SB 722
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
First Reader
Senate Bill 722 (Senator Hester)
Education, Health, and Environmental Affairs
Department of Small Business, Entrepreneurship, and Innovation - Established
This bill establishes the Department of Small Business, Entrepreneurship, and Innovation
(DSBEI) as a principal department of the Executive Branch, composed of specified
transferred entities, responsibilities, and staff, and makes related changes. Additional
responsibilities for DSBEI, beyond those of the transferred entities, include establishing a
small business issue-studying commission, meeting new reporting requirements, and
evaluating agency regulations for their effects on small businesses.
Fiscal Summary
State Effect: State revenues and expenditures for DSBEI increase beginning in FY 2022
to reflect the required transfer, and additional expenditures are required. State revenues
and/or expenditures for certain of the affected State entities decrease correspondingly, as
discussed below. The Department of Legislative Services (DLS) can handle the bill’s
requirements with existing budgeted resources.
Local Effect: None.
Small Business Effect: Minimal.
Analysis
Bill Summary:
Transfers and Related Continuity Provisions
The following entities, responsibilities, appropriations, and related specified items are
transferred to DSBEI, effective October 1, 2021: (1) the Governor’s Office of Small,
Minority, and Women Business Affairs (GOSBA); (2) the responsibilities of the
Department of Commerce (Commerce) to oversee the Maryland Small Business
Development Financing Authority (MSBDFA); and (3) the responsibilities of the
Maryland Department of Labor (MDL) to oversee the Office of Small Business Regulatory
Assistance. All GOSBA staff and those Commerce and MDL staff with more than 50%
assigned time to the transferred responsibilities are transferred to DSBEI.
The following are also transferred to DSBEI: all of the functions, powers, duties, books
and records (including electronic records), real and personal property, equipment, fixtures,
assets, liabilities, obligations, credits, rights, and privileges of GOSBA, Commerce and
assigned for the use of MSBDFA, or MDL and assigned for use of the Office of Small
Business Regulatory Assistance.
Any recipient of a loan from MSBDFA on or before the effective date of the bill may not
have any change to the terms of the loan or loan status as a result of the bill. The bill
specifies similar treatment of transactions affected by the transfer of a program managed
by MSBDFA.
All existing laws, regulations, proposed regulations, standards and guidelines, policies,
orders and other directives, forms, plans, memberships, contracts, property, investigations,
administrative and judicial responsibilities, rights to sue and be sued, and all other duties
and responsibilities associated with the functions of the transferred entities prior to the
effective date of the bill must continue and, as appropriate, are legal and binding on DSBEI
until completed, withdrawn, canceled, modified, or otherwise changed under the law.
Department of Small Business, Entrepreneurship, and Innovation
DSBEI is established as a principal department of the Executive Branch; the head of
DSBEI is the Secretary for Small Business. Subject to the limitations of any law that
governs the activities of other units of the Executive Branch of State government, the
Secretary must advise the Governor on specified matters and perform specified tasks as
authorized, including creating a commission to study and address matters that affect small
businesses in the State.
Also the Interdepartmental Advisory Committee on Small, Minority, and Women Business
Affairs is renamed the Interdepartmental Advisory Committee on Entrepreneurship and
Innovation. Committee responsibilities are unchanged, except that the committee advises
and supports DSBEI instead of GOSBA.
SB 722/ Page 2
Reporting Requirements
An annual GOSBA report is modified to explicitly include:
an update on the status of small business in the State, including small business
access to capital;
scorecards for each unit on participation in the State Minority Business Enterprise
(MBE) program and the Small Business Reserve program;
an update on small business outreach and training efforts; and
an update on projects undertaken in consultation with local economic development
corporations to create small business ecosystems throughout the State.
Regulation Evaluation Process
DSBEI must prepare an economic impact analysis rating and an economic impact analysis,
as appropriate, for each regulation that an agency proposes to adopt. The requirement
parallels the existing requirement for DLS. DLS must in turn comment on DSBEI’s rating
and analysis as part of its existing responsibilities to the Joint Committee on
Administrative, Executive, and Legislative Review (AELR Committee).
Current Law:
Governor’s Office of Small, Minority, and Women Business Affairs
GOSBA is established in the Executive Department; the head of the office is a
Special Secretary who is appointed by and serves at the pleasure of the Governor. The
Special Secretary’s general duties are to advise the Governor on activities to promote the
employment of minority persons in the State and any other matters that affect the rights
and interests of minority persons and the communities in which they live. GOSBA has
designated oversight, reporting, and outreach responsibilities related to the State’s MBE
program and responsibility for overseeing the State’s Small Business Reserve program.
