House Republicans Present Plan for Maryland’s Fiscal Future

Annapolis, Md. – Today, House Republicans announced their alternative budget plan in response to the O’Malley/Brown Administration’s FY2015 budget proposal that raises overall spending by more than $2 billion over last year. This represents a cumulative spending increase of $10.6 billion since they took office in 2007.

2014 Budget Growth (2)“Despite more than 80 tax, fee and toll increases since 2007, the O’Malley/Brown Administration relies on broken promises and one-time fixes to balance the budget,” said Delegate Gail Bates (Howard). “This is poor management. We cannot steal from the pensions of our hardworking state employees or codify ‘one time fixes’ like hijacking county highway user revenues to fund more wasteful and mismanaged programs.”

“Continuing on this misguided path is irresponsible and ties our hands in the future,” said Delegate Andrew Serafini (Washington). “We will be forced to choose between two bad options: more taxes or deep cuts. What major programs will we have to cut or what taxes will we have to raise because we cannot exercise fiscal discipline today?”

The House Republican alternative budget proposal limits spending growth to just 1% over last year, restores the contribution to the state pension fund, and leaves a fund balance to cushion against possible revenue shortfalls later this year.

“We believe our budget proposal protects the promises made by our state,” said Delegate Tony McConkey (Anne Arundel). “The Republican budget plan fully funds pensions and reduces the fiscal cliff facing Maryland by responsibly restraining spending in next year’s budget.”

The Minority Report: Session 2013

The following is a summary report of the major issues of the 2013 Legislative Session.

BUDGET & FISCAL ISSUES

Operating Budget. Despite claims that he has reduced state spending by almost $8 billion since taking office, Governor O’Malley’s FY2014 budget continued the trend of increasing the state’s overall spending by more than $1 billion each year, a 25% increase since 2007.

Maryland%27s Total SpendingTouted as “fiscally prudent and socially responsible,” the FY2014 budget is anything but. As 26% of Maryland’s budget is supported by the Federal Government, our citizens will be affected by the federal sequester more than most. With the full effects of federal sequestration still an unknown, Governor O’Malley continues to irresponsibly increase spending. State spending continues to outpace personal income growth as Maryland’s government keeps getting bigger while taxpayers struggle to keep up with new taxes and fees. O’Malley’s budget increased spending by over $1 billion dollars in FY 2014 – a 3% increase from last year.

House Republicans urged the Governor to exercise caution during these uncertain fiscal times and reduce his budget proposal by 2%, which equaled the same paycheck reduction all Marylanders saw when the federal payroll tax holiday expired in January. This proposal was rejected by the Administration and House Democrats, who are content to continue their spend-and-tax cycle.

Click here to view the House Republican Caucus press conference on the budget.

Pensions. The House Republican Caucus championed pension reform in the 2013 Session. Chronic mismanagement and underfunding of the state’s pension fund has left state employees and the state’s fiscal health in jeopardy. The Republican legislative package would have required full-funding of the state’s pension obligation and a more realistic estimation of return on fund investments as well as a stringent limitation on risky pension investments. Additional Republican proposals included the creation of a 401(k)-type retirement option for all state employees and would have added two more county representatives to the State Pension Board.

While the Republican initiatives were rejected, the General Assembly did pass alternative legislation to phase in the full-funding of the State Pension Fund, albeit at a slower rate than the Republican suggestion.

Click here to read a Baltimore Sun article about the GOP Pension Reform Proposal.

Debt Grows, Debt Payments Grow, But Funding Source FlatCapital Budget. This year, Governor O’Malley’s Capital Budget authorized $1.11 BILLION in new state debt. While the Capital Budget includes many worthy items such as school construction, the constantly increasing debt of the O’Malley-Brown Administration is not sustainable long-term. Maryland’s debt payments are funded primarily by the state’s property tax revenue. Due to the decline in home values over the last several years this revenue source has fallen short of covering our debt payments. With the debt that has already been undertaken and the additional debt that is authorized this year, the gap between what is owed and what is covered by the property tax widens significantly, making an increase in the property tax rate a very real possibility. The bottom line is that over the last seven years the O’Malley-Brown Administration has been content to max out the state’s credit card and stick present and future generations of Marylanders with the bill.

ELECTIONS

ballot boxHB 224: Election Law – Improving Access to Voting.  Governor O’Malley’s Improving Access to Voting legislation relaxes the requirements needed to register to vote by allowing same day registration, expanding early voting and allowing online access to absentee ballots. House Republicans opposed this bill on the grounds that it creates more opportunities for voter fraud and compromises the integrity of the election process.

