The Week Ahead

Monday, January 30^th

• House Education and Economic Development Subcommittee looks at higher education.  3pm in room 145 in the House Office Building.

Tuesday, January 31^st

• Department of Legislative Services (DLS) will give a fiscal briefing to the House Environmental Matters Committee at 10:30am.
• MBTPI director Neil Bergsman will discuss the budget on Midday with Dan Rodricks at noon on WYPR (88.1 FM).  Ron Wineholt, the Maryland Chamber of Commerce Vice President for Government Affairs, joins Dan and Neil.
• Senate Education, Business, and Administration Subcommittee meets to discuss a variety of issues, including the Interagency Committee on School Construction. 1pm in 3 West, Miller Senate Office Building.
• Senate Health and Human Services Subcommittee meets to discuss the Department of Health and Mental Hygiene and the Health Benefit Exchange.  1pm in the Amoss Room, Miller Senate Office Building.
• Senate Judicial Proceedings Committee will hold a hearing on the Civil Marriage Protection Act (SB 241) starting at 1pm.  All Senate Bills relating to same-sex marriage will be heard on this date.  Testimony will be limited to 2 hours per side.
• DLS will give a fiscal briefing to the Senate Capital Budget Subcommittee on the capital budget.  4pm in room 3 West, Miller Senate Office Building, Annapolis.

Wednesday, February 1^st

• Bureau of Labor Statistics releases December 2011 employment figures for metropolitan areas.
• House Appropriations Subcommittee on Education and Economic Development meets to discuss a variety of issues, including the Interagency Committee on School Construction.  1:30pm in room 145, House Office Building.
• DLS will give a fiscal briefing to the House Health and Government Operations Committee.  2pm in room 240 in the House Office Building.
• Senate Budget and Taxation Committee receives an update on health care reform, starting at 2:15pm.

Thursday, February 2^nd

• Happy Groundhog Day!  With the way this winter’s gone, it seems likely that groundhogs everywhere will predict a short season.  Please celebrate safely.
• House Ways and Means Committee will be briefed on local aid by the Maryland Association of Counties, the Maryland Municipal League, and DLS.  11am in room 130, House Office Building.
• DLS will give a fiscal briefing to the Senate Education, Health, and Environmental Affairs Committee at 1pm.
• Senate Finance Committee will receive an update on Health Care Reform Implementation by the Maryland Health Benefit Exchange Board, also at 1pm.
• House Appropriations Subcommittee on Transportation and the Environment will hold a budget hearing with an overview of the Chesapeake Bay.  1pm in room 120, House Office Building.

Friday, February 3^rd

• Senate Budget and Taxation Subcommittee on Health and Human Services will hold a budget hearing on the Maryland Health Insurance Plan, among other topics.  1pm in the Amoss Room, Miller Senate Office Building.
• House Appropriations Committee will hold a budget hearing on the Maryland Department of Transportation, and public debt.  1pm in room 120, House Office Building.

Details of revenue proposals emerging

We are now getting some details about several of Governor O’Malley’s revenue proposals. 

Sales Tax on Digital Products 

Part of the Budget Reconciliation and Financing Act of 2012 (or BRFA), the governor's proposal would require merchants to collect the state sales tax on purchases of digital products such as music, videos, electronic books, ringtones, and newspapers based on where the purchaser is, regardless of where the merchant is located.  While online purchases of physical goods from out of state merchants are legally subject to tax, they are collected directly from the taxpayer in what amounts to an honor system.  The governor’s proposal would treat digital (i.e. non-physical) goods as equivalent to their physical counterparts and place the burden of collection back on the merchant, but opponents worry about unintended consequences.  In the long run, this is an issue that requires federal action, but Maryland and other states are right to do what they can in the interim.

Flush tax

The flush tax funds the Bay Restoration Fund, which works to reduce pollution from wastewater treatment, and urban and agricultural runoff into the Chesapeake Bay.  Currently, wastewater treatment customers pay $2.50 per month and septic system owners pay $30 per year (the equivalent amount), regardless of how much water they use.  The Task Force on Sustainable Growth and Wastewater Disposal recommended tripling the fee by fiscal year 2015.  The governor’s proposal would double the revenue collected by moving to a consumption based system, charging $0.90 per 1,000 gallons for the first 2,000 gallons per month and $1.25 per 1,000 gallons thereafter.  Septic system users would see their fee double, to $60 per year.  There are some income-based exemptions.  The governor argues that the average fee would double, but some argue that the 2,000 gallon break between the high and low fee is too low.

Motor Fuel Tax and Income Tax

What we don’t have details on yet is the governor’s gas tax proposal.  We do know that it will probably raise the state gas tax between 5 and 15 cents per gallon, spread out over several years.  For the last twenty years, Maryland’s gas tax has been stuck at 23.5 cents per gallon, while fuel efficiency and the cost of infrastructure and maintenance keep rising. Adjusting for inflation, Maryland’s gas tax is now at its lowest level since the early 1980’s. Without an increase, it will soon be at levels not seen since the 1920’s.  The governor has also expressed some interest in indexing the rat e to inflation (it isn’t currently), but it is unclear how likely that is.

