The Week Ahead

Last week we blogged about Maryland's showing in the Census Bureau's State and Local Government Finance Summary for 2011.

Also last week, the Maryland Insurance Commissioner released the premium rates for the individual health care plans to be sold through the state's insurance exchange in October. The premiums are much lower than originally estimated and are among the lowest of the states who so far have released cost information for their exchange options.

For the week of July 29th through August 4th:

• On Monday, July 29th, the Alcoholic Beverages Article Review Committee meets to continue the review of special venue licenses at 5pm  in the Judiciary Training Room at 2009F Commerce Park Drive in Annapolis.
• On Tuesday, July 30th, the Bureau of Labor Statistics (BLS) will publish the monthly Metropolitan Area Employment and Unemployment figures for June 2013.
• Also on Tuesday, the Council for the Procurement of Health, Education, and Social Services meets at 1:30 pm in room 241 of the House Office Building at 6 Bladen Street in Annapolis. The meeting subject is state procurement.
• Later on Tuesday, the Maryland Health Care Commission Center for Information Services and Analysis will be holding its third meeting of the Performance Practitioner Measurement Work Group from 3pm to 5pm at the Maryland Health Care Commission building at 4160 Patterson Avenue in Baltimore.
• On Wednesday, July 31, the Capital Debt Affordability Committee gathers at 1:30pm in the Assembly Room (114-116) at the Goldstein Treasury Building on 80 Calvert Street in Annapolis to conduct a legislative review and to examine the size and condition of tax-supported debt.
• Later on Wednesday, the Workgroup on Access to Habilitative Services Benefits meets from 2pm-4pm in the Maryland Insurance Administration Hearing Room on the 24th floor of St. Paul Plaza at 200 St. Paul Place in Baltimore. 
• On Friday, August 2, BLS will issue its Employment Situation report for July.

Maryland Ranks 41st in Total Taxes as a Percent of Personal Income

The Census Bureau recently released its State and Local Government Finance Summary for 2011, which reports the findings from its annual survey on the revenues, expenditures, debt, and assets of state and local governments. The 2011 figures showed a historic high of $3.4 trillion in state and local government revenues, which was a full 8.4 percent increase over 2010. Governments also increased their spending in aggregate by 1.5 percent, reaching $3.2 trillion that year. 

At the state level, Maryland collected over $29 billion in state and local taxes, ranking 14th highest among the states. Maryland's aggregate total for state and local governments ranked 8th in personal income revenue, 13th in corporate income tax revenue, 17th for property tax receipts, and 25th for general sales taxes.

Roughly 36.5 percent of tax revenue in Maryland came from income taxes in 2011, which earned it a ranking of 2nd most reliant on the personal income tax for revenue (Oregon state and local governments ranked 1st, at 39 percent). This partly reflects state's practice of allowing local governments to share in the income tax, mainly for the purpose of funding local schools. Many argue that heavy reliance on the income tax is a fairer system of collecting government revenue, as it is a less regressive tax source that more accurately reflects an individual's ability to pay for the general welfare.

Also, Maryland's relatively high total of personal income taxes collective should be rather unsurprising when considering the state's wealth. Maryland boasts the fifth highest personal income per capita among the states ($49,424). 

When ranked as a percent of personal income, Maryland's position moves substantially down the list. According to the Center on Budget and Policy Priorities' tabulations of the Census report data, the state ranked 39th highest for state and local personal income tax as a percent of personal income and 45th for corporate income tax and property tax as a percent of personal income. Overall for total taxes as a percent of personal income, Maryland ranked near the bottom at 41st place among the states.

The Week Ahead

Last week we blogged about sales tax modernization strategies for Maryland and posted about the realities of personal budgeting for low-wage workers in the state.

The Bureau of Labor Statistics issued a number of economic news releases last week. Its earnings report shows that the seasonally adjusted median weekly earnings in the second quarter of 2013 were $775, up a minor $6 from the previous quarter. The Employment Cost Index figures for the three-month period ending in March of this year indicate overall compensation levels for civilian workers were steady from the previous period, with wages increasing by 0.5 percent and benefit costs decreasing 0.1 percent. The Consumer Price Index report for June lists the CPI as having increased a half of a percent last month, with the increases in gas prices accounting for the majority of this change.The index for non-food and non-energy goods increased by 0.2 percent, staying level with the figures for May. The preliminary multifactor productivity trends analysis (which measures the change in output per unit of combined capital and labor input) for 2012 states that productivity in the private nonfarm business sector increased at a 0.9 percent annual rate last year, which is the same annual rate the nation experienced from 1987 to 2012. The unemployment numbers reported the state's unemployment rate increased by 0.3 percentage points in June to 7 percent. The private sector added over 6,000 jobs last month, reaching the highest employment level for the sector since June of 2008. Government jobs decreased by nearly 2,000 jobs during that period. Maryland's unemployment levels still remain below the national average of 7.6 percent.

