Before the pandemic, the State was looking at a structural budget deficit. Now, after billions of dollars of federal aid and stronger performance of income and other taxes, the State is looking at a surplus. So the question becomes: what to do with the money? The Governor started the dialog with the General Assembly when he unveiled his final budget proposal, which uses the historic $4.6 billion surplus, by pouring billions into statewide construction projects and eliminating all state incomes taxes for retirees by 2028.
His proposal also highlighted investments in safety net programs, higher education and making the expanded Earned Income Tax Credit permanent. The budget will need the Maryland General Assembly’s final approval, where some have already pushed back on enacting long-term tax cuts. However, Hogan remains hopeful of reaching a bipartisan deal that will be critical to Maryland’s economic recovery. Here are some specifics on the Governor’s proposal:
- Eliminate state retirement taxes on retirees amounting to $4 billion over the next five years
- Make the temporary expansion of the state’s earned income tax credit permanent
- Eliminate electronic filing fees for corporations, limited liability corporations and family farms
- Funnel money to the More Jobs for Marylanders Act, which would give incentives to manufacturers that open or expand inside designated zones
- Keep COVID-19 incentive programs for commercial real estate properties
HB 8: Family and Medical Leave Insurance Program
HB 8 is known as “The Time to Care Act” and it is different from sick days and the existing Family Medical Leave Act, most notably because this bill is geared towards longer-term absences from work and provides partial wage replacement. It would set up an insurance program that allows workers to take up to 12 weeks of paid leave. It is funded through a state-administered insurance pool into which employees and employers contribute.
If the legislation passes, Maryland would join nine other states and the District of Columbia, which already established paid family and medical leave laws. Seven of Maryland’s gubernatorial candidates have pledged their support to the Time to Care Act, according to a statewide advocacy organization questionnaire.
There are concerns about the bill. First of all it would be a tax increase for workers and for employers. Another concern is that only the state would be allowed to verify the employee’s eligibility for paid leave benefits and the employer would not be able to verify the need for leave or challenge it if it is fraudulent or abusive. The other states that have implemented a similar paid family leave program include an exemption or adjustment to the contribution costs for small employers, this bill does not go far enough to exempt small employers.
The Chamber will continue to monitor this bill as it moves through the legislative process.
SB 528: Climate Solutions Now Act of 2022
This is 52 page bill contains a broad range of climate and energy efficiency provisions and would require the State to achieve 60% greenhouse gas emission reductions by 2030, net zero emissions by 2045, and annual statewide energy savings of 2.75% in 2027 and beyond. The bill also sets new standards for residential and commercial buildings in Maryland including 40% emissions reductions in all buildings by 2035.
The Chamber has some concerns about the SB 528. The Chamber supports the concept of reducing greenhouse gases but would like to see a more realistic timetables particularly for the new emission standards for residential and commercial buildings. The bill seems to indicate new construction and existing building would be under the new standard, which would mean converting from gas to electric. It will be much easier for newly constructed buildings to incorporate material and systems that will be able to meet the new emission standards but it will be very costly and disruptive to retrofit all existing businesses, especially for smaller businesses and residential property owners
The Chamber believes that this deadline is too ambitious and will create a hardship for small businesses and small property owners. Small businesses that own their building will have to take on the cost of converting and those small businesses that rent their facilities would most certainly face a rent increase. The Chamber would encourage the Committee to review the bill in more detail and determine a way to reduce the financial cost to small business by either establishing a phase in period or providing financial assistance to small business and small property owner to help cover the cost of the conversion.