FROM THE HALLS | A Maryland business legislative update | November 2019

In this issue…


FROM THE HALLS


MDCC MEETING WITH MDE SECRETARY BEN GRUMBLES AND SENIOR STAFF

On Friday, November 15, the Maryland Chamber of Commerce Energy & Environment Policy Committee facilitated a meeting with Maryland Secretary of Environment Ben Grumbles and members of his leadership team representing air, land and water. The meeting presented an opportunity for MDE leadership to share with MDCC membership the agency’s 2020 legislative and departmental priorities, as well as provide updates on other ongoing regulatory and policy areas.

VIEW THE MEETING NOTES

Click the above button to find a summary of key points raised during the discussion.


STATE UPDATES


KIRWAN COMMISSION ISSUES FINAL APPROVAL FOR EDUCATION REFORM PACKAGE

On Thursday, November 21, members of the Commission on Innovation & Excellence in Education, better known as the Kirwan Commission, voted 19-3 in favor of putting forward a 10-year, multi-billion-dollar education reform package and a new state funding formula to support it. The recommendations approved by the Commission, including the phasing-in of reforms and a proposed funding formula, will now move forward to the General Assembly for consideration when Session begins on January 8, 2020.

Under the plan approved by the Commission, state education funding would incrementally increase over the next decade, with an additional $2.77 billion in state aid to schools by 2030. County budgets are also expected to increase to a cumulative $1.23 billion annually. Still, the Commission was not tasked with coming up with a plan to generate the new revenue needed to pay for its recommendations.

Three members of the Commission, including Maryland Budget Secretary David Brinkley, voted against final approval. In his remarks, Brinkley cited his concerns about long-term funding for the package, including the absence of reforms to guide state spending in the event of economic downturn. The other “no” votes came from Senator Mary Beth Carozza (R-Lower Shore) and Queen Anne’s County Commissioner Jack N. Wilson Jr. (R). Three members of the Commission were absent and did not participate in the vote.

After the vote, Governor Hogan issued a statement reiterating his concern that the Commission had not identified funding sources to support the proposed reforms.

When legislators return to Annapolis in January, they will be tasked with identifying revenue sources to support the work and recommendations put forward by the Commission. Delegate Maggie McIntosh (D-Baltimore City), Chairwoman of the House Appropriations Committee, has repeatedly said that big increases may not be necessary. She has previously cited a bill passed last year to tax online retail sales that has generated more money than anticipated, as well as the “education lockbox” passed in 2018 that steers state casino revenue to education spending. Following the vote, McIntosh was quoted as saying that “what was adopted in there today may not require much more new revenue if our economy stays good and healthy.”

Previously, the legalization of recreational marijuana was put forward as a potential new revenue source. Though it may come up in the future, leadership has acknowledged that the legalization of recreational marijuana is not likely to gain traction during the 2020 Session. In fact, a legislative workgroup studying the possibility announced earlier this month that it would not recommend that a bill move forward this Session. Instead, the panel is expected to finalize its recommendations by the end of the year, including taking intermediate steps to collect data on health, underage use and traffic issues.

Other groups have called for sweeping changes to Maryland’s tax code to fund education reform plans. Meanwhile, the Maryland Public Policy Institute estimates that the real cost of the Kirwan education reforms will approach $32 billion by 2030.

Nevertheless, it is abundantly clear that Maryland’s 2020 Legislative Session will provide the forum for debate over recommendations to overhaul the state’s education system. Featured prominently in that debate will be any number of plans related to how the state and local jurisdictions will fund the implementation of said proposals.

The Maryland Chamber of Commerce supports adequate and reasonable funding for all our students and educators. As funding proposals are developed, the Chamber urges policymakers and other stakeholders to ensure that there is a dedicated source of funding from which to implement education reform recommendations. In addition, the Chamber advocates that funding proposals be crafted in such a way so that they do not unintentionally or unduly challenge economic growth and development in the state. The Chamber stands ready to work with all stakeholders to identify viable funding solutions that support a robust education system, but do not unintentionally create barriers for the employer community, which has long demonstrated its commitment to developing the next-generation workforce.


SEIU LOCAL 500 RELEASES REPORT CALLING FOR BUSINESS TAX OVERHAUL TO FUND KIRWAN

SEIU Local 500, the labor union representing Maryland workers at colleges, universities, public schools and nonprofits, recently released a report titled Funding Our Future, which calls for sweeping changes to Maryland’s tax code in order to pay for the recommendations of the Kirwan Commission to overhaul the state’s education system. Specifically, the report outlines changes to Maryland’s corporate and income tax structures that would result in higher rates for the wealthy and businesses which, they maintain, could result in an additional $1.6 billion in state revenue.