Also last week, the Maryland State Retirement Retirement and Pension System published a press release proclaiming their investment portfolio earned a 10.6 percent return last fiscal year. This achievement went well beyond the state's target of 7.75 percent.

For the week of July 22nd through the 28th:

• On Wednesday, July 24th, the Board of Public Works will hold a general meeting at 10am in the Assembly Room of the Goldstein Treasury Building at 80 Calvert Street in Annapolis.
• Later on Wednesday,  Progressive Maryland, Common Cause, and Delegate Mary Washington are hosting a joint event, screening Bill Moyers' acclaimed film "The United States of ALEC" at the Baltimore County Public Library at 320 York Road in Towson. The documentary details the activities of the American Legislative Exchange Council, a group of corporate lobbyists who author "model legislation" that attacks labor rights and promoting corporate interests and privatization, to be used by member legislators in their home states. Following the screening, there will be a discussion. Directions and RSVP information is available here.
• On Thursday, July 25 the Special Joint Committee on Public Safety and Security in State and Local Correctional Facilities will conduct a site visit to the Baltimore City Detention Center at 10am.
• Later on Thursday, the Maryland Medicaid Advisory Committee will meet from 1pm to 3pm at the Department of Health and Mental Hygiene's lobby level conference room L-3 at 201 W. Preston Street in Baltimore. The agenda is to be announced.

McD's Budget Tool Not Adequate for MD Cost of Living

Just how hard is it to set up a budget on fast food wages? That question is currently up for debate in the blogosphere, as Visa's "Practical Money Skills Budget Journal" for McDonald's employees, which they created a few years ago, caused quite the commotion online this week. 

Visa intends for the tool to help fast food employees plan their finances, understand their expenses, and develop savings and spending goals for the future. To aid in this effort, it provides a sample monthly budget that includes a net income of $2,060 for one childless earner working two jobs and lists estimates for various major expense categories. 

Considering the sample personal finance figures, many critics have taken issue with the suggestion by Visa that the worker would be able hold down two full-time, low-wage jobs to be able to earn the after tax income of $2,060 in the budget ($1,105 from one job and $955 from another). The budget's sample expenses also come under fire as being gross underestimates for the real cost of living faced by low-wage workers in most of modern America.

How Realistic is this sample's suggestion for Maryland fast food workers?

Income:
The median earnings for a Maryland fast food cook is $8.91 per hour, according to the Bureau of Labor Statistics (BLS) Occupational Employment Statistics data for 2012. If the sample worker had a minimum wage job as their second source of income, the worker would need to work a total of 75.5 hours per week between their two jobs (37 hours per week at the fast food restaurant and 38.5 hours at their other gig) to have an after-tax income of $2,060. While this may be possible to achieve, data suggests that only around five percent of Americans hold multiple jobs, so this employment situation would fall far outside the norm.

Expenses:

Unstable shift scheduling and transportation challenges also present significant hurdles for low-wage workers trying to find a second job.

The proposed sample budget's expenses underestimate most of the average living costs for a worker with an after-tax income between $20,000 and $29,000. Data from BLS's Consumer Expenditure Survey and the American Community Survey data on median rent costs suggests that the average Maryland fast food worker bringing home an after-tax income of $24,720 would have monthly expenses in these categories totaling at least $2,225, which exceeds their monthly earnings in this example by $165-- and this figure does not even include the typical spending on clothes, housekeeping supplies, prescription drugs and other medical costs, entertainment, alcohol, or tobacco. 

The sample budget also assumes employees do not have children (even though roughly half of minimum wage workers are over the age of 25).

McDonald's does offer a low-cost health insurance plan to its workers, but this bare-bones plan, which is capped at a paltry $2,000 worth of coverage annually, still costs around $60 per month, a full three times the cost suggested by Visa. 

