MD unemployment down in 2011

Unemployment in Maryland declined in 2011 for the first time in three years, according to a Bureau of Labor Statistics report released today.

Source: Local Area Unemployment Statistics, BLS

The number of unemployed Marylanders also fell last year.  From a peak of 239,441 in 2010 the number of unemployed Marylanders fell by 22,930, or 9.6 percent.  Yet there are still more than twice as many unemployed residents as there were in 2007, before the Great Recession.

Source: Local Area Unemployment Statistics, BLS

State employment figures for January 2012 will be released March 13^th. 

The (Very Busy) Week Ahead

As the Baltimore Sun so aptly put it, this week the Assembly shifts [its] attention from love to money.  In case you missed it, last week MBTPI testified in support of expanding property tax relief for renters.  This week we are submitting testimony on at least seven bills.


Monday, February 27^th

• Senate Education, Business, and Administration Subcommittee holds budget hearings on the Canal Place Preservation and Development Authority, Workforce Development (DLLR), the University System of Maryland Office, and the UM Center for Environmental Science. 1pm, in 3 West, Miller.
• Senate Health and Human Services Subcommittee holds budget hearings on the State Board of Elections, the Office of Home Energy Programs (DHR), and the Infectious Disease and Environmental Health Administration (DHMH).  1pm in Amoss, Senate Office Building.
• House Education and Economic Development Subcommittee holds budget hearings on the Canal Place Preservation and Development Authority and Funding for Educational Organizations (MSDE).  3pm in room 120, House Office Building.
• House Public Safety and Administration Subcommittee holds budget hearings on the Judiciary, Office of the Attorney General, and the Department of Veterans Affairs.  3pm in room 150, House Office Building.
• House Transportation and the Environment Subcommittee holds budget hearings on the State Highway Administration (MDOT) and the Maryland Transportation Authority.  3pm in room 145, House Office Building.

Tuesday, February 28^th

• Senate Budget and Taxation Committee holds budget hearings on the Department of Information Technology, the State Retirement Agency, Maryland Supplemental Retirement Plans, and the Cigarette Restitution Fund.  1pm in 3 West, Senate Office Building.
• House Ways and Means Committee holds hearings on a number of proposed revenue measures beginning at 1pm in the House Office Building, including:
•  HB 784 (SB 249), which would reinstate the 6.25 percent income bracket for millionaires.  MBTPI supports this bill. [UPDATE: This hearing has been postponed to March 6th.] 
•  HB 836 (SB 523) would partially repeal the 1997 Tax Cut, by adding a quarter of a percent to each of the four existing tax brackets (over $3,000 of taxable income).  This bill is intended as an alternative to the Governor’s plan to reduce deductions for upper income taxpayers.  Unlike the governor’s plan this does not generate revenue for the counties.  MBTPI prefers the Governor’s proposal, but would support HB 836/SB 523 over the equivalent amount of damaging budget cuts. 
• HB 764 (SB 739) would require reviews of a wide range of tax credit programs every five years in order for the credits to be continued. MBTPI also supports this measure.   
• House Appropriations Committee holds a hearing on the revenue outlook for counties.  This will be particularly interesting in light of the debate over splitting teacher pension costs between the state and the counties.  1pm in the House Office Building.
• House Economic Matters Committee holds a hearing on the Rental Purchase Agreements Best Practices Act (HB 997/SB 778).  MBTPI supports this bill, which would force rent-to-own businesses to be more transparent with their customers and promote fairer business practices. A fiscal note is available. 1pm in the House Office Building.

Wednesday, February 29^th

• Wednesday will be a long day in the Senate Budget and Taxation Committee. The committee holds a hearing on the Budget Reconciliation and Financing Act (or BRFA, SB 152/HB 87).  The House Appropriations Committee will hold its hearing on the BRFA on Thursday.  MBTPI supports the Governor’s revenue proposals as responsible measures to support vital services.  However, revenue enhancements should be paired with an increase in the refundable state earned income tax credit (HB 331/SB 943). The committee will also hold hearings on:
• Reinstating the millionaire’s tax (SB 249/HB 784).  MBTPI supports this bill. 
• Partially repealing the 1997 tax cut (SB 523, see description for HB836 above).  MBTPI supports this bill.
• A constitutional amendment on the budget process.  SB 837 would allow the legislature to shift funds between budget items, so long as the total amount is not increased, and would give the Governor a ‘line item veto’ on items increased.   This amendment would make Maryland legislators full partners in the budget process. MBTPI supports this bill. 
• A bill to reduce the Board of Public Works (BPW) power to cut appropriations.  SB 838 would limit the BPW to cuts totaling 10 percent of the approved budget, down from 25 percent.  The bill would also require proposed cuts to be presented to the legislative budget committees a week prior to BPW consideration.
• House Health and Human Resources Subcommittee holds budget hearings on the Office of the Chief Medical Examiner (DHMH), the Office of Preparedness and Response (DHMH), and the Department of Housing and Community Development.  1pm in room 150, House Office Building.
• House Public Safety and Administration Subcommittee holds budget hearings on the State Treasurer, the Office of the Public Defender, the Department of Information Technology, the Department of State Police, and the Maryland State Board of Contract Appeals. 1pm in room 120, House Office Building.
• House Transportation and the Environment Subcommittee holds a budget hearing on the Department of the Environment.  1pm in room 145, House Office Building.

