Montgomery County should not give Bethesda defense giant Lockheed Martin a proposed $900,000 tax rebate, the County Council’s staff says.
The rebate, proposed as an Economic Development Fund grant, is a way to circumvent the County Council’s rejection of a 2010 bill that would have reached the same goal, Council Senior Legislative Analyst Jacob Sesker wrote in a memo prepared for a Thursday council committee meeting. That bill, which died, would have exempted Lockheed Martin’s Center for Leadership Excellence from the county’s room rental and transient tax, commonly known as the “hotel-motel tax.”
But in offering $900,000 to Lockheed through a grant, County Executive Ike Leggett ignored laws governing the grants, Sesker wrote.
The grants are supposed to be an incentive for businesses considering moving to or expanding in Montgomery County. And in this case, the grant has no such strings attached.
The grant — intended as a rebate for taxes expected to be paid in fiscal 2012 and 2013 — is for more than twice the amount of room rental and transient taxes paid in fiscal 2011. That year, Lockheed Martin paid $403,992 in taxes, according to county Finance Director Joe Beach.
Leggett is supposed to give the council an economic benefit analysis or an analysis of the company’s projected financial position, which he did not, Sesker said. He also appears to not have given the council required notice, Sesker said.
“The Economic Development Fund was not intended to be used this way,” said Councilwoman Nancy Floreen, D-at large and chairwoman of the Planning, Housing and Economic Development Committee, which will discuss the grant Thursday. “I don’t think there is any support for this on the council.”
But the question is whether Lockheed should be paying the tax to begin with, Leggett said.
“If the basic issue is that you want to resolve it, you could resolve it in any number of ways,” he said. Sesker’s points “seem to be excuses for not dealing with it.”
Since the facility is not open to the public and 99.3 percent of the guests in 2011 were Lockheed Martin employees, the tax is not appropriate, company Vice President David Heywood wrote in a letter to the council this week. The company had $46.5 billion in net sales and about $4 billion in operating profits last year.
