Marketplace Fairness Act

Marylanders will avoid paying sales tax on roughly $3 billion in online purchases this year.  That works out to $184.1 million in lost state sales tax revenue, according to projections by the University of Tennessee (see Table 5, page 11).  U.S. Senator Ben Cardin wants to do something about that, which is why he cosponsored the Marketplace Fairness Act last fall.

I've written about the need for an internet sales tax previously (Cyber Monday highlights need for internet sales tax). Now apparently Memorial Day online sales are becoming a thing as well.  As time goes on the percentage of purchases which are made online will continue to grow.  Unfortunately, given the status quo that means that the amount of sales tax Maryland can expect to collect will likely decline.

The state's bank account isn't the only victim here.  Not charging sales tax on online purchases hurts local retailers who can't compete on price because they have to collect the tax. Consequently local businesses and the state can't afford to hire more employees, which in turn means that retailers lose further sales.

While there are actions Maryland can take to collect on some of these purchases (the governor has a few ideas), this is one policy area that can only be resolved at the federal level.  The Marketplace Fairness Act is a good start, but I fear it will languish in Congress.

The Week Ahead

We hope you had a happy and safe Memorial Day!  While this weekend marks the unofficial start to summer, it also commemorates the sacrifices of American servicemen and women.  The next time somebody asks why we need taxes remember, taxes pay our soldiers (and firefighters, teachers, garbage collectors, and many other important people).

Tuesday, May 29th

• Alcoholic Beverages Article Review Committee meets to review festival licenses and tasting licenses.  Having spent the weekend at the Delfest Bluegrass Festival in Cumberland with a bunch of fine folks from Frederick's own Flying Dog Brewery, I appreciate the work of this committee.  5pm in the Judiciary Training Room, 2009F Commerce Park Drive Annapolis.

Wednesday, May 30th

• Bureau of Labor Statistics (BLS) releases April metropolitan-level employment statistics.

Thursday, May 31st

• Maryland Health Care Commission meets at 11am in conference room 100 at their offices in Baltimore (4160 Patterson Ave).  This meeting makes up for the cancelled May 17th public meeting.

Friday, June 1st

• June 1st is the earliest date most bills (other than emergency legislation) may take effect.  However, October 1st is the usual effective date for bills. 
• BLS release May employment statistics for the entire U.S.  In April the national unemployment rate dropped slightly to 8.1 percent.
• The newly formed Work-group to Consider Gaming Expansion meets for an overview of video lottery terminals in Maryland and surrounding states, recent video lottery terminal legislation, and presentations from current and prospective video lottery facility licensees. 10am in room 101 of the House Office Building, Annapolis.

Investing in Maryland's people - O'Malley signs training fund into law

There's one new law that has not received a lot of attention, but that will be a big help for Maryland workers and for Maryland's future economy.

Governor O'Malley signed HB 457 yesterday, establishing a transportation infrastructure training program using federal dollars. This is a really smart policy. A small portion of our transportation budget can mean job skills and a path to employment for so many workers who need a solid start that leads to family-supporting wages. It also positions Maryland's economy to build on our strength of a well-prepared workforce.

Maryland will now become the second state in the nation to permanently commit the 0.5% to job training and to ensure ongoing monitoring of the spending.  Passage of this legislation will also allow for the continued support of Project BuildUP, an on-the-job training program that serves workers across the state.

The federal government allows states to dedicate up to one half of one percent of their federal surface transportation and bridge dollars to training programs for under-represented and disadvantaged populations. This amounts to over a million dollars that Maryland could spend on construction and infrastructure training for minority, disadvantaged, and female workers, and to connect workers to actual jobs after completing the program.

The Maryland Department of Transportation took the first step toward developing these programs by creating the BuildUp program.  HB 457 guarantees that the money made available by the federal government will be used for training programs, linking workforce development with job development.


Congratulations to the Maryland Department of Transportation and great advocates (like the Job Opportunities Task Force) for promoting this forward-looking investment in Maryland's people.

The Week Ahead

Last week the General Assembly returned to Annapolis and took care of unfinished business.  Over three days the legislature passed a vital revenue bill, passed the Budget Reconciliation and Financing Act of 2012 making the legal changes and fund transfers necessary to fully enact the budget, and shared pension costs with local jurisdictions.  This week will be relatively quiet, by comparison.

Tuesday, May 22nd

• Governor O'Malley will sign the next batch of bills from the 2012 legislative session into law.  The list of bills has not been released yet. 10:30am, Annapolis.