Beyond the sample budget figures, the resource does offer personal finance tips that could aid the worker in reducing their monthly expenses below the average for their income range by using public transportation, avoiding debt, and planning expenses in advance whenever possible. However, Visa also uses the document to promote its prepaid debit card products to workers, and this arguably presents a substantial conflict of interest.

Writers at the Washington Post, Business Insider, and others defend Visa's worksheet, arguing that it is simply a sample for what a worker's budget may look like, and for some parts of America, these estimated expenses may be accurate given their regional cost of living. However, the cost of living in more expensive metropolitan areas across the country demands that workers earn higher wages to support a meager standard of living on a parsimonious budget that apparently is difficult for even a global financial giant to map out in a simple worksheet.

Sales Tax Modernization for Maryland

Last week, the Center on Budget and Policy Priorities published a new report, "Four Steps to Moving State Sales Taxes Into the 21st Century," that urges states to modernize their sales taxes in order to broaden their tax bases and increase revenues. 

The Center suggests states adopt four general tactics to achieve this goal:
     1.   Tax more services. 
When the state established a sales tax in 1947, goods made up 60 percent of household receipts. Today, goods weigh far less in the share of total consumption; households spend almost 68 percent of their budgets on services, most of which are not subject to the 6 percent state sales tax. 

Source: Center on Budget and Policy Priorities

According to an earlier report by the Center, if Maryland taxed all household purchases of services other than health care, housing, education, legal, banking, public transit, insurance, and funeral services at the same rates they tax tangible goods, the total revenue yield could amount to more than $2 billion per year. 

In the 2012 session, Delegates Hixson and Gilchrist introduced HB1051, which would have expanded the definition of "taxable service" to include personal services such as motor vehicle maintenance and repairs, parking, barber or beauty services, tanning,saunas, and shoe repair. It would have also taxed several business-to-business services, such as  tax preparation, business brokerage, and personnel supply services. MBTPI generally supported the bill's goal of recalibrating the sales tax system to cover a broader range of services but advised that the bill be amended to exempt from taxation 

services that are principally purchased by businesses. However, this legislation did not make it out of committee, so new action in future sessions would be required to broaden the tax base in this way.

     2.   Tax tangible goods purchased online.

Online purchases make up a significant portion of Maryland consumer spending, and very few of these transactions are taxed. According to a study by the state Comptroller, "In 2010, Maryland lost an estimated $198.4 million in sales and use tax revenue from the sale of tangible goods by remote sellers, which represents about 5.4 percent of gross sales tax collections." 

Federal legislation has been introduced that would enable all states to require online retailers such as Amazon and Ebay to collect sales tax on online purchases. The bill known as the "Marketplace Fairness Act" passed the Senate in May but awaits an uphill battle in the Republican-controlled House. In the meantime, several states have passed their own legislation to reach this end, most notably New York with its so-called "Amazon law." Maryland's legislature has so far yielded to Congress to address the issue at the national level. Maryland's 2013 Transportation Bill dedicates some of the increase in sales tax that would result from a federal rule change to state transportation projects, but if Congress fails to pass new law, the state will raise its gas taxes further to meet its financial needs for these projects.

     3.   Tax digital downloads.

Maryland does not currently tax online downloads. The Comptroller's sales tax study estimated the foregone tax revenue from the sale of digital goods (such as online downloads of software, music, ebooks, and movies) amounts to roughly $5 million per year if these sales were taxed at a rate of 6 percent. The Governor proposed an initiative in the 2012 session that would have created a tax on these downloads, but it was rejected by the legislature. This could be an additional source of state revenue in the future. 

     4.   Eliminate the online hotel tax loophole.

Online travel agencies often do not collect the full value of hotel taxes owed to the state. A loophole allows these websites to apply the tax on the wholesale rate the travel firms pay the hotels rather than the higher retail rate that would be charged to a consumer who booked a room directly with the hotel. This difference amounts to at least $5 million foregone state revenue. No major legislation at the state level has been proposed to amend this practice.

Sales and use taxes are second only to the income tax as Maryland's largest sources of income and accounted for 28 percent of state revenue for fiscal year 2012. While sales taxes--like most consumption taxes-- tend to be regressive in nature, they are a more robust source of revenue for state governments than income taxes, declining less in periods of recession. 