It is important to remember that the proposed increases for flush and fuel taxes would be dedicated to their specific purposes. They do not help with the state’s billion-dollar general fund revenue shortfall.  Keep an eye out for our report next week on the proposed changes to income tax deductions and exemptions.

Maryland unemployment rate falls again in December

Maryland’s monthly unemployment rate fell again last month, to 6.7 percent, according to data released today from the Bureau of Labor Statistics.  This is the lowest the rate has been since February of 2009.

The state added 8,100 jobs in December.  Unfortunately, there are still 125,000 fewer employed Marylanders than there were four years ago.

Given the continuing weak economy, Governor O’Malley is right to emphasize jobs in recent weeks.  Whether it is leveling the playing field for local employers by implementing an online sales tax, hiring new state workers in critical areas, funding infrastructure projects and school and rental housing construction through the capital budget, or asking the wealthiest Marylanders to help pay for services to help their less fortunate neighbors, finding the revenues to pay for vital services is responsible governing.

On the other hand, Maryland can ill afford more job-killing budget cuts to schools, healthcare providers, childcare centers, and other vital services that provide employment, help families get back on their feet, and keep Maryland competitive.  As the General Assembly takes up the budget, we call on them to build on the Governor’s proposal and pass a budget that helps low and moderate income Marylanders continue to recover from the effects of the Great Recession.

The Week Ahead

Now that the governor has released his budget, the legislature and MBTPI are putting noses to the grindstone.  Don’t forget to check back here for more post about specific aspects of the budget, and look for our Instant Analysis this week and the annual Regular Person’s Guide to the Budget in a couple of weeks.

Monday, January 23^rd

The Federal Reserve Bank provides an update on Maryland’s economy to the Senate Budget and Taxation Committee and the House Appropriations Committee at 1:30 pm in the Joint Hearing Room. 

The Federal Reserve briefing is followed at 3pm by the Fiscal Briefing from the Department of Legislative Services (DLS).

Tuesday, January 24^th

The Bureau of Labor Statistics releases state unemployment figures for December 2011.  Maryland’s unemployment rate fell half a percent in the first two months of the fourth quarter.

The Senate Budget and Taxation Committee has a busy briefing schedule on Tuesday:

Starting at 1pm, the committee will be briefed by the Maryland Association of Counties and the Maryland Municipal League, who will surely discuss the governor’s proposal to transfer pension costs to the counties. 

Then Baltimore City Schools will brief the committee on an alternative financing proposal at 1:30pm.

Alcohol tax revenues will be the focus of the next two briefings, from the Interagency Committee on School Construction at 2pm and the Developmental Disabilities Administration at 2:30

Finally, the Maryland Alliance for the Poor (@MAPAdvocacy, blog will update shortly), which MBTPI is a member of, will brief the Senate Budget and Taxation Committee.  We will be highlighting the need for critical services for Maryland’s most vulnerable and asking legislators to protect them.

The House Appropriations Committee will hold a hearing on the new youth detention facility in Baltimore City, which Occupy Baltimore brought attention to last week.

The House Ways and Means Committee will receive a fiscal briefing from DLS at 2pm in the House Office Building.

Wednesday, January 25^th

The Senate Budget and Taxation committee continues its briefings, with K-12 education at 1pm and the University Maryland’s study recommending against a College park-UM Baltimore merger at 3. 

Thursday, January 26^th

The House Appropriations Subcommittees start off their agency budget hearings. The Subcommittee on Health and Human Resources holds a budget hearing on the Department of Health and Mental Hygiene, and the Maryland Health Benefit Exchange.  1pm in Room 150 of the House Office Building.

Friday, January 27^th

The House Appropriations Committee receives a Capital Fiscal Briefing at 1pm in Room 120 of the House Office Building. 

This will be immediately followed by a briefing from the Maryland Alliance for the Poor, which MBTPI is a member of and will participate in.  We will be highlighting the need for critical services for Maryland’s most vulnerable and asking legislators to protect them.

Governor’s budget – a solid start

Governor O’Malley’s proposed budget employs elements of a balanced approach and significantly reduces the state’s structural deficit. In his budget message, the Governor emphasized creating jobs, building on our quality education system, protecting public safety and restoring the environment. The budget is relatively free of accounting gimmicks and temporary measures.

The budget makes $800 million in cuts; with the result that the state will expend fewer general fund dollars in fiscal 2013 that it does in the current year – the 2% growth in the general fund budget is wholly attributable to a required payment from the general fund to the state’s Rainy Day Fund.  Some of these cuts will have severe consequences for the lives of real people. We’ll be reporting on details as we learn them. The largest cut is a transfer to Maryland’s counties and Baltimore City of responsibility for $240 million in teacher retirement costs.