Authors of the report make the following assertions:

The report also calls for the elimination of subsidies and tax breaks for corporations and names the following programs specifically: (1) Enterprise Zone Tax Credit, (2) Biotechnology Investment Incentive Tax Credit, (3) Businesses that Create New Jobs Tax Credit, (4) One Maryland Economic Development Tax Credit.

In order to address what the report characterizes as tax loopholes and inequities, it issues the following policy recommendations:

Following the release of the report, the Maryland Chamber of Commerce, along with NFIB and the Maryland Retailers Association, issued a press release that can be found here. Maryland Chamber staff continue to analyze the report and are working to prepare collateral materials to support our arguments against these misguided proposals.


LEGISLATIVE LEADERSHIP ANNOUNCES BUILD TO LEARN ACT

With the debate over the funding of the Kirwan Commission as a backdrop, earlier this month Democratic legislative leaders announced their plans to spend an additional $2.2 billion in order to assist local governments in renovating and building schools.

Named the “Build to Learn Act,” HB 1/SB 1 would appropriate $2.2 billion in extra funds to be steered to local governments for the purposes of upgrading school facilities. The money would come from bonds issued by the Maryland Stadium Authority to be paid back over 30 years using $125 million per year in casino revenues, which have been set aside in an “education lockbox.”

You may recall that a similar bill passed the House of Delegates on a bipartisan vote in 2019, but it stalled in the Senate. Now, leadership in both Chambers have announced their support for the bill.   House Speaker Adrienne Jones previously announced that school construction legislation would be among her top priorities for the upcoming Session.


UPDATES FROM THE MARYLAND GENERAL ASSEMBLY


SENATE COMMITTEE LEADERSHIP ANNOUNCEMENTS

Senator Guy Guzzone will replace Senator Nancy King as the Chair of the Senate Budget and Taxation Committee when legislators return to Annapolis in January. It is speculated that King will be offered the position of Senate Majority Leader, Guzzone’s current post, when the Senate reconvenes. The move is significant as the influential Senate Budget and Taxation Committee oversees the state’s $44.5 billion budget and capital spending.

Senator Ferguson is expected to announce additional leadership changes in January.


GOVERNOR HOGAN NAMES REPLACEMENT FOR DELEGATE TAWANNA GAINES

Governor Hogan has appointed Nicole Williams to serve in the Maryland House of Delegates seat vacated by former Delegate Tawanna Gaines. Williams, an attorney, placed 4th in last year’s Democratic primary in the 22nd District. She was recommended to the Governor by the Prince George’s County Democratic Central Committee.


FEDERAL UPDATES


AMERICA’S TRANSPORTATION INFRASTRUCTURE ACT (ATIA)

In August, the U.S. Senate Committee on Environment and Public Works (EPW) unanimously passed America’s Transportation Infrastructure Act (ATIA). The bill represents the largest amount of funding provided for highway reauthorization in history, authorizing $287 billion from the Highway Trust Fund over five years in order to maintain and repair America’s roads and bridges. The bill includes funding to improve road safety, accelerate project delivery, improve resiliency during disasters, reduce highway emissions and grow the economy.

If enacted, ATIA would increase infrastructure spending by around 27% for each state. According to data compiled by the U.S. Chamber of Commerce, Maryland could receive $126 million per year in highway funding if Congress passes ATIA.

More information about the legislation can be found by clicking here.

It’s time for the Senate to act to address the critical infrastructure issues being faced by states across the country. In order to urge Congress to act on this important legislation, the U.S. Chamber is encouraging its Federation and coalition partners to promote the hashtag #InfrastructureNow. The Maryland Chamber of Commerce will continue to monitor this and its impact on Maryland, and we will encourage members of our delegation to move toward swift passage of the legislation to address our state’s growing infrastructure needs.


FEDERAL APPROPRIATIONS UPDATE

On November 21, Congress passed, and President Trump signed, a short-term spending bill in order to keep the government operating through late December. Absent passage of this stopgap measure, a government shutdown would have begun at midnight.

The bill, which passed the Senate on a bipartisan vote of 74-20, extends government funding through December 20th. Interestingly, it sets up a budget battle that could occur at the same time that the House is expected to vote on articles of impeachment against President Trump.

In addition to extending government funding, the bill passed this week includes a 3.1% military pay raise and monies to conduct the Census. It also extends some of the provisions expiring in the USA Patriot Act.

In spite of the fact that Congress and the Trump administration agreed on a broad budget deal over the summer—one which extends the debt limit past the 2020 election and sets caps on spending levels for the military and domestic agencies—lawmakers in both chambers have yet to agree on a single one of the 12 spending bills that make up the budget. However, Congressional leadership is optimistic that passage of the most recent short-term continuing resolution represents a sign that appropriators are ready to come together to settle the debate over government funding before the end of the calendar year.


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Written by Ashley Duckman, Vice President Government Affairs, Maryland Chamber of Commerce.

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