2011 General Assembly Session Recap

The 2011 Maryland General Assembly session ended at 12 a.m. on Tuesday, April 12. During the 90-day session, the Maryland Chamber took positions on 132 of the 2,370 bills and resolutions introduced. Below is a recap of important business issues considered during the session. For more information, visit www.mdchamber.org. To download a printable pdf document of this recap, click here.

State Budget
The Governor and General Assembly made progress in reducing the state’s structural budget deficit, but will face tougher decisions in the years ahead to close the remaining annual gap of over $1 billion. The total state budget for fiscal year 2012 will grow by nearly 3 percent to $34.1 billion. Pension and health insurance benefits for state employees were restructured in order to produce significant long-term savings. However, the continued costs to the state of funding a defined benefit pension for employees and teachers will be challenging. Medicaid expenditures will grow by 14 percent to $7 billion, and are partly funded through a $250 million charge to hospitals that will further inflate health insurance costs. Over $300 million in shifts from special funds and the Transportation Trust Fund are again made to support general fund spending. The uncertainty of federal funds and a small ($50 million) projected year-end fund balance will be risk factors for the budget.

Business Taxes
Pressure to raise taxes remained strong due to the state’s budget gap. However, the Maryland Chamber again successfully led businesses in opposition to priority bills (SB 305/HB 731) that would have implemented a corporate income tax system of unitary combined reporting and jeopardized single sales factor apportionment for manufacturers.
Other successes included:

• Defeating legislation (SB 798/HB 1070) that would have extended the 6.25 percent individual income tax bracket on high wage earners.
• Passage of legislation (HB 463) to allow small businesses with real property tax bills of up to $100,000 to pay their taxes in semiannual installments, starting in 2012.
• Defeating changes to the corporate income tax that would have imposed a throwback rule for apportionment (SB 800) and an alternative minimum assessment structured as a gross receipts tax (SB 979)

Legislation was passed over the Maryland Chamber’s objection (HB 632) that will require every Maryland employer to annually provide an electronic or written notice to employees who may be eligible for the federal or state earned income tax credit. The Chamber was successful in amending the bill to require the Comptroller to annually mail notifications to employers.

Health Care
Major legislation (SB 182/HB 166) was enacted with the Chamber’s priority support that will establish the governing structure and powers of a Health Benefit Exchange. Important issues regarding the Exchange will be studied during 2011 and addressed by the General Assembly next session concerning powers, fee setting authority, marketing, and benefits offered by the Exchange. The Maryland Chamber also had success with the following state health care legislation this session:

• Passage of legislation (HB 156) to allow sole proprietors that are currently participating in the small group health insurance plan to continue their participation through December 31, 2013.
• Defeating legislation (SB 579/HB 815) that would have placed unnecessary limits on the ability of employers to use copayments in health benefit plans.
• Defeating new employer health benefit mandates that would have required additional coverage for individuals with autism spectrum disorders (SB 759/HB 783), physical therapy services (SB 603/HB 446), habilitation services (SB 312/HB 811), and bleeding disorders (SB 879/HB 949).

Economic Development
The Maryland Chamber successfully led businesses in opposition to legislation (HB 620) that would have terminated all job creation tax credits, subject to a sunset review process. The bill would have compromised the effectiveness of tax credits that are vital to job creation in Maryland by subjecting them to termination and review every 5 years. Other successes included:

• Passage of legislation (HB 587) to enable more companies to qualify for the biotechnology tax credit for the next 2 years.
• Passage of the Invest Maryland legislation (HB 173) that will stimulate job growth and economic development by allowing the state to borrow up to $100 million from future tax receipts to generate around $70 million to $75 million in venture capital to invest in emerging Maryland technology companies.

Workplace Regulation
The business community worked to defeat legislation (SB 716/HB 988) that would have increased Maryland's minimum wage to nearly $10 an hour by 2013 and indexed it to the consumer price index beginning in 2014. This legislation would have created significant financial hardship for employers in the midst of a recession. Unfortunately, momentum continues to build, as evidenced by the Senate Majority Leader’s sponsorship of this year’s bill. This issue will be back in 2012.

