Not the budget: Other legislation of note

The 2013 regular session of the legislature concluded on midnight Monday. During the course of the session, the Maryland Budget and Tax Policy Institute took positions on a variety of bills related to Maryland’s finances and their effects on low-income and other vulnerable Marylanders.

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Here is the run-down:

Transportation

The legislature enacted a much-needed transportation bill (House Bill (HB) 1515) that gradually increases taxes on gasoline to replenish the state’s transportation fund, allowing Maryland to improve roads, bridges, transit systems, and bicycle and pedestrian passageways.

MBTPI supported this legislation as a responsible compromise. 

However, there are two concerns we have about the bill. One we discussed in yesterday’s blog. The bill calls for a portion of the sales tax to be diverted from general fund purposes (like education, healthcare, and police) to transportation once Congress allows states to collect taxes on internet and catalog purchases.

The other concern we had is that the gas tax places a disproportionate cost on low-income working families. To address this regressive effect, we supported bills to expand Maryland’s earned income tax credit (HB 845/Senate Bill (SB) 703).  Unfortunately, these bills died in committee.

Homeless Youth

MBTPI supported HB 823/SB 764 to create a task force to find solutions for the growing problem of unaccompanied homeless youth.  The legislature enacted these bills. MBTPI will be following the task force’s work closely. We expect the task force to develop creative and effective initiatives to help these teens and young adults.

Making Welfare to Work Workable

MBTPI supported and the legislature enacted SB 686 to establish an earned income disregard pilot program. Currently, Temporary Cash Assistance (TCA) recipients lose 60 cents in benefits for every dollar they earn when they join the workforce, even though those exiting TCA on average earn less than the federal poverty rate. SB 686 creates a pilot program in a rural county to research the impact of reducing the earned income disregard when recipients initially enter the workforce. The pilot program would ease the transition from TCA to self-sufficiency by disregarding (for the purposes of TCA eligibility) 100 percent of their earned income for the first three months of employment, disregarding 60 percent of their earned income for the following six months, and disregarding 40 percent (the current standard) afterwards. A graduated disregard would help TCA parents succeed when they enter the workforce, encouraging personal responsibility and helping families achieve independence. The pilot program will allow this policy to be tested and evaluated.

Tomorrow we'll look at some of the bills we supported that didn't make it through the legislative process.

The Week Ahead (Sine Die Edition)

Today is Sine Die, the last day of the 2013 legislative session. It's been a busy session, between passing the budget, raising the gas tax, enacting gun control, and repealing the death penalty, among other issues--but with less drama than last year. Look for our in-depth review of the session on our blog later this week.

Last week we blogged about the legislature missing the budget target date, the supplemental budget introduced by Governor O'Malley, national employment trends in March, and the budget conference committee report.

For the week of April 8th to April 14th:

• Monday being the last day of the 2013 session, the legislature is scheduled to rush through its remaining workload, including bills on: speed cameras, medical marijuana, pit bulls, and driving while using a mobile device.
• The Commission on State Debt, which advises the Board of Public Works on the property tax rate, also meets Monday, April 8th at 2pm in the Treasury Building, Annapolis. 
• The Advisory Council for Alternative Response meets on Tuesday, April 9th at 1pm in the Department of Human Resources, 311 West Saratoga Street, Baltimore. 
• The Bureau of Labor Statistics releases metropolitan level employment figures for February on Wednesday, April 10th. 
• The Health Services Cost Review Commission holds their monthly meeting at 1pm on Wednesday, April 10th at 4160 Patterson Avenue, Baltimore. 
• The Census Bureau releases the 2012 edition of their Annual Survey of State Government Tax Collections on Thursday, April 11th.
• The Maryland Health Insurance Plan Board of Directors holds its monthly meeting at 9am on Thursday, April 11th at 201 E. Baltimore Street, Baltimore.

What happened to Maryland's budget deficit?

For the first time in six years, Maryland enters a legislative session without an immediate budget crisis. The latest projections show that Maryland's revenues will be sufficient to cover "baseline" expenditures, through the next fiscal year: that is until June 30, 2014.

Over the past several years at this point in the budget cycle, Maryland faced projected shortfalls in the one to two billion dollar range. The shortfalls were resolved each year through a combination of budget cuts, transfers from special funds to the general funds, and revenue increases (including taxes, fees, and expanded gambling).

So why is this year different?

Part of the difference is the continuing economic recovery. The recovery is weak and sporadic. Maryland has not yet recovered all of the jobs its lost in the recession. Nevertheless, the recovery has been sufficient to halt the annual decline of state revenues and also to generate some modest growth.

Another part of what makes this year different is good luck. For example, the dynamics of the national credit market have helped the state receive "premium" payments from investors when it sells bonds, and this reduces the growth in payments for annual debt service.

Let's give credit where credit is due: the improved outlook for Maryland's general fund is also due to good planning and management on the part of state officials. In 2010 the legislature set a goal of resolving the state's structural deficit over three years (the "structural deficit" is the ongoing gap between revenues received and expenditures incurred, excluding one-time and temporary effects).

The Governor signed on to the legislature's plan. The state made some difficult decisions to hold back expenditure growth and raise revenues, including raising taxes on upper-income households, alcohol, and cigarettes. And it worked.

In a week, the Governor will submit his proposed budget for the legislature's consideration. We expect it to have some significant cuts and some modest initiatives, but nothing too dramatic.

A word of warning though: there are three threats that could mess up Maryland's finances before the legislative session concludes in April.

• Congress' next actions to reduce the federal deficit.
• Maryland's response to the need to fund its transportation program.
• The remaining "structural deficit."

We'll discuss each of these threats in upcoming blogs.

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

Last week we unveiled our Doomsday Clock on our website and blog, counting down the days left for the legislature to fix Maryland's budget.  Hopefully, the General Assembly moves much sooner than that, as counties, colleges, school districts and other entities reliant on state aid need time to plan their own budgets.  We also blogged the truth about taxes, and analyzed the latest Maryland employment figures.

Monday, April 23rd

• We are releasing an updated and expanded version of our brief on the doomsday budget today. The updates reflect the most recent analysis of the constitutionality of some of the cuts it contains.  We have also added an analysis what will happen to the general fund balance if the doomsday budget goes into effect on July 1st.
• Health Care Reform Delivery Subcommittee of the Health Care Reform Coordinating Commission will hold their regular meeting.  11am at the UMD School of Pharmacy, Baltimore.

Tuesday, April 24th

• The Governor, Speaker of the House, and President of the Senate will meet over breakfast to discuss a compromise revenue package as a preliminary step toward calling a special session.
• Community Services Reimbursement Rate Commission holds their regular bimonthly meeting.  6pm at the Maryland Association of Community Services, 8835 Columbia 100 Parkway, Unit P, Columbia.

 Thursday, April 26th

• Task Force on Industrial Job Creation board meets at the Baltimore Operations office of General Motors.  10am at 10301 Philadelphia Rd, Baltimore.
• Medicaid Advisory Committee meets at the State Center in Baltimore, subject to be announced.  1pm in conference room L-3, 201 W. Preston St., Baltimore.