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Business executives generally gave a thumbs-up this week to legislation that would allow employers a $3,000 state tax credit for every unemployed state resident they hire.

But at a hearing in the Senate Budget and Taxation Committee on Tuesday, some executives said a larger credit is in order. Others questioned its effectiveness.

To qualify, an employer would need to hire someone by Dec. 31 into a new full-time position or one vacant for at least six months. Total credit amounts would be capped at $250,000 per employer and $20 million for the entire program.

The new employee has to be either currently receiving Maryland unemployment benefits or exhausted those benefits within the past 12 months, according to the bill. The new position must be expected to last for at least a year, and it cannot be a position created by displacing an existing employee or one who is shifted from one facility to another.

The Maryland Retailers Association is among the business groups supporting the measure, which could spur some hiring in an uncertain economy, said president Thomas S. Saquella.

"If it doesn't work, the state doesn't lose any money," he said.

Maryland's retail sector shed about 9,300 jobs last year, making it among the hardest hit industries in the state, according to federal figures.

If fully utilized, the credit would help 6,700 Maryland residents get off the unemployment rolls, according to the office of Gov. Martin O'Malley (D).

Some business groups want to see a bigger credit to help further defray hiring costs. The Maryland Chamber of Commerce recommended that the maximum credit be increased to $5,000 per new employee while supporting the concept.

Others questioned how effective the credit would be in the first place.

"What's really important to small businesses is the work," said Judy Stephenson, president of Officepro, a Gaithersburg software-training company. "If small businesses have the work, that's the key to whether they can hire more people."

Another hearing on a companion bill in the House Ways and Means Committee was to have been held Thursday.

The bills, filed by Senate President Thomas V. Mike Miller Jr. (D-Dist. 27) of Chesapeake Beach and House Speaker Michael E. Busch (D-Dist. 30) of Annapolis at the request of O'Malley, have attracted numerous co-sponsors in both chambers.

Federal job credit

proposal debated

Employers could also benefit from a similar $5,000 federal tax credit proposed by the Obama administration. The measure is being considered by Congress.

That tax credit may help a limited number of small businesses, but most are unlikely to hire someone just to get a $5,000 credit, said Susan Eckerly, senior vice president for federal public policy with the National Federation of Independent Business, which advocates for small companies. Another federal proposal to give employers a tax credit for Social Security taxes paid if they increase wages or hours has more potential to help smaller companies, she said.

"Tying the credit to payroll taxes is the right approach and will help employers have more cash on hand to invest back in their business and their employees," Eckerly said. "However, a broader payroll tax credit that applies to all small employers, not just to employers that can afford to increase wages, would have a greater impact on job creation."

Another Maryland bill that would prohibit an employer from using a job applicant's credit report or history during employment checks and certain other matters faces a hearing in the House Economic Matters Committee on Wednesday. The Maryland chamber is among the business groups opposing the legislation, saying the issue is already well regulated at the federal level.