Back row (L-R): Sen. Laurence Levitan, chair, Budget and Taxation Committee; Michael DeLorenzo, vice president of International Franchise Systems, assistant to chair of Budget Committee. Front row (L-R): Mike Miller, Senate president; William Donald Schaefer, governor of Maryland; and Clayton Mitchell, speaker of the House of Delegates, at the signing of Senate Bill 732, which replaced the need for rental car companies to pay titling tax with a use tax.
As the late, great, Tip O’Neill said “All politics is local,” and by their very nature, franchise owners are the definition of local. Politicians will listen to your voice, because you represent small business in their district.
The photo was taken in 1993, and it captures a moment that was the end result of getting involved in my state’s legislative process.
At the time, I was a franchisee of the Budget system operating about 10 stores in the Baltimore/Washington market. I had no experience lobbying, but I was facing unsustainable costs as the result of a tax credit for car rental companies that was legislated away. This credit offset the title tax on rental cars that all Maryland car rental operators had to pay to register their rental fleet.
In those days, we had to pay 5% of the vehicle value when we registered the car. This was about $600 out of pocket before we could rent the car. Without an offsetting tax credit, it became a huge burden for my 1,200-car operation.
When I began making my case to the legislature, one staffer confided that he had been surprised that no one from our industry had shown up to fight the repeal of the tax credit. The fact was none of us in the rental industry were paying attention. I vowed to never let that happen again.
I devoted one day per week to visiting Annapolis. I knocked on doors in the House and Senate and met with aides, staffers, and an occasional legislator. My story was simple: the change in the law was going to put me out of business, and my employees would be out of jobs.
Though at first I felt they didn’t understand how critical the issue was, I was surprised that people actually listened to me. It was mainly the staffers listening, but they were receptive. I learned over time how to present my case in an effective way so that people outside our industry could understand.
We formed an informal lobbying group with other franchisees and corporate representatives and together started making our case.
We won a key ally in Laurence Levitan, chairman of the Senate Budget Committee. He understood that collecting title tax on rental cars was not the best approach for the industry or the state. He directed us to work with one of his top staffers to develop a fair solution that would be revenue-neutral to the state.
We built our case for a 10% tax on rental cars. At the 11th hour, as the bill was in committee and in danger of stalling, we were approached by a key state senator who pressed us for a 1.5% increase in the rental car tax, up to 11.5%.
If we gave in, we’d have his support. If we didn’t, we’d run the risk of the bill dying and having to revive it in the next session. We decided to give in on the 11.5%. The senator kept his word and supported us. The bill was signed into law and is still in effect some 23 years later.
We promised the state that we’d keep revenue neutral, which meant $20 million into the state coffers in 1993. In 2015, our industry contributed over $60 million in revenue.
This experience has taught me that if I want to make a change in government, I need to stop complaining and get involved.
Contact Sharon Faulkner, ACRA’s executive director, and make a donation to support the ACRA PAC (Political Action Committee). Also, visit Legiscan.com to receive alerts about legislation in your area. I urge you to contribute and take an active role in determining our future.
Don’t be afraid to tell your story. You hold the keys to the future of our industry. No one can speak for you as well as you can speak for yourself.