Thursday, March 1^st

• Senate Education, Business, and Administration Subcommittee holds budget hearings on the University of Maryland-College Park, University of Maryland-Baltimore, and Coppin State University.  1pm in 3 West, Senate Office Building.
• Senate Health and Human Services Subcommittee holds budget hearings on the Department of Housing and Community Development, the Office of the Chief Medical Examiner (DHMH), and the Office of Preparedness and Response (DHMH).  1pm in Amoss, Senate Office Building.
• Senate Public Safety, Transportation, and Environment Subcommittee holds budget hearings on the Office of the Attorney General, the Department of State Police, the Maryland Energy Administration, and the Maryland Automobile Insurance Fund.  1pm in Schweinhaut, Senate Office Building.
• House Appropriations Committee holds its hearing on the BRFA (HB 87/SB 152), which MBTPI supports, along with an increase in the refundable state earned income tax.  See first item in Wednesday above.
• House Environmental Matters Committee holds a hearing on modifications to the Neighborhood and Community Assistance Program (HB 731).  This bill increases the amount of contributions eligible for a 50 percent state tax credit from $2 to $5 million (increasing state costs from $1 to $2.5 million) and allows preference to be given to projects in Neighborhood Conservation Districts designated by the US Department of Housing and Urban Development.  This is a limited but valuable source of funds for community level service programs which MBTPI has traditionally supported. 1pm in the House Office Building.

Friday, March 2^nd

• House Appropriations Committee holds budget hearings on the Department of Juvenile Services and the Governor's Office for Children & Interagency Fund.  1pm in room 120, House Office Building.
• Senate Education, Business, and Administration Subcommittee holds budget hearings on the Department of Business and Economic Development, the Maryland State Board of Contract Appeals, the Maryland Public Broadcasting Commission, and MHEC Scholarship Programs. 1pm in 3 West, Senate Office Building.
• Senate Health and Human Services Subcommittee holds budget hearings on the Maryland Insurance Administration and the Medical Care Programs Administration (DHMH). 1pm in Amoss, Senate Office Building.
• Senate Public Safety, Transportation, and Environment Subcommittee holds budget hearings on the Maryland Transit Administration (MDOT) and the Washington Metropolitan Area Transit Authority. 1pm in Schweinhaut, Senate Office Building.

The Week Ahead

Happy President's Day!  There's no rest for the weary, as the General Assembly soldiers on despite the holiday.  In case you missed it, MBTPI testified last week in support of increasing the refundable state earned income tax credit, an alternative minimum tax assessment for corporations, and the Housing Opportunities Made Equal (HOME) Act.

Monday, February 20^th

• Senate Education, Business, and Administration Subcommittee holds budget hearings on the Comptroller of the Treasury, Department of General Services, Maryland Economic Development Corporation (MEDCO), and the Maryland Technology Development Corporation (TEDCO).  1pm in 3 West, Senate Office Building.
• House Education and Economic Development Subcommittee holds budget hearings on St Mary's College of Maryland, the Historic St Mary's City Commission, Aid to Education (MSDE), and the Maryland Public Broadcasting Commission. 3pm in room 145, House Office Building.
• House Transportation and the Environment Subcommittee holds budget hearings on the Maryland Aviation Administration (MDOT) and the Public Service Commission.  3pm in room 120, House Office Building.