The budget also uses new revenues so that our state won’t depend on cuts as the only solution to this year’s revenue shortfall. The largest revenue measure would phase out income tax exemptions and deductions for high-income filers.  No one likes to raise taxes, but if you have to, it’s good to have a proposal based on people’s ability to pay. These revenue increases will be much less damaging to Maryland’s economy than would further cuts to education, healthcare and infrastructure.

In future blog posts, we’ll explore some of the specifics.

Most everyone will find some things they don’t like about this budget proposal – including us here at the Budget and Tax Institute. Overall, though, it is a very solid starting point for legislative deliberations.

Maryland subsidy programs score B- in national study

Maryland is fourth in the nation when it comes to enforcement mechanisms for economic development projects that fail to meet their performance objectives, according to a report out today from Good Jobs First (GJF).  However, there is still work to be done as Maryland only achieved a B- grade.  This new report comes a month after GJF ranked Maryland fifth in terms of subsidy performance and job quality standards.

Subsidy enforcement mechanisms are a timely topic in Maryland, as several programs have been in the news recently.  Officials with the Department of Business and Economic Development (DBED) testified yesterday in front of the Senate Budget and Taxation Committee about two programs, InvestMaryland, and the Job Creation Tax Credit, which are intended to spur innovation and job growth.  On Monday, Lieutenant Governor Brown highlighted a proposal that will be in Governor O’Malley’s budget released later today; Health Enterprise Zones (HEZ’s).  Similar to Maryland Enterprise Zones, HEZ’s would provide financial incentives to doctors and clinics that set up shop in areas with poor health outcomes (usually poor rural or urban areas).  The House Ways and Means Committee may also revisit the Tax Credit Evaluation Act, which would require tax credits to undergo a cost-benefit review every five years.  The bill died in the Senate last year.

Narrowing the health outcome gap is a laudable goal, as are job creation and spurring innovation.  However, as the GJF reports highlight, accountability standards and enforcement mechanisms are key to the success of any subsidy program.  DBED is rolling out a database that is a step in the right direction, and passing the Tax Credit Evaluation Act would be another.  Maryland should continue to improve its subsidy programs, to the benefit of all Marylanders

The Week Ahead

Happy Martin Luther King, Jr. Day!  Today we are reminded of Dr. King’s quest for social and economic justice.  Jobs, income, and housing were the main focus of the last few years of his life, and that struggle continues today.  At a time when Maryland is experiencing high unemployment, tremendous wage and income disparities, and high housing costs, we as advocates must follow in Dr. King’s footsteps and press our leaders in Annapolis to enact a budget and pass other legislation that strengthens low and moderate income Maryland families.

Monday, January 16^th

• Unions, civil rights organizations, Lieutenant Governor Brown, and members of Congress and the state legislature will rally tonight to honor Dr. King and call for jobs, justice, and equality. From 6pm to 8pm on Lawyers Mall, Annapolis.

Tuesday, January 17^th

• The House Appropriations Committee receives a briefing from the Developmental Disabilities Administration (DDA) at 1pm.  This should be particularly interesting because of the fight last year to increase the tax on alcohol sales to fund DDA services, coupled with the revelation in November that DDA returned $25 million in unspent funds to the general fund.
• The House Health and Government Operations Committee meets to discuss the public health perspective on health care reform, among other topics.  The briefing is scheduled for 1pm in room 240 of the House Office Building, Annapolis.  The Senate Education, Health and Environmental Affairs Committee will receive a similar briefing at the same time.
• The Senate Budget and Taxation Committee meets for a briefing on property tax assessment, tax subsides, and other topics.    The briefing is scheduled for 1pm.

Wednesday, January 18^th

• The day we’ve all been waiting for, when Governor O’Malley introduces his budget for Fiscal Year 2013.
• The House Appropriations subcommittees hold briefings from 1-3pm, including on the Bay Restoration Fund.
• Good Jobs First publishes the third in their series of papers on state tax subsidies.  This latest report will look at enforcement mechanisms states use when projects fail to meet their goals, for example when not enough jobs are created.  I blogged about their second paper when it came out a month ago.

Thursday, January 19^th

• The House Ways and Means Committee receives a tax briefing from the Comptroller’s office at 11am in room 130 of the House Office Building, Annapolis.

• The Maryland Health Care Commission meets at 1pm in room 100 of their offices at 4160 Patterson Avenue, Baltimore.

Friday, January 20^th

• The House Appropriations and Ways and Means Committees hold a joint briefing on maintenance of effort (MOE) and K-12 education.  MOE promises to be a significant issue this year.  The briefing is scheduled for 1pm in the Joint Hearing Room.

Coming up

Look for MBTPI’s Instant Analysis later in the week, our first look at the governor’s budget.  Next Monday the Department of Legislative Services gives its Fiscal Briefing to a joint meeting of the House Appropriations Committee and the Senate Budget and Taxation Committee.  The schedule for other budget hearings can be found on the General Assembly’s website, and of course highlights will be provided every Monday right here on Maryland’s Money Matters.