The Maryland General Assembly passed legislation (SB 132/HB 87) that will prohibit employers from using an applicant’s credit report or credit history in determining whether to deny employment, discharge the employee, or determine compensation. The Maryland Chamber opposed the legislation and was active in helping to ensure amendments were adopted to make the bill less onerous on employers. Other successes included:

• Helping defeat legislation (HB 907) that would have prohibited employers from using an individual’s criminal history when making personnel decisions.
• Successfully opposing legislation (HB 1136) that would have mandated that employers pay employees their normal compensation, less any government per diem, when employees are called to jury duty.

Transportation Funding
The Maryland Chamber and its business allies supported legislation (SB 714/HB 1001) that would have created a secure firewall to protect funding designated for the Transportation Trust Fund and substantially increased transportation funding. Transportation funding is an investment in Maryland’s economic development and quality of life. The Maryland General Assembly did not move forward with the legislation, but the issue will return in future sessions.

Civil Liability
Several bills were considered that would have increased the exposure of businesses to lawsuits. The Maryland Chamber and other business groups helped to defeat legislation (HB 729) that would have prohibited the use of class action waivers in written agreements. This bill would have severely limited the usefulness of arbitration agreements and resulted in more disputes being litigated. Other important issues included:

• Defeating legislation (HB 873) that would have exempted litigation funding companies from the Maryland's consumer lending laws and made it more difficult to settle litigation.
• Defeating legislation (SB 483/HB 574) that would have liberalized the standard for the awarding of punitive damages.
• Defending contributory negligence – Although HB 1129 failed in its attempt to codify the common law standard of contributory negligence, the bill provided a forum to protest against the efforts of an activist judiciary that was considering adoption of a more liberal tort liability standard of comparative fault.

Energy & Environment
The Maryland Chamber successfully opposed legislation (SB 846/HB 1107) to limit new development relying on septic systems. The Maryland Chamber opposed the bill as a priority, because it would have harmed economic development opportunities in rural jurisdictions. The issue will be studied this summer. Additional successes include:

• Successfully opposing legislation (SB 861/HB 1054) that would have mandated utilities to enter into long-term contracts with offshore wind generators. The Chamber opposed the bill because it would be costly to all customers. Lawmakers from key committees will study the issue this summer.
• Helping defeat legislation (SB 632/HB 852) that would have created a temporary moratorium on natural gas drilling in Western Maryland’s Marcellus Shale. The legislation passed the House, but failed to pass the Senate. The Maryland Chamber believes that, by proceeding responsibly, Maryland has the opportunity to play a pivotal role in expanding America’s next generation of domestic clean energy, while boosting Western Maryland’s economy.

Business Campaign Expenditures
Legislation was enacted (HB 93) with the Chamber’s support to establish a system of reporting independent campaign expenditures. The bill will require any person, business entity, labor organization or other organization that makes independent expenditures of over $10,000 during an election cycle that promote a candidate or ballot issue to file expense reports with the State Board of Elections at the same times as campaign finance entities.

Special Session Looming
A special session will be held this fall to deal with congressional redistricting. Unfortunately, it looks like redistricting may not be the only topic on the special session agenda. There is growing talk that transportation funding and consideration of tax increases will also be discussed this fall. The Maryland Chamber of Commerce strongly believes that a special session is not the proper time to deal with important issues like these.

Remember the 2007 special session? A sales tax on computer services was enacted, despite the fact that computer service companies were given no opportunity to voice their opposition during a public hearing. The House Ways & Means Committee held a six-hour marathon hearing on 36 tax bills … on a Saturday. Bills were considered with little advance notice, and sometimes with no fiscal notes. The General Assembly enacted $1.4 billion in new taxes, with Maryland businesses paying about $800 million.

We cannot afford a replay of the 2007 special session. Transportation funding and tax issues should be considered in a more transparent way, allowing for proper public input, not under the constraints of a special session this fall.