Reforms that could enlarge and strengthen this key source of state dollars and bring sales tax into the 21st Century should be considered. However, the state should be sure to accompany any substantial broadening of the tax base with a robustly progressive income tax system and/or accompanying tax credits to help aid lower-income Marylanders who might be disproportionately affected by increases to their consumption tax burdens.

The Week Ahead

Last week, the state of Maryland's AAA credit rating was officially re-certified by the nation's three major bond rating agencies. This recognition of the stability of Maryland's financial affairs is important because it results in lower interest rates for debt-financed public projects, lowering borrowing costs and thus saving tax dollars. More detailed coverage of this story can be found here by Maryland Reporter.

Also last week,The Atlantic posted two articles about the effects of the sequester on the the people and policies of America. One focuses on how federal budget cuts have stalled action in the legal system, and the other overviews the harsh impact of sequestration on the poor.

In other recent news, the Economic Policy Institute (EPI) has updated its Family Budget Calculator to reflect this year's economic conditions faced by families living in 615 communities around America. EPI's tool calculates the family income necessary for a "secure yet modest living standard" in those communities from its estimates of local costs for housing, transportation, child care, food, health care, taxes, and other living necessities. The Maryland communities included in EPI's analysis are Baltimore-Townson, Columbia City, Cumberland, Hagerstown, Philadelphia-Camden-Wilmington, Salisbury, Somerset County, Washington-Arlington-Alexandria, and a general "rural" Maryland estimate. 

On a final note of economic news, the Tax Policy Center has launched its inaugural "State Economic Monitor: Quarterly Appraisal of State Economic Conditions" report as part of its state and local finance initiative. It provides an overview of different economic factors such as employment levels, government finance, housing, and economic growth and displays how states compare relative to one another in these areas. Overall, the report puts Maryland in the middle of the pack in terms of overall economic growth, employment growth, and year-over-year change in house prices, but the state ranked far lower in the category of private sector real wage growth.


For the week of July 15th through the 21st:

• On Tuesday, July 16th, the Bureau of Labor Statistics (BLS) will publish its Consumer Price Index figures for June 2013 at 8:30am. Also at that time, BLS will release its Real Earnings report for last month.
• On Thursday, July 18th, the Joint Committee on Children, Youth, & Families meets at 10am in room 130 of the House Office Building on 6 Bladen Street in Annapolis to review the "Race to the Top" early learning grant opportunities.
• Later on Thursday, the Joint Committee on Gaming Oversight has a briefing  at 1pm at 3 West in the Miller Office Building at 11 Bladen Street in Annapolis. There will be an update by the State Lottery and Gaming Control Agency on the current status of the state's gambling program.
• Also at 1pm on Thursday, the Maryland Health Care Commission meets in conference room 100 in their building on 4160 Patterson Avenue in Baltimore (agenda to be announced).
• On Friday, July 19th, BLS will post its monthly Regional and State Employment numbers for June 2013 at 10am.
• Later on Friday, the Maryland Medicaid Advisory Committee meets from 1pm to 3pm in the Department of Health and Mental Hygiene's lobby-level conference room L-3 at 201 W. Preston Street in Baltimore (agenda to be announced).

The Week Ahead

Last week on the blog, we celebrated the start of the new state fiscal year by featuring the highlights of this year's budget. We also marked Independence Day with Stateline's infographic, "Fourth of July, By The Numbers."

On Tuesday of last week, the Bureau of Labor Statistics (BLS) released its Metropolitan Area Employment report for May. Maryland's overall civilian unemployment rate was 6.9 percent, up from 6.4 percent in April and 6.7 percent the same time last year. The metropolitan areas of Baltimore-Towson, Cumberland, and Salisbury all saw small increases in their unemployment rates, while Hagerstown-Martinsburg's employment figures remained constant since April. 

Last week BLS also published its Employment Situation figures for June, which reported that the total nonfarm employment increased by 195,000 last month, keeping the unemployment rate at 7.6 percent. According to BLS, the overall employment situation has changed very little since February.