HB 244 passed the House 92-43 and the Senate 36-11.

HB 493: Referendum Integrity Act.  While not passed, HB 493 would have placed additional burdens on the petition process and dissuaded citizens from signing onto a referendum.  If passed, HB 493 would have required petition sponsors to create a campaign finance committee for each law being petitioned, required signers to include their birthdate with their signature, required each signature page to contain language that signer information is subject to public disclosure, required petition circulators to take a training course and prohibited payment per approved signature.

This legislation was Democratic retaliation following three successful petitions that resulted in ballot initiatives in 2012: repeals of the DREAM Act, same-sex marriage and the newest legislative redistricting plan. While the legislation didn’t move forward this year, it will be something to keep an eye on in the future.

GAS TAX – TRANSPORTATION

HB 1515: Transportation Infrastructure and Investment Act of 2013

No Gas Tax HikeGas Tax. At the 11th hour, Governor O’Malley introduced the complicated and convoluted Transportation Infrastructure and Investment Act of 2013 sneaking it in just minutes before the deadline to introduce legislation in the session. This $2 billion revenue bill puts a disproportionate burden on motorists by:

  • Indexing the existing excise tax on gas using the Consumer Price Index. This means that the excise tax is indexed to inflation and will put gas tax increases on auto-pilot. The gas tax will continue to go up year after year with no legislative oversight.
  • Creating a new 1% sales tax on the retail price of gas effective July 1, 2013 that will increase to 2% on January 1, 2015, and to 3% on July 1, 2015. These amounts assume that the federal government will authorize online sales tax collection, but if that does not happen,
    the sales tax on gas will increase by 4% on January 1, 2016 and to 5% on July 1, 2016.

As a result, even with a conservative estimate of inflation, the total gas tax will increase by 88% by FY2017 and Marylanders could be paying 44.1 cents per gallon in Maryland gas taxes alone. To add insult to injury to motorists, the majority of the money raised through these new taxes will not even be used to build and repair roads and bridges, but instead will be directed to seldom-used mass transit. While just 8% of Marylanders use mass transit to commute, mass transit receives more than four times the funding for highways. Motorists are being asked to foot the bill for a service many of them don’t and will never be able to use.

The Fake Transportation Trust Fund Lock Box
The Transportation Trust Fund (TTF) has been Governor O’Malley’s overdraft protection as he continues to spend beyond the State’s means. The TTF has repeatedly been raided to balance the state’s budget and $1 billion of local highway user funds have yet to be paid back.

SB 829: Transportation Trust Fund – Financing – Use of Funds
In order to provide themselves with political cover after passing the gas tax, Democrats, following the lead of Senate President Mike Miller passed SB 829 – a fake lockbox on the Transportation Trust Fund – during the last hour of the 2013 legislative session. Instead of actually protecting the TTF from future raids, SB 829 codifies this reckless spending behavior and encapsulates it into the State Constitution. The bottom line is that SB 829 does absolutely nothing to ensure that TTF dollars are actually spent on transportation.

SB 829 passed the House 106-32 and Senate 45-2.

House Republicans strongly opposed the gas tax and advocated for the protection, alignment and restoration of the Transportation Trust Fund. They supported legislation that would create a true lockbox on the Transportation Trust Fund, bring TTF spending into alignment with the needs of Marylanders by directing more funding towards highways, and restoring nearly $1 billion in highway user funds back to the TTF. Unfortunately for Maryland’s motorists, the Republican proposals were rejected by House Democrats. While they were willing to grab more than $2 billion out of Marylander’s wallets, they were very unwilling to pass legislation to guarantee that the money raised through these new taxes would actually fund transportation infrastructure.

HB 1515 passed the House 76-63 and Senate 27-20.

Click here to view the House Republican Caucus press conference on the gas tax.

Click here to read one of many articles chronicling Senate President Mike Miller’s infamous “neanderthal” comments regarding the House Republican Transportation plan.

 LABOR ISSUES

 Mandatory Union Fees for State Public School and Higher Education Employees – HB 667 & SB 841

Governor O’Malley and his fellow Democrats continued to cave to union pressures with the passage of HB 667 and SB 863. These bills create a “fee to work” by requiring that all state public school and higher education employees pay a fee to a union regardless of whether they are a member of the organization, support its political or ideological views, or wish the organization to negotiate or advocate on their behalf. Essentially this bill takes hundreds of dollars a year out of employee paychecks and makes a deposit to the union’s banking account without the employees’ consent.

