maryland Chemical — which has 18 employees from forklift operators to chemical engineers — sells products that make food and drinking water safe to consume.

“It’s been frustrating for me to see the award of contracts that would have been very meaningful to us, get awarded to the great big out-of-state companies,” Partlow said. “More business flows into the local economy when you do business with local companies.”