Maryland lawmakers are bristling at the Montgomery County delegation's request to invest in start-up biotech companies, saying the local government is overstepping its bounds and "gambling with taxpayer money."
Del. Brian Feldman, head of Montgomery's House delegation, is pushing a bill that would empower Montgomery to make stock investments in Maryland companies. State law prohibits local government from making equity investments, which are regarded as high-risk, according to a legislative analysis of the bill.
"As soon as you are investing and taking a stock into these companies, you are really gambling with taxpayers' money," said Del. James J. King, R-Anne Arundel. He said he worries that Montgomery's bill would start a trend and that all Maryland counties would want to invest in equities.
"I don't think we should be financing businesses, this isn't appropriate," said Del. Richard K. Impallaria, R-Baltimore and Harford counties. "When [businesses] go belly up, we aren't going to get our money back."
But Feldman said "the money is already flowing" from Montgomery County to businesses in the form of loans and grants. Dishing out a couple thousand more for company shares would bring Montgomery benefits beyond the jobs, income tax and property tax revenues lawmakers expect from businesses borrowing county money.
Under Feldman's bill, Montgomery's Department of Economic Development would be in charge of making the county's investment decisions.
The department has about $850,000 in county appropriations for business loans, said Director Steve Silverman. But the department can petition the County Council for more money at any time.
Feldman's bill would unleash the department's funds for investments. The bill doesn't include a cap limiting the amount of money the county can use for investments vs. loans.
"The government should not be out picking winners and losers -- deciding we're gonna fund this company and not that one," Impallaria said.
Feldman cited competition with Northern Virginia as a reason for the bill, but Cynthia Richmond, deputy director of Arlington County's Department of Economic Development, said her county would never make stock investments in a company.
"That's very aggressive," she said. "To my knowledge, nothing like that goes on here. If it did, I would be shocked."