Weekly Update – March 26

Cross-over Week

This is “cross-over week” in the General Assembly – an insider’s term for the week before important bill deadlines.  Under the rules, each chamber has until Monday, March 28th to send to the other chamber those bills it intends to pass.  So, all the House Bills must be passed on to the Senate and vice versa.  Bills passed after that date must go to the respective chamber’s Rules Committee – a hurdle to avoid with less than three weeks remaining.  Cross-over week means multiple floor sessions and multiple committee voting sessions.  The pace is fast and the tension is high.

House Passes $34 Billion Budget

Contrary to what you may read in the Baltimore Sun, the House of Delegates passed a $34 billion budget Thursday night. 

During floor debate on the budget, Minority Leader Tony O'Donnell shares a chart illustrating Maryland's budget growth since 1979.

Spending is $1 billion more than last year and just about every special interest in Maryland is protected.  Well, every special interest except the taxpayers.

General Fund spending in this budget increases by 10.6% over last year.  This was largely because of the backfilling to replace Federal Stimulus dollars that are no longer available.  Had the necessary reductions been made two years ago, these increases would not have been necessary.  But, the Governor and Democratic leadership could not resist the temptation to use that temporary money to fund permanent programs.  So, here we are. 

 The budget was balanced with a combination of tax and fee increases including:

  • Doubling the Vehicle Titling Tax from $50 to $100
  • Doubling the Vanity Plate Fee from $25 to $50
  • Doubling the Land Recording Fees from $20 to $40
  • Doubling the Birth Certificate Fees from $12 to $24
  • Doubling the Parole Supervision Fee from $25 to $50
  • Increasing Nursing Home Tax from 4% to 5.5%
  • Increasing Hospital Assessments, adding 2.5% to rates
  • Applying a 2% Tax to Insurance Premiums for the Injured Workers Insurance Fund

The unsustainable nature of these spending increases will make the taxes and fees included in this budget a mere preview of things to come. 

What is important to remember is there was another option.  The House Republican Caucus offered an alternative budget that would have decreased spending and put Maryland on a course to lower taxes and fiscal stability.  The Democrats in the House of Delegates rejected this alternative at every turn.  So when the time comes for another round of massive tax increases and they tell you there is no choice but more taxes – don’t believe them. 

Transgender Bill

On track for passage today is HB 235 – Human Relations – Sexual Orientation and Gender Identity – Antidiscrimination.  This bill would protect people who identify with a gender other than the one they were assigned at birth, or people who wish to dress in a manner that is not congruent with the gender they were assigned at birth. 

For example a male teacher who wishes to dress as a female must, without the benefit of a sex-change operation, be allowed to dress as a woman in the classroom and cannot be fired or punished for doing so.  An amendment to the bill adds that the employee must dress consistently.  A man may dress as a woman if he wishes, but he must consistently do so – he cannot switch back and forth.

The bill deals only with housing and employment.  In previous years similar bills have been introduced and have included the use of bathrooms and locker rooms, which are not included in the bill this year.  Further, the bill would protect transgendered and transsexuals from being discriminated against when renting property.  An amendment to the bill allows individuals to refuse a renter based on any criteria, but not to include discriminatory language in an advertisement.  For example, if Aunt Martha wants to rent out an apartment that she owns, and a transgender person wants to rent it, she’s free to refuse him if she wishes.  She cannot, however, put an advertisement in the newspaper that reads “Apartment for rent. One bedroom, one bath. Furnished. No smoking, no pets, no transgenders.” 

This bill has been flying under the media’s radar and may pass so the liberal Democrats in the General Assembly can appease their supporters in the Gay, Lesbian, Bisexual & Transgender (GLBT) Community who are still upset with the failure of the Gay Marriage bill.

Weekly Update March 19th

The Grim Reaper, just one example of the over-the-top rhetoric at the Enough is Enough rally.

Unions and the State of Maryland – When will it be “Enough”?

Calling it the “Enough is Enough” rally, thousands of union members descended upon Annapolis Monday night to protest the Governor’s budget.   They came equipped with their standby class warfare calls,their rally signs, and even The Grim Reaper (who is apparently a member of the GOP).  Never before has such a wholesale sense of entitlement rocked the streets of Annapolis.

Governor O’Malley made an appearance, and in what may be a first in his political career, actually received “boos” from the union members.  He told the crowd that he didn’t like his budget either – a rather bizarre statement since just over a month ago he said his budget, “…rightly focuses resources on jobs and innovation – the worthwhile costs of making the right choices and investments in our future.”