Wednesday, May 23rd

• Board of Public Works (BPW) meets.  This meeting was an important pressure on the legislature prior to the special session last week; the BPW would have had to begin implementing the doomsday budget and cut an additional $70 million from the state's budget at this meeting if the General Assembly had failed to pass a revenue package.  10am in the State House, Annapolis.

Thursday, May 24th

• Economic Development Commission holds a Regional and Economic Diversity Forum.  Space is apparently limited so RSVP if you wish to attend.  10am in Suite 110, 5520 Research Park Drive, Baltimore.

MD unemployment rate edged up, but so did manufacturing employment

Maryland's unemployment rate edged up one tenth of one percentage point in April, to 6.7 percent.  This is still down from a year ago, when the unemployment rate was 7.1 percent.  There were 1,400 more Marylanders in the labor force last month compared to the month before, but 2,500 fewer employed residents. Because the growth in the ranks of the unemployed was larger than the growth in the labor force, the bump up in the unemployment rate was likely the result of actual jobs lost rather than merely a larger pool of workers.

In the accompanying survey of establishments, Maryland businesses employed 6,000 fewer individuals in April (the total differs from the unemployment rate figures above because - due to differences in methodology between the two surveys - some of these individuals may work in MD but live out of state, or work more than one job).  The largest decline was in the leisure and hospitality sector (-3,900), followed by the professional and business services sector (-2,200).  The government sector also lost 100 jobs.

More positively, the manufacturing sector added 1,200 jobs in April.  Education and health services - a perennial employment generator for the state - also added 700 employees last month.  Overall, Maryland's employers have added 40,600 new jobs since April of 2011.

Responsible compromise stops doomsday clock

The Maryland General Assembly completed its work on the budget with 45 days remaining before “doomsday budget” cuts go into effect.   The legislature passed the (pre-negotiated) administration package without amendment. We’ll be reporting the details in the coming days … in the mean time, you can check out the legislature’s staff analysis here, and the administration’s testimony on the package (which provides a good, factual background and description), here.

On the last day of the regular legislative session, the Maryland legislature fell down on the job, giving the state’s governmental leaders black eyes.

In the special session, they did much to redeem themselves.

1.  They acted in a timely manner, so as not to require local governments, public schools, nonprofit service providers, scholarship recipients, businesses and many other affected parties to put contingency plans into effect.
2. They compromised. The administration package was not anyone’s first choice. It has been criticized from the left, the right and the center. But it is a practical plan that avoids disastrous cuts. The “doomsday budget” would have harmed families and communities today and Maryland’s prosperity in coming years.
3. They acted responsibly. The revenue plan is moderate and progressive. It affects individual tax filers with 6-figure incomes and households with incomes over $150,000. It increases taxes on these high earners by less than 1/3 of one percent. You can find Citizens for Tax Justice’s blog item here and the Institute on Taxation and Economic Policy’s analysis here.

The compromise plan relies on a shift of part of teacher retirement costs to local budgets, but it’s gradual – phased in over four years, and there are offsets in the form of local revenue and restorations of some state aid payments for police and public health.

In addition, the legislature’s action improves the state’s bottom line, reducing the chance of disruptive mid-year cuts this year, and reducing the revenue shortfall the governor and legislature will face next year.Responsible compromise. It’s a great American value. Maybe Annapolis can be an example for Washington.

General Assembly moves fast on day one of special session

Yesterday, the Senate Budget and Tax Committee held its hearing on the Budget Reconciliation and Financing Act or BRFA (SB 1301) and the State and Local Revenue and Financing Act (SB 1302). Fiscal notes are available for both bills, as is our testimony in support of the revenue bill. The committee gave a favorable report to SB 1301 and 1302, setting the stage for passage by the Senate.  After rejecting all amendments and an affirmative vote at second reading yesterday, the Senate is poised to pass the bills upon third reading today.

This year, the House of Delegates must wait for the Senate to send it the BRFA and revenue bill before it can act (the chambers alternate taking the lead on the budget; next year the opposite will be true). However, in order to save time and taxpayer money, the House held hearings yesterday on identical House bills. The House Appropriations Committee held a hearing on the BRFA (HB 1801), followed by a hearing on the revenue bill (HB 1802) in the Ways and Means Committee. 

The combination of the compressed three-day schedule for the special session and the legislative rules laid out in Maryland's constitution require some contortions regarding legislative dates.  The constitution requires three readings on three separate days for all bills.  A holdover from the early days of Maryland, reading each bill three times ensured that illiterate legislators had a chance to digest the import of each bill before they voted.