For the week of July 8th through 14th:

• On Tuesday, July 9th, the Maryland Pesticide Reporting and Information Work Group meets from 9am to noon in room 250 of the House Office Building at 6 Bladen Street in Annapolis. They will overview the current state pesticide laws and regulations.
• Also on Tuesday, BLS will publish its Job Openings and Labor Turnover Survey for May at 10am.
• Later on Tuesday, the Community Services Reimbursement Rate Commission has their regular bi-monthly meeting from 6pm to 8pm in the basement conference room of the Mental Hygiene Administration Building at 55 Wade Avene in Catonsville.
• On Wednesday, July 10, the Maryland Underground Facilities Damage Prevention Authority meets at 9am in the lower level conference room at One Call Center, 7223 Parkway Drive in Hanover.
• On Friday, July 12, BLS will issue its Producer Price Index numbers for June at 8:30am.

Happy New Year 2014!

On Monday, July 1 Maryland began its fiscal year 2014. Last week, we reviewed the fiscal year 2013 budget that we rang out with the old year at midnight on June 30. The new budget totals $36.7 billion. That’s 3% higher than last year. After adjusting for inflation and population growth, the budget grows only 0.5 percent . On an inflation-adjusted, per person basis, this budget is below the budget in place three years ago in fiscal 2011.

Most of the money is stated for education, healthcare, transportation and public safety. These four slices make up over three-quarters of the total. Most of the budget growth over the current year will be in health and education programs.

The budget is balanced, with a surplus if over $1 billion projected to be available at the end of the year, one year from today (counting both general fund balances and the state’s “Rainy Day Fund”).

4th of July, By the Numbers

The folks at Stateline put up this neat infographic about the Fourth of July.

Click to Enlarge

Stateline is a nonpartisan, nonprofit news service of the Pew Charitable Trusts that provides daily reporting and analysis on trends in state policy.

So what are some of the figures for Maryland?

• In 1770, there were roughly 200,000 Marylanders (see pg 16 of this Census PDF). Today there are 5.8 million.
• Maryland isn't a big cattle producing state (at least compared to Texas), so the best figure I could find combined our beef production with Delaware's for a total of 3.8 million pounds of beef production in May 2013. This was just 0.6 percent of what TX produced that same month!
• Maryland ranked much higher on broiler chicken production. In 2011 we produced 311.1 million broiler chickens worth $724.9 million for 7th place.
• However, Maryland only had 4,000 acres of potatoes as of 2006. Idaho is hard to beat on this front.
• AAA Mid-Atlantic estimates 798,400 Marylanders will travel over the holiday, down slightly from last year.
• And speaking of the calendar, five months after the signing of the Declaration of Independence the Continental Congress moved to Baltimore, meeting in the Henry Fite House on the site now occupied by 1st Mariner Arena (the house was destroyed in the Great Baltimore Fire of 1904). 

The Week Ahead

Last week on the blog, we celebrated the end of the state fiscal year by reviewing last year's budgetary process. The new fiscal year for the state begins today, and the state's gas tax and toll increases are now in effect.

On Thursday of last week, the Bureau of Labor Statistics released their employment and wage figures for the fourth quarter of 2012, covering the nation's 329 largest counties. Each of the eight Maryland counties included in the report saw employment growth during that period, with Baltimore City seeing the most growth (a 6.1 percent increase over the quarter). A summary of the report can be found here.  

A few weeks ago, Neil Bergsman presented to the Community Foundation of the Eastern Shore about the effects of sequestration on that region of the state. Coverage from WMDT of that presentation can be found here.

There are few events this week due to the July 4th holiday. Have a happy and safe Independence Day.

For the week of July 1st through 7th:

• On Monday, July 1st (the first day of fiscal year 2014), the Task Force to Study Economic Development and Apprenticeships hosts an organizational meeting at 3pm in room 230 of the House Office Building at 6 Bladen Street in Annapolis. They will also provide a background on current apprenticeship programs.
• On Tuesday, July 2nd, the Bureau of Labor Statistics will release its Metropolitan Area Employment report for May at 10am.
• On Wednesday, July 3rd, the Board of Public Works meets at 10am in the Governor's Reception Room on the second floor of the State House in Annapolis. The meeting's agenda can be found here. It includes approval for an upcoming $475 million sale of state bonds; $6 million in local library projects; and a $71 million 5-year contract for lottery advertising, marketing and related services. 
• Thursday July 4th is Independence Day. Most government offices are closed. Have fun and be safe.
• On Friday, July 5th, the BLS will publish its Employment Situation figures for June. MBPTI's offices will be closed on Friday.