Maryland Tax Proposal Would Hand Another Victory to Virginia

By Brad Wills and Henry Fawell

“And The Winner Is…Virginia”

That’s the headline greeting anyone who visits CNBC’s 2011 “Survey of America’s Top States for Business” online. Virginia ranks as the premiere place in America to do business while our home state of Maryland lags 28 spots behind.

In coming weeks, that disparity may get a lot worse. On Tuesday, March 6, the Maryland General Assembly held a hearing to consider a proposal to impose a new six percent sales tax on professional services firms in Maryland, including public relations firms like ours. The tax would also be applied to dozens of other services, from commercial cleaning to cell phone coverage.  More than 74 witnesses signed up to testify before the House Ways & Means Committee, including PR professionals, and the committee heard an earful.   WJZ TV in Baltimore ran this story yesterday on the hearing.

Our opposition to this plan is not borne of partisanship. One of us is a lifelong Democrat and the other a lifelong Republican. We were both born and raised in Maryland. Our opposition is due to the severe decline in work and revenue PR firms and other professional services firms like ours will experience if House Bill 1051 becomes law. Consider the consequences:

The Virginia Factor: Virginia outranks Maryland in 9 out of 10 economic categories in CNBC’s survey, from overall economy to cost of living. Despite these odds, our respective firms “import” work and revenue to Maryland from Virginia clients, which we then spend in our communities in the form of personal income, philanthropy and by hiring employees and subcontractors. If House Bill 1051 becomes law, the importation of Virginia money may cease entirely for Maryland firms like ours. Our Virginia clients will shift work from our companies to Virginia firms whose costs have not been artificially inflated by their government.

Mobility: Saddled with this new tax, professional services firms like ours will simply move to Virginia, the District of Columbia, Delaware or Pennsylvania. We don’t have heavy machinery to move. We only need to move brainpower, laptops and mailing addresses a few miles across the Potomac. We know from experience. We served as media advisors to the Maryland Computer Services Association during its successful repeal of the infamous “Tech Tax” in 2008. Within days of the tax’s enactment, hundreds of computer services firms received letters from economic development offices in bordering states encouraging them to move across state lines. Only full repeal of that tax prevented the exodus of hi-tech entrepreneurs and jobs. Odds are good we’ll see those letters again if House Bill 1051 becomes law.

Hurting the Little Guy: Consider the impact this tax will have on the owners of very small businesses. For a sole proprietorship, one or two owner S-Corps or LLC’s, a new business tax is, practically speaking, identical to a second personal income tax. The cash to pay this new tax comes directly out of the owner’s pocket. For these owners, there may be no alternatives to recoup the funds that are available to larger corporations such as price increases, stock sales or other funding. Likewise, our small business clients would shoulder a disproportionate tax burden as lawmakers force them to pay the same tax rate on professional services that a Fortune 100 would pay.

The Message to Entrepreneurs: Like all entrepreneurs, we both took a risk – a personal, professional and financial risk – to pursue the dream of entrepreneurship in Maryland. We are driven by the idea of helping others communicate more effectively. We take pride in building our respective enterprises while creating work and wealth for others. Like the thousands of small businesses subject to House Bill 1051, we don’t want to be punished for pursuing this dream.

If Maryland lawmakers want to create jobs and score a few victories against Virginia for a change, they can start by rejecting this terribly flawed bill.  All PR professionals in Maryland should get involved by writing your representative in Annapolis. Click here to link to the Maryland Chamber of Commerce’s web site that does a great job outlining the issue and makes it easy to get involved.

Brad Wills is President & CEO of Wills & Associates Public Relations in Bethesda. Henry Fawell is President of Campfire Communications in Annapolis.
Share your thoughts – let us know how this could impact your business.

The power of public affairs (video)

Integrating social media into public affairs campaigns is the topic of this social media video featuring an interview with Ben Finzel, Senior Vice President and public affairs practice lead at Widmeyer Communications http://www.Widmeyer.com

Ben shares his expertise built on more than 20 years of experience in public affairs. Produced October 2009 by Mary Fletcher Jones and David Hyson for Conversations in Public Relations.

Trends that will power public relations in 2010

Mary Fletcher Jones provides PR planning tips

Planning for Success in 2010

Many public relations consultants and agencies are regrouping in the wake of one of the worst economic crises in our lifetime. As PR professionals plan for 2010, their questions may include where to look for new business, which competencies to develop, and how to satisfy the revised expectations of current and prospective clients.  Read on for ideas on how public relations consultants and agencies may position themselves for success now and through 2010.