HB 667, Public School Employees – Collective Bargaining – Representation Fees, passed the House 95-43 and the Senate 31-13.

SB 841, the Higher Education Fair Share Act, passed the House 94-45
and the Senate 34-12.

NATURAL RESOURCES & ENERGY

wind turbinesHB 226: Maryland Offshore Wind Energy Act of 2013. Governor O’Malley was finally able to pass his Offshore Wind bill after working with Senate President Miller to rearrange the make-up of Senate Finance Committee to remove detractors. House Republicans opposed the bill on financial grounds. When the 200 megawatt wind project comes on line in 2018, ratepayers will bear the $112 million annual net cost of the project, which is more than twice the cost than projected conventional energy costs. Offshore wind is also a bad investment for Maryland ratepayers as is it projected to lose more than $1.4 billion over the 20-year life of the project. The increased costs to ratepayers will disproportionately affect the state’s most vulnerable low-income earners that cannot afford the latest residential upgrades or energy-saving appliances who already pay higher than average utility bills. Despite their pontificating about creating jobs in Maryland, House Democrats rejected an amendment requiring a substation be built in Maryland, thus creating sustainable jobs in the state. Democrats also rejected other amendments to cap the costs to ratepayers and ensure that companies working on the project were US-based and also used US-made materials. The bill passed the House 88-48 and the Senate 30-15.

PUBLIC SAFETY

 SB 276: Death Penalty Repeal. SB 276 repealed the Death Penalty in Maryland and made the maximum penalty issued by the state life without parole. Most members of the House Republican Caucus opposed this legislation and offered multiple amendments to the bill that were ultimately rejected. House Democrats opposed retaining the death penalty as a sentencing option in cases of mass murder, terrorism, school shootings, contract killing, murder of law enforcement and first responders, and correctional officers. House Democrats effectively removed an important tool for prosecutors and have also endangered the safety of correctional officers working in the state prisons, as there is now no deterrent to keep the most vicious criminals from committing acts of violence against them. House Democrats also rejected an amendment that would have removed prison “perks” from those serving life from parole such as TV, internet access, recreation time, and family visits.

The Death Penalty Repeal passed the House 82-57 and the Senate 27-20.

SB 715: Maryland Highway Safety Act of 2013. Deceptively named the Maryland Highway Safety Act of 2013, SB 715 authorizes the Maryland Motor Vehicle Administration (MVA) to issue drivers licenses and identification cards to illegal immigrants. These “second tier” licenses could not be used for federal purposes such as purchasing a firearm, boarding a flight, or entering a federal building.

House Republicans opposed SB 715 with concerns that the requirements to obtain a drivers license were not stringent enough and with no way to reliably verify an applicant’s identity, multiple licenses could be issued to the same person. With Maryland being the only state on the East Coast to issue licenses to illegal immigrants, our state becomes a gateway for potential terrorists and others seeking to obtain ID for questionable purposes. Additionally, the two-tiered ID system, downgrades all Maryland-issued drivers licenses and IDs and makes Maryland non-compliant with the Federal REAL ID Act. Once this measure goes into effect, no Maryland-issued ID may be used for federal purposes, including boarding a plane or entering a federal building.

House Republican amendments to require fingerprinting of illegal immigrants who were issued an ID, and to make the second-tier ID a different color, among others were rejected. SB 715 passed the House 82-55 and Senate 29-18.

SECOND AMENDMENT

 SB 281: Firearm Safety Act of 2013. The House Republican Caucus vehemently opposed SB 281 on the grounds that it severely limits the Second Amendment rights of Marylanders and effectively punishes Marylanders that legally exercise their right to own a firearm. Billed as a way to make our families and streets safer following the tragedy in Newtown, CT, SB281 does nothing to curb gun-related crime.

wethepeopleA majority of Democrats opposed amendments that would have eliminated “time off for good behavior” and other perks for those convicted of crimes with a firearm. They also opposed amendments eliminating the fingerprinting requirement, creating a special license for competitive shooters, creating a public campaign to end the stigma of mental illness, expanding conceal-carry permits, as well as many others.

While the bill limits firearm access for the mentally ill, the O’Malley Administration left many critical mental health and early intervention programs grossly underfunded so those most at-risk are not able to receive the services and support they desperately need.

Unfortunately for Maryland, Governor O’Malley decided to pave his way to the 2016 Presidential Campaign by trampling on the rights of law-abiding citizens and exploiting recent tragedies for political gain.