Tuesday, February 21^st

• Senate Budget and Taxation Committee holds budget hearings on the Maryland Emergency Medical System Operations Fund, and the Department of Budget and Management (Personnel).  1pm in 3 West, Senate Office Building.
• House Ways and Means Committee holds a hearing on the Maryland Renter's Property Tax Relief Program (HB 629).  This bill would expand the number of renters who qualify for property tax relief.  MBTPI supports this bill, which would expand property tax relief for renters to low-income, non-elderly or disabled households.  A fiscal note is also available.  1pm in the House Office building.

Wednesday, February 22^nd

• Senate Finance Committee holds a hearing on SB 884.  This bill would require the State Highway Administration to use the maximum amount of federal funds available for a highway construction training program and supportive services.  A fiscal note is also available.  1pm in the Senate Office Building. 
• Senate Budget and Taxation Committee holds a hearing on the Maryland Business Tax Fairness Act (SB 269).  This bill would require multi-state corporations to use a combined reporting method when computing their Maryland state taxes.  MBTPI supports this bill, which would level the playing field for Maryland-based businesses, more accurately reflect where large corporations make their profits, and raise needed revenues.  A fiscal note is also available.  1pm in the Senate Office Building. 
• House Education and Economic Development Subcommittee holds budget hearings on Workforce Development (DLLR), Scholarship Programs (MHEC), and the University System of Maryland Office.  1pm in room 145, House Office Building.
• House Health and Human Resources Subcommittee holds budget hearings on Infectious Disease and Environmental Health Administration (DHMH), Family Investment (DHR), and the Department of Disabilities.  1pm in room 150, House Office Building.
• House Public Safety and Administration Subcommittee holds budget hearings on the Military Department, and the State Board of Elections.  1pm in room 120, House Office Building.

Thursday, February 23^rd

• House Education and Economic Development and Senate Education, Business, and Administration Subcommittees hold a joint briefing on performance metrics in higher education.  1pm in room 145, House Office Building.
• House Health and Human Resources Subcommittee holds budget hearings on the Office of Home Energy Programs (DHR) and Developmental Disabilities Administration (DHMH).  1pm in room 150, House Office Building.
• House Public Safety and Administration Subcommittee holds budget hearings on the Police and Correctional Training Commissions (DPSCS), Criminal Injuries Compensation Board (DPSCS), Workers' Compensation Commission, State Retirement Agency, and Maryland Supplemental Retirement Plans.  1pm in room 120, House Office Building.
• Senate Health and Human Services Subcommittee holds budget hearings on the Military Department, and Family Investment (DHR).  1pm in Amoss, Senate Office Building.
• Senate Public Safety, Transportation, and Environment Subcommittee holds budget hearings on the Judiciary and Department of Natural Resources.  1pm in Schweinhaut, Senate Office Building.

Friday, February 24^th

• House Appropriations Committee holds budget hearings on the Maryland Emergency Medical System Operations Fund, the State Reserve Fund, Payments to Civil Divisions of the State, and the Department of Budget and Management (Personnel).  1pm in room 120, House Office Building.
• Senate Education, Business, and Administration Subcommittee holds budget hearings on the State Treasurer, Early Childhood Development (MSDE), and Funding for Educational Organizations (MSDE).  1pm in 3 West, Senate Office Building.
• Senate Health and Human Services Subcommittee holds budget hearings on the Developmental Disabilities Administration (DHMH), Department of Veterans Affairs, and Department of Disabilities.  1pm in Amoss, Senate Office Building.
• Senate Public Safety, Transportation, and Environment Subcommittee holds budget hearings on the State Highway Administration (MDOT), Office of the Public Defender, Maryland Food Center Authority, and the Maryland Transportation Authority.  1pm in Schweinhaut, Senate Office Building.

DBED audit highlights need for tax credit accountability

A legislative audit has found serious problems with programs managed by the Maryland Department of Business and Economic Development (DBED).  The audit found that:

• DBED did not require eight companies applying for the One Maryland tax credit to document costs that serve as the basis for the amount of credit awarded.  Total tax credits awarded equaled $34 million.
• DBED investment agreements contain provisions to force repayment plus interest if companies leave Maryland within five years of the state investment.  Yet DBED failed to follow up when the recipient of a $250,000 investment in 2008 left the state one year later.  The audit estimated that the amount owed the state now totals $325,000.  After the legislative audit raised the issue DBED sent the company a letter demanding repayment.
• Internal users of DBEDs financing programs tracking systems were not adequately restricted.  Some DBED employees had access to many actions, such as bill initiation and payment processing, which were outside the scope of their responsibilities.  Disturbingly some former employees still had access up to 20 months after they left DBED.  The department corrected security permissions once they were brought to its attention.
• DBED did not collect required expenditure and performance reports from all grantees.  Consequently, the state does not know if the funds were used for their intended purposes.  Grantees may well be in compliance with the terms of their grants, but DBED has no way of knowing in many cases.