Follow the Money: Industries in the Market for Public Relations

The economic stimulus dollars associated with the American Economic Recovery and Reinvestment Act (ARRA) will have a major impact on certain industries now and through 2010.  While banking, retail, and insurance may not experience a resurgence next year, other industries have an increased demand for public relations services, including large and small businesses, government agencies, and vendors providing associated services that are related to

• Healthcare. A huge chunk of the stimulus dollars will be directed to companies which provide patient care and related services (particularly to low-income individuals), medical research,  and education and training of doctors, nurses, and nurse practitioners.  Think laboratories, medical supply companies, universities, hospital systems, medical institutes, and pharmaceutical companies.  Wellness projects, such as immunization and nutrition programs, will also receive funding.  Examples of where money will be directed include projects for NIH and research related to autism.
• Energy. Industries will be competing for funding for renewable energy research and development grants, construction projects, and tax incentives.  Expect companies that research or produce energy-saving, low-emissions vehicles to have an increased need for public relations services.
• Technology.  A healthcare-related initiative to provide medical e-records for all Americans and other technological upgrades and innovations will be a huge boost for information technology and database management companies. Wireless and broadband services will also receive government funding, particularly for providing service to rural and underserved communities.
• Utilities. Transforming the country’s electric utilities into a smart grid will be a priority.
• Transportation.  Including airports, mass transit, rail, and highways.  There will be a focus on rebuilding highways and rebuilding roads and bridges in rural communities.
• Construction. Particularly at federal facilities, but also across many other sectors.
• Conservation and the Environment. EPA-funded projects will benefit many industries, such as those involved with waste management, providing clean water, environmental clean-ups of petroleum leaks and nuclear waste, emissions control in vehicles, etc.  Any “green” initiatives may be lucrative PR endeavors.
• Public Safety. Homeland Security and the Department of Justice will be funding projects at the federal, state, and local level, including airport security, domestic violence prevention, law enforcement, border protection, and many other types of projects.
• Education. Especially those focused on early childhood education and teacher training.  School construction projects mean increased business for construction, architecture, and engineering firms.

In-Demand Service Areas for Public Relations Businesses

Wondering how to position your public relations consultancy or agency for increased business?  In terms of services, what clients want now and in the new year include

• Public affairs, government relations, public-policy related services.
• Positioning businesses to obtain ARRA government grants and projects.
• Digital public relations efforts, such as monitoring, analyzing, and responding to online conversations about the client’s brand, blog relations, and content development.
• Expert social media consultation.  Clients expect their agencies to be involved in social media and to have cutting-edge expertise on all trends related to it.
• Online reputation management and crisis communications consultation.
• Cause marketing, such as “green” or environmental initiatives.
• Employee communications strategies.

Increased Expectations From Clients

One compelling trend in this economy is that client expectations for results from public relations consultants and agencies have increased, while fees have either decreased or remained the same.  Retainer fees and agency-of-record agreements are falling by the wayside in this economy.  Agencies and consultants are expected to do more with less, and clients are looking for these qualities in the public relations consultants with whom they conduct business

• Lower fees.
• Project-based fee structures.
• Increased emphasis on results measurement and associated value with business goals, including metrics for social media efforts and campaigns.
• Demonstrated understanding of marketing, including closer collaboration with advertising agencies or the ability to provide integrated marketing campaigns.
• New, creative, and innovative solutions.  In our high-tech, information-saturated culture, the ability to cut through the noise and grab the attention of target markets has become an even greater priority for companies who hire public relations firms.

To learn more, read this Council of Public Relations Firms article and this article on the impact of the  Economic Stimulus.

Barbara Burfeind: A Career in Military Public Affairs

Barbara Burfeind, APR, has had an illustrious career in public affairs with the U.S. Navy. She now works for Defense Visual Information in the Department of Defense.

In this video, she discusses the power of photographic images to inform. She also explains how working in military public affairs is different from other paths in public relations.

Barbara is also President of the National Capital Chapter of the Public Relations Society of America and talks about her experiences in that leadership role in another Conversations in Public Relations video.

Marissa Levin explains government contracts

Would you like to obtain a federal contract? Working for the federal government can be a lucrative proposition for public relations agencies, advertising agencies, marketing firms, and creative services firms, as well as independent consultants.

However, the process of getting on the GSA Schedule is complex and competitive. In this Conversations in Public Relations video interview, Marissa Levin, CEO of Information Experts (http://www.InformationExperts.com) and DC Women’s Entrepreneurship Examiner for Examiner.com (http://www.Examiner.com/x-12152-DC-Womens-Entrepreneurship-Examiner) provides helpful tips for communicators who would like to obtain federal agency clients.

Jim Krol explains the GSA Schedule

Have you wondered how communicators and agencies obtain federal contracts? Would you like to get on the GSA Schedule? This video interview features Jim Krol, Vice President of Xenophon Strategies, a communications firm headquartered in Washington, DC. Jim will talk about the GSA Schedule, and the business opportunities it presents for communications professionals.

Jim manages a GSA scheduled contract for Xenophon. Xenophon (http://www.XenophonStrategies.com) is particularly distinguished as the winner of the 2009 Silver Anvil Award for Public Affairs Campaign of the Year.

Jim formerly worked for GSA, and managed the agency’s national public relations and marketing efforts.

This video is part of the series Conversations in Public Relations, produced by Mary Fletcher Jones. Please visit the Conversations in Public Relations blog http://prconversations.wordpress.com

A career in nonprofit public relations: Rachel Maleh

Meet Rachel Maleh, a DC communicator and VP of Public Awareness at VSA arts, a nonprofit organization that celebrates the artistic achievements of people with disabilities.

In this video interview with Mary Fletcher Jones, Rachel shares her career experiences in nonprofit public relations. Topics discussed include the benefits of working for a nonprofit organization, how working for a nonprofit organization is different from working for a company or PR agency, and how to obtain a job in nonprofit public relations.

To learn more about VSA arts, please visit http://www.vsarts.org