After almost 24 hours of hearings and debate and thousands of Second-Amendment supporters traveling to Annapolis to make their voices heard, SB 281 passed the House 78-61 and the Senate 28-19.

SB 281 makes sweeping changes to Maryland’s gun laws and goes into effect on October 1, 2013. The bill is not retroactive, meaning that it only applies to firearm purchases made on or after October 1st. The major highlights are as follows:

Assault Weapon Ban. SB 281 designates 45 rifles as “Assault Long Guns” including the AR-15, SKS, as well as any of their “copycats” and bans the sale of these firearms effective October 1st, 2013. This bill is NOT retroactive. If you currently own one of these firearms, or purchase prior to October 1st, 2013 you can continue to possess your firearm. In addition, these firearms can continue to be passed on through inheritance provided the heir is not otherwise disqualified from possessing a Regulated Firearm.

Magazine Capacity/Ammunition.  Effective October 1, 2013 magazine size for all firearms is restricted to 10 rounds or less. The purchase, transfer, or sale of higher capacity magazines is prohibited. This bill is NOT retroactive. If you currently possess a large capacity magazine, you may continue to do so.

SB 281 bans a person from possessing any ammunition if they are disqualified from possessing a regulated firearm (by virtue of a criminal conviction, drug or alcohol abuse, is a fugitive from justice, or suffers from a mental disorder)

Handgun Qualification License: Fees, Training and Fingerprinting. Anyone who wishes to purchase a handgun after October 1, 2013, must apply to the Maryland State Police for a handgun qualification license. Applicants are required to complete 4 hours of training and submit fingerprints and complete a criminal background check. The cost of the initial licensing, fingerprinting, and background check is paid by the applicant and is estimated to be over $100. Once issued, the license is good for ten years. The license can be renewed for a $20 fee and additional training is not required for renewal. If you currently own a regulated firearm you do not have to ever complete the training to apply for the handgun purchase license.

Mental Health Provisions. SB 281 restricts a person who has ever been a subject of an Involuntarily Commitment or those who are currently under a protective order from possessing any firearm and requires them to surrender any firearms to law enforcement for safe keeping. A hearing review process is available for individuals to petition to regain their rights to possess a firearm.

Active and retired law enforcement officers and military personnel over age 21 as well as firearm manufacturing facilities are generally exempted from the provisions and restrictions of this act.

For a PDF version of this report, please click here.

House Republicans Propose Pension Reform

Annapolis – The House Republican Caucus today announced a legislative package aimed to correct the problems in Maryland’s pension system. The package calls for honest accounting of the pension fund obligation, full annual funding of the pension fund, and limiting risky investment with pension fund dollars. The plan also includes giving state employees more choice in their retirement planning and providing adequate representation for counties on the Pension Board.

“The current state of Maryland’s Pension Fund is cause for alarm,” said Delegate Steven Schuh of Anne Arundel County. “Currently, Maryland is $21 billion short of fully funding its pension obligations. The consequences of this underfunding will not only impact current and retired state employees, but also the taxpayers of Maryland. The current shortfall translates into a hidden debt obligation of $8,750 for every household in the State.”

Currently, only $37 billion of the total $58 billion pension obligation is funded. This shortfall is due to chronic annual underfunding to the pension fund as well as overestimating the expected return on pension fund investments. Risky investment strategies including, hedge funds, junk bonds and private equity, have also contributed to the problem. Continued underfunding of pension obligations could require increased taxes or program cuts to cover the shortfall. If underfunding continues long-term, it is even possible that Maryland’s retirees could see their benefit reduced or eliminated.

Bills in this legislative package are sponsored by Delegates. Steven Schuh of Anne Arundel County, Andrew Serafini of Washington County, Gail Bates of Howard County, Nic Kipke of Anne Arundel County, Jeannie Haddaway-Riccio of the Eastern Shore, and Susan Aumann of Baltimore County.

“House Republicans believe that a promise made is a promise kept when it comes to employee pensions,” commented Del. Andrew Serafini of Washington County. “But, this is not a political issue. Democrats and Republicans can come together to solve this issue to keep the State’s commitment to its employees. This legislative package will put Maryland’s pension fund back on solid ground so that our state retirees will never have to worry if their pension check is going to clear and will give all state employees flexibility in how they structure their retirement planning.”

Click here for PDF of the Press Release.

Additional information available in Caucus Powerpoint Presentation and Pew Center on the States Report.

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