Maryland Small Business Development Financing Authority
MSBDFA provides financing options for small businesses that are not able to qualify for
financing from private lending institutions or are owned by socially and economically
disadvantaged persons. Subject to specified conditions, Commerce may (and does) contract
for and engage the services of some or all of the MSBDFA staff to administer the
authority’s programs. MSBDFA has four programs: the Contract Financing Program; the
Long-term Guaranty Program; the Surety Bond Program; and the Equity Participation
Investment Program.
SB 722/ Page 3
Office of Small Business Regulatory Assistance
The Office of Small Business Regulatory Assistance, created by executive order in 2018
in MDL, has several established purposes, including to (1) assist businesses with the
implementation of the Maryland Healthy Working Families Act and other labor and
licensing laws and regulations; (2) resolve problems encountered by businesses interacting
with State agencies; and (3) serve as a central clearinghouse of information for business
assistance programs and services available in the State. Responsibilities of the office
generally relate to its established purposes. The office also administers the State Customer
Service and Business Development Efforts Training Program.
Regulations with Meaningful Impacts on Small Businesses
Generally, a State agency must submit proposed regulations to the AELR Committee and
DLS 15 days prior to publication in the Maryland Register. There are specific requirements
for proposed regulations with different effects, such as those that will have a significant or
meaningful impact on small businesses. For determinations of a meaningful impact, which
are those affected by the bill, if the appropriate State agency or DLS determines that a
proposed regulation will have a meaningful economic impact on small businesses, the
agency or DLS must develop a complete written economic impact analysis, as specified,
unless the agency or DLS is unable to do so, in which case the agency or DLS must provide
a written explanation of why the regulation will have a meaningful economic impact.
State Fiscal Effect: A precise estimate of the effect on State finances due to the bill cannot
be determined at this time. At a minimum, the bill:
transfers 11 GOSBA staff, 6 Commerce staff, and 5 MDL staff and associated
Commerce/MDL programmatic expenditures to the new DSBEI;
requires the hiring of sufficient administrative, finance, human resources, and
information technology staff for DSBEI, or an agreement with a different State
agency to provide those services;
requires MDL and Commerce to hire replacement staff to cover the remaining
responsibilities of the transferred staff;
creates moving and related administrative expenses, including, potentially, new rent
and information technology expenses;
potentially requires the hiring of additional staff at DSBEI, depending on the
ultimate purview of the department and the skills of transferred staff; and
potentially requires an increased salary for a cabinet-level Secretary.
Therefore, beginning in fiscal 2022, State revenues and expenditures increase for DBSEI
to reflect the required transfers, and expenditures further increase for additional required
SB 722/ Page 4
expenses. General fund expenditures decrease for GOSBA, as that entity is transferred in
its entirety, but are generally unchanged for MDL due to hiring replacement staff. Special
fund revenues and expenditures decrease for Commerce due to the transfer of MSBFDA
responsibilities, once again reflecting the need to hire replacement staff with general funds.
It is assumed that the effect in fiscal 2022 is about three-quarters of the effect in future
years, reflecting the bill’s October 1, 2021 effective date.
For context as to the eventual size of the new DSBEI, GOSBA’s budget is about
$1.4 million; the transferred Commerce and MDL staff account for about $1.2 million in
salary and benefits annually; and MSBDFA’s special fund expenditures are $5.5 million to
$6.0 million annually.
Additional Information
Prior Introductions: None.
Designated Cross File: HB 62 (Delegate J. Lewis) - Health and Government Operations.
Information Source(s): Governor’s Office of Small, Minority, and Women Business
Affairs; Department of Commerce; Department of Budget and Management; Maryland
Department of Labor; Department of Legislative Services
Fiscal Note History: First Reader - February 15, 2021
an/vlg
Analysis by: Stephen M. Ross Direct Inquiries to:
(410) 946-5510
(301) 970-5510
SB 722/ Page 5
Statutes affected: Text - First - Department of Small Business, Entrepreneurship, and Innovation - Established: 9-304 State Government, 5-501 Economic Development, 5-512 Economic Development, 5-555 Economic Development, 14-103 Economic Development, 11-1001 Education, 9-345 Environment, 9-421 Environment, 91-605.2 Environment, 91-605.3 Environment, 13-3302 Environment, 13-3305.2 Environment, 14-301 Environment, 20-1004 Environment, 4-501.1 Environment, 20-303 Insurance, 24-310 Insurance, 21-257 Insurance, 7-704.1 Public Utilities, 6-222 Public Utilities, 21-257 Public Utilities, 14-302 Public Utilities, 14-303 Public Utilities, 14-305 Public Utilities, 14-308 Public Utilities, 14-503 Public Utilities, 14-505 Public Utilities, 14-604 Public Utilities, 21-505.2 State Government, 8-201 State Government, 9-301 State Government, 9-302 State Government, 9-303 State Government, 9-303.1 State Government, 9-303.2 State Government, 9-304 State Government, 9-305 State Government, 9-305.1 State Government, 9-306 State Government, 14-305 State Government, 21-116 State Government, 35-302 State Government