In the modern, more literate General Assembly, bills are rarely read aloud three times. In most cases the legislature interprets other actions as having fulfilled the three readings requirement.  However, the three day rule still applies.

The Senate got around this problem yesterday by adopting a rules exception allowing two readings on the same day.  The House took a more interesting approach as it waits for the Senate bills. Last night the House recessed but did not adjourn, meaning that the legislative date inside the House chamber is still Monday, May 14th.  Once the Senate passes SB 1301 and 1302 (in a Tuesday, May 15th session) and sends them across the hall, the bills will move backwards in (legislative) time as the House moves through their first reading, then adjourns Monday's session. Later on Tuesday the Speaker will then open Tuesday's session and the chamber will proceed with the second reading.  Third reading and passage of the two bills in the House is expected sometime on Wednesday.

The Week Ahead

The General Assembly returns to Annapolis today in a special session to pass budget and revenue legislation eliminating the need for the doomsday budget. On Wednesday the governor outlined what state leaders expect to accomplish over the next three days, but regardless it is going to be a stressful week.

Monday, May 14th

• Senate Budget and Taxation Committee will hold hearings on the Budget Reconciliation and Financing Act (BRFA), the State and Local Revenue and Financing Act, and Qualified Zone Academy Bonds (a federal tax credit program to help local jurisdictions borrow for education spending, excluding new construction). MBTPI has prepared testimony in support of the revenue bill in both chambers. 11am in 3 West, Senate Office Building, Annapolis. 
• House Appropriations Committee will hold a hearing on the BRFA. Testimony is due by 11am today. 1pm in room 120, House Office Building.
• House Ways and Means Committee will hold a hearing on the State and Local Revenue and Financing Act. Testimony is due by noon today. 2pm in room 130, House Office Building.
• We expect the Senate will have its second reading of the BRFA and revenue bills late Monday.

Tuesday, May 15th

• We expect the Senate to vote on the BRFA and revenue bills Tuesday morning.
• We expect the House to begin its consideration of the BRFA and revenue bills late Tuesday.

Wednesday, May 16th

• If all goes according to plan, the legislature will wrap up the special session sometime on Wednesday.
• MBTPI co-hosts our annual Legislative Wrap-Up with Maryland Nonprofits, the Maryland CASH Campaign, Advocates for Children and Youth, Job Opportunities Task Force, and the Maryland Consumer Rights Coalition. This free event will focus on what came out of the 2012 regular session, what is happening with the special session, and our budget briefing.  Lea Gilmore from the Moving Maryland Forward Network will speak, as will representatives from each of the sponsoring organizations. Leading legislators will stop by as available. Lunch is included. You must register for this free event, and the deadline to register is today (Monday) at 4 pm. 10am to 2pm, Senate Office Building, Annapolis.
• To register, download a registration form. Complete your information at the top of the form, write "Legislative Wrap-Up" for 'course name', and May 16 for 'course date', and ignore all payment related fields. Fax the completed form to Maryland Nonprofits at 410-235-2190.
• If you are a Maryland Nonprofits member you can register online.  Scroll down to "Legislative Wrap-Up" and click on Register . 

Friday, May 18th

• Friday is Bike to Work Day.  In an effort to encourage more bicycling, communities across the country sponsor events, pit stops, and support teams for the day.  If you live in the Baltimore region you can find out more here.  If in the DC region, look here. 
• Bureau of Labor Statistics releases state employment figures for April 2012.  Maryland's unemployment rate ticked up slightly in March, to 6.6 percent.  The rate rose because the labor force grew faster than employment (MD added more than 2,000 jobs in March). 

Governor releases details of special session agreement

Governor O'Malley, Senate President Miller, and Speaker Busch held a press conference this morning (video) outlining the agreement they have come to for the special session starting May 14th.