The reality is that while individual state employees have every reason to be upset with the Governor and his budget, the unions – particularly AFSCME – really shouldn’t be crying foul.
Consider this: part of the Governor’s budget includes a $750 bonus for state employees.  This  scored him big points with the union and at the same time allowed the union to score big points with its membership.  But, what hasn’t been widely discussed is that the bulk of this $750 bonus will not make it into the pockets of Maryland’s employees, it will instead line the coffers of AFSCME via the fair share charge.

The fair share charge is a product of “The Fair Share Act” which was a piece of Governor O’Malley’s legislative package in 2009.  It forces non-union state employees to pay a fee to the exclusive representative of their collective bargaining unit.  Who is the exclusive representative for 78% of the bargaining units subject to this fee?  AFSCME!  Even if you are a dues-paying member of another union such as Maryland Classified Employee Association (MCEA), you are still subject to the fee.

The fair share fee will be assessed for the first time in the 2012 Fiscal year which starts July 1.  While the amount of the fee is still being negotiated, it is expected to be in the ballpark of $400 per year – more than half of the $750 bonus.  According to the analysis by the Department of Legislative Services, with the bonus spread out across 26 pay periods (as it is currently designed) it will be swallowed up by the fair share fee (roughly $15 per pay period), and after taxes will only make the whopping impact of an additional $3.50 per pay period.

But don’t take our word for it, the non-partisan Department of Legislative Services said in their budget analysis “…the bonus as currently conceived will be spread over the 26 pay periods of fiscal 2012. Given the current tax structure for the average employee earning $48,500 per year, this $28.85 pre-tax boost to each check would likely result in the general post-tax range of an added $18.50 per pay period. This amount will be just enough to offset the fair share charge, hence doing little to provide a bonus to employees.”

The unions have fared quite well under Governor O’Malley’s leadership.  It’s a shame we can’t say the same for the taxpayers.  But, the question is – when will it be enough?

In-State Tuition for Illegal Immigrants

The controversial bill giving illegal immigrants in-state tuition rates moved out of the Maryland State Senate late Monday night. This legislation would allow illegal immigrants residing in the state and attending Maryland public schools the ability to receive in-state tuition benefits at Maryland public colleges.

SB 167 – Public Institutions of Higher Education – Tuition Rates – Exemptions makes illegal immigrants who have attended a MD high school for three years, and go on to complete an associate’s degree at the community college in their county of residence, eligible for in-state tuition rates both at the community college and at any public four year institution in the state. Currently, all students achieving an associate’s degree from a MD community college are eligible to transfer to a public institution to complete a bachelor’s degree.

Besides deepening Maryland’s current $1.6 billion deficit, there is an associated loss of opportunity for legal high school graduates in the state of Maryland. Currently, there are a select number of admission slots open to in-state residents. If the bill were to pass, the opportunities for legal in-state residents would decrease.

According to the Baltimore Sun, “Students who complete their associate’s degree would then be eligible to transfer to a four year institution with the same discount. Those who attend community college could save between $4,000 and $6,000 per year, while those who move on to four-year institutions could save much more.”

The fiscal impact of the Dream Act would be at “a cost of $800,000 next year. However, the total cost could grow to 3.5 million by 2016,” if signed into law. Former Governor Ehrlich vetoed a similar bill in 2003 but present Governor O’Malley has confirmed that he will sign the current bill into law if it passes the House.

House Republican Caucus Weekly Update

Same Sex Marriage Update

After a long debate on Friday, the House voted to send SB116, the same sex marriage bill, back to the House Judiciary committee.  Even with weeks of pressure and arm twisting by the Democratic leadership to pass this bill, when the time came it was clear that the votes simply were not there.  Rather than suffer the embarrassment of having the bill die on the floor, supporters decided it was better to put it back in committee.  The issue is not expected to come up again this session.

Maryland’s Budget – Appropriations Committee Sets a Low Bar

The House Appropriations Committee has begun to make preliminary decisions on additional cuts to Maryland’s Budget.  According to our Ranking Member on the Committee, Delegate Gail Bates, the Democratic leadership on the Committee has set the stunningly low goal of an additional $120 million in reductions to the Governor’s budget.  That is a reduction of less than ½%.  There is no doubt that when this budget comes to the House floor, the Democrats on the Committee will pound their chest calling this a socially responsible and fiscally prudent budget. 