Encouragingly, DBED’s response to the audit (included as an appendix to the report) was generally positive.  They agreed with the auditors findings and, as noted above, took immediate action in several cases. 

MBTPI supports the Tax Credit Evaluation Act (SB 739/HB 764), because Marylanders deserve to know what they are getting for their tax dollars.  Unfortunately, this audit highlights the need for continued oversight to make sure that existing and new regulations are properly followed.

Unemployment remains high for African American Marylanders

The Economic Policy Institute released an issue brief today on minority unemployment in 2011, and looking forward to the end of 2012.  Yet again the data show that the unemployment rate for African Americans is significantly higher in Maryland and the rest of the country than the rate for other groups.  

Source: Annual unemployment rate data for 2007-2010 is from the Bureau of Labor Statistics.  Data for the third quarter of 2011 is from the EPI report linked to above.

At 11.2 percent, Maryland had the lowest African American unemployment rate in the country in the third quarter of 2011—among the 25 states (including the District of Columbia) for which this rate could be determined.  However, this was significantly above the Maryland average of 7.3 percent and far above the state’s White unemployment rate of just 5.6 percent.  Out of all fifty states, only in Nevada was the White unemployment rate (11.7 percent) higher than Maryland’s African American unemployment rate.

Unfortunately, as the graph and EPI report make clear, this disparity is a longstanding problem that is unlikely to disappear any time soon.  Even as the economy recovers from the Great Recession the only way this problem will improve is if Maryland supports education and job training programs, removes barriers to employment for ex-offenders who have paid their debt to society, and otherwise encourages job growth (including state employment) across the state.

O’Malley’s gas tax proposal should be paired with EITC changes

Governor O’Malley released the final details of his gas tax proposal yesterday.  We already knew that he was going to propose phasing out the sales tax exemption on gas over three years.  Now we know what’s in the fine print.

The governor introduced a “braking mechanism” to ease the effects of implementation on consumers.  This braking mechanism would hit the pause button on implementation if, during the prior year, the price of gasoline rose by more than 15 percent.  So in year one of implementation consumers would pay a 2 percent sales tax on the retail price of gasoline (less the 18.4 cent per gallon federal and 23.5 cent per gallon state gas taxes).  If during that first year the price of gasoline rose more than 15 percent, the sales tax on gas would remain at 2 percent during year two instead of rising to 4 percent.  Only after a year in which the price of gas rose less than 15 percent would the sales tax on gas rise to 4 percent.  This braking mechanism would remain in place until the sales tax on gasoline rises to 6 percent, where it will remain. 

How likely is it that Maryland will need to use this braking mechanism?  I did some digging, and according to data from the federal Energy Information Administration, it would have engaged in six out of the last eleven years.  So it seems likely that implementing Governor O’Malley’s proposal will take longer than the minimum three years.

Source:  MBTPI analysis of Energy Information Administration data

The second new detail of the governor’s proposal is an increase in the amount transportation funding given by the state to county governments.  Under his proposal, local governments would eventually get one fifth of the money raised by the gasoline sales tax. This doubles the current level of 10 percent, but it’s still less than the historic local share. Prior to the 2007 recession, the local share of transportation revenues was 30 percent.

Governor O’Malley also proposed several mechanisms to restore faith in the transportation trust fund, though his proposal does not go as far as some legislators want.  First, any transfer of money from the transportation trust fund to non-transportation purposes would require a stand-alone bill in the General Assembly, passed by three fifths of all assigned committees in each house.  Transfers could also be made if the governor declared a state of emergency.  In either case, an automatic repayment plan must be included.

While MBTPI is focusing on revenue measures that provide general fund support, raising funds for transportation needs is also important.  We believe that this and other necessary tax increases should be paired with an increase in the state refundable earned income tax credit (EITC) to minimize the harm done to those Marylanders least able to pay.

MBTPI Director Neil Bergsman testified yesterday before the House Ways and Means Committee in support of HB 331.  This bill would increase the refundable portion of the state EITC to 30 percent of the federal EITC, from its current level of 25 percent.  EITC is one of the most powerful anti-poverty tools Maryland has in its toolbox.  Lawmakers should use it, as they did in 2007, as part of a package of tax reforms that raise needed revenues while enhancing the progressive nature of our tax code.