For the most part, the new Budget Reconciliation and Financing Act (BRFA) and revenue bill will follow the template created by the conference committee at the end of the regular session.  Other highlights from the press conference included:

• The session should take three days.
• The special session agreement will include an additional $109 million in cuts.  The majority of the new cuts, $80 million, are actually due to revised estimates of Medicaid costs..  However, there is no explanation yet on where the other $29 million will come from.
• The revenue package will include a tax increase on single filers making more than $100,000 and joint filers making more than $150,000 (the top 16 percent of filers, according to the Governor).  The House and Senate leaders confirmed they are in agreement on this point.
• Sharing education pension costs with counties is part of the deal, phased in over four years.
• Transportation funding is a continuing problem, but will not be addressed this year.  Nor will the "net taxable income" issue (NTI).  NTI is an element of the education funding formula of particular importance to Baltimore City and Prince George's County. The governor said that he plans to do something about NTI in his budget next year.
• The overall FY2013 budget will grow 2.6 percent, but general fund spending will decline $380 million.
• The fund balance at the end of FY 2013 is projected to be $204 million, an improvement over the $155 million balance projected in the conference agreement. This will help protect the state against the possibility of mid-year cuts, and put the state in a better position to balance the next budget.

The governor also said he would send a letter to the speaker and senate president to begin convening a working group on gaming shortly, in anticipation of calling a second special session later this summer.

Senate committee schedules hearing for special session bills



Miller Senate Building - Photo: Md. Archives

The Senate Budget and Taxation Committee has set hearings for special session legislation related to the budget and revenues for Monday, May 14 at 11:00 am.

Individuals and groups seeking to testify or to submit written statements should sign up and submit their statements to the committee by 12:00 noon on Friday May 11.  See the announcement here.

The specifics of the proposed legislation has not been announced yet, and the text of the bills are not yet available. There is no word yet about hearing dates and times on the House of Delegates side.

MBTPI will be submitting written testimony urging the Committee to quickly enact a fair and sustainable revenue package that prevents $500 million in cuts to local schools, public and private colleges, community services and critical state operations.

The Week Ahead

Governor O'Malley officially called the legislature back into special session on Friday.  Legislators will revisit the budget starting May 14th, and state leaders hope to pass a revenue package that averts the doomsday budget by the end of that week.

Now that the special session is official, please urge your representatives in the General Assembly to continue investing in education, health care, transportation, and safe communities - the building blocks of Maryland’s economy.  Our state’s well-being depends on it. 

Tuesday, May 8th

• Health Care Reform Coordinating Committee meets in full.  10am in the Joint Hearing Room, Department of Legislative Services, Annapolis.
• The Oversight Committee for Quality Care in Nursing Homes meets.  2pm in room 240, House Office Building, Annapolis.

Thursday, May 10th

• The Board of Directors for the Maryland Health Insurance Plan meets to review the Certificate of Coverage, get an update on federal activity, and review requests for letters of interest.  1pm at 201 E. Baltimore Street, Baltimore. 

Friday, May 11th

• The Board of Social Work Examiners holds a public hearing to discuss and vote on proposed regulations.  A portion of the meeting may be held in closed session.  11am in room 109 of the Metro Building, 4201 Patterson Avenue, Baltimore. 

And don't forget that our annual Legislative Wrap-Up is May 16th.  Register now to reserve your spot. MBTPI cosponsors this free event every year to summarize budget and legislative decisions.  If you are a Maryland Nonprofits member you can register online (scroll down to Legislative Wrap-Up).  Otherwise, download and fax the registration form.

Bill signing and unemployment

Governor O'Malley signed almost 300 bills into law this afternoon.  Media coverage focused on three environmental bills, the Sustainable Growth and Agricultural Preservation Act of 2012 (SB 236/HB 445), the expansion of the Bay Restoration Fund (HB 446/SB 240), and the Watershed Protection and Restoration Program (HB 987/SB 614).  The list also includes bills related to the health benefit exchange, electronic filing of tax credits, a foreclosed properties registry, recycling at large apartment buildings,and a host of other topics.

This morning the Bureau of Labor Statistics (BLS) released March employment figures for metropolitan statistical areas (MSA's).  There are four MSA's centered in Maryland: Baltimore-Towson, Cumberland, Hagerstown-Martinsburg, and Salisbury.  Maryland also includes portions of the DC and Philadelphia MSA's.  The unemployment rate improved compared to March 2011 for all but one of those areas (metro unemployment is not seasonally adjusted, so in order to compare like to like we have to look back 12 months).

Unemployment in the Salisbury MSA - which includes Somerset and Wicomico counties - was 9.3 percent in March 2011 and 2012.  The Salisbury MSA also has the highest unemployment rate of any region in MD. Employment in the Salisbury area is concentrated in education and healthcare, a relatively strong industry most of the country in recent years.  However, the region's next largest industries are wholesale and retail trade, construction, and hospitality, which have been more vulnerable during and after the Great Recession.

click on graph to enlarge