It is surprising that the Appropriations Committee has set the bar so low, given that their Chairman, Delegate Norm Conway, sent an email to the entire House of Delegates in late January discussing the structural deficit.  In his email, he stated “even with the Governor’s current budget proposal, the structural deficit still remains at $1.2 billion for fiscal year 2012”.  He also called this “the single most important issue the General Assembly will address this year.”  With only $120 million in reductions, this budget is anything but responsible or prudent.  In fact, it could put us on the unavoidable path to more tax hikes. 

Maryland’s budget problems, while significant, are not unsolvable.  As we told you last week, the House Republican Caucus has created a budget plan that would reduce the size of government and allow us to reduce the tax burden on our citizens and businesses.  This plan has been rolled into a bill, HB 1294 – The Deficit Reduction and Financing Act and will have a hearing on March 15th

Off-Shore Wind

The O’Malley Administration’s House Bill 1054 – Maryland Offshore Wind Energy Act, creates an off-shore wind project to be located in the Atlantic off the coast of Ocean City, MD.  During the Governor’s presentation of HB 1054, many Delegates became concerned when no one on the panel of supporters could estimate the project costs to build a 500 Megawatt (MW) offshore wind project.

In 2008 the Maryland Public Service Commission issued the Levitan Report, which came at the cost of millions of dollars and two years of expert study.  The analysis determined that building and operating an offshore wind facility was severely uneconomical.  Just over two years later the Governor’s administration declared this information to be obsolete. Still not obtaining the findings to support his initiative, the Governor issued an Executive Order requiring DNR to prepare a Long Term Electricity Report due this December. Delegate Hershey questioned the Governor and asked to wait for the results of this report prior to asking Marylanders to commit to a 25 year debt of over $4.6 billion, according to the bill’s fiscal note.

Should the project move forward, each residential ratepayer could expect their average monthly bill to increase for the next 25 years.  The House Republican Caucus will closely watch the progress of this proposed off-shore wind farm to ensure Marylanders are not asked to provide financial backing to Governor O’Malley’s pet project in spite of any associated economic considerations.

House Republicans Present Plan to Close Budget Gap and Roll Back Tax Increases

 Annapolis, MD – House Republicans today presented a budget plan to the House Appropriations Committee.  The plan eliminates the structural deficit by FY 2013 and allows for a gradual repeal of the 2007 increases in the sales and corporate income taxes.“This plan represents months of deliberations and tough choices”, said Delegate Gail Bates, the Ranking Republican on the Appropriations Committee.  “There are no easy solutions.  But this plan puts us on a path to fiscal stability and allows us to alleviate the tax burden on our citizens.  It will also lessen the tax burden on businesses allowing them to expand and add jobs to our economy.”

 The Republican plan reduces state spending by an additional $621 million in FY 2012 and holds growth at 2% for Fiscal Years 2013-15.  The plan allows for 4% budget growth in FY 2016.  The Republican budget replenishes the Transportation Trust Fund without increasing the gas tax.  It also reverses the raiding of the Bay Restoration Fund and Program Open Space of cash and funding the projects with debt.  The plan allows for a gradual rollback of the increases in the sales and corporate income taxes beginning in FY 2014 making Maryland a more business-friendly state.

 “There seems to be an unfortunate and growing appetite for tax increases among many in the House and Senate”, said House Minority Leader Anthony O’Donnell.  “Soaring gas, food, and energy prices could have a devastating impact on our citizens and economy.  We do not need to add on the burden of even higher taxes.  The Republican members of the Appropriations Committee have done an excellent job disproving the fallacy that tax increases are required to achieve sound fiscal footing.”

 “Just last week, a group of Democratic Senators introduced their ‘Maryland First’ concept which includes $827 million in tax increases – gas tax, income tax, and alcohol tax to name a few”, said House Minority Whip Jeannie Haddaway-Riccio.  “Our constituents have had enough and have made it clear they want real leadership on these budget issues. Our plan reduces spending, ends credit card government, and stops the demands on our taxpayers while restoring Maryland’s fiscal health.  There is no better way to stimulate the economy than allowing the taxpayers to keep more of their hard-earned money.”

Click here to view the presentation.  For additional details see Appendix Page A-1 Appendix Page A-2 Appendix Page A-3 Appendix Page A-4