Center Maryland: The “horses” to watch in the early running of the Maryland General Assembly sweepstakes

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Editor’s note: The following commentary appeared on CenterMaryland.org on January 20, 2016.

By Donald C. Fry

With lots of smiles, glad-handing and the usual pomp and circumstance, the Maryland General Assembly got off to the races on January 13, and in the early going there appear to be several “horses” to keep an eye on.

First and foremost is the relationship between Republican Governor Larry Hogan and the Democratic controlled leadership of the state Senate and House of Delegates, primarily Senate President Thomas V. “Mike” Miller and House Speaker Michael Busch.

The relationship between the then-freshman governor, who had no prior elective experience, and the two veteran politicos ended on a sour note at the conclusion of the 2015 session, in part due to a tussle over education funding.

And last week, even as the governor and senate president were shaking hands and exchanging pleasantries as the 2016 session’s opening bell sounded, there were signs that the relationship of the Republican executive and Democratic legislative leadership might again have its challenges.

For one, President Miller made it clear publicly he wasn’t enthused with the governor announcing in a press conference – without first informing either him or other legislative leaders – that the administration will propose a number of tax cuts and incentives, including a 10-year corporate income tax break for manufacturing companies that open new operations in Western Maryland, Baltimore City or the Eastern Shore.

Miller called for better communication from the governor. The governor’s press secretary retorted that his doors are always open and the phones are working.

It signaled a potential for a bumpy relationship, and one to keep an eye on as the 90-day session gets into full swing soon.

Another “horse” to monitor will be the debate over what the state should do with a state budget surplus – the first in years. Forecast to total about $500 million by the end of the current fiscal year, there are any number of state programs or initiatives, such as education and environment, which legislators may argue would benefit from additional funding. The governor has expressed his continued desire to hold the reins on spending and expansion of major government programs.

The different approaches or philosophies taken by elected officials over the best way to address a surplus is not unexpected, and is not an unhealthy policy discussion. Anytime there are surplus dollars you can expect a spirited political debate about the expenditure of those dollars.

The handling of the budget surplus is intrinsically tied to other policy issues that deserve close attention as the session unfolds.

One already out of the starting gate, as previously mentioned, is the tax cut proposal announced by the governor just prior to the session’s start. The proposal ranges from tax breaks for small businesses, increasing income tax exemptions for retirees, expanding earned tax credits for low wage earners, and the tax break for new manufacturers that establish operations in targeted geographic areas that experience high levels of unemployment.

While more details of the proposals are forthcoming, many legislators on both sides of the aisle seem receptive to the initial concepts advanced by the governor, but it is likely that we will not know the outcome until we reach the finish line in April.

It is highly anticipated that other policy and legislative proposals will be included in a report due to be released shortly by the Maryland Economic and Business Climate Commission, chaired by Norman Augustine, former CEO of Lockheed Martin.

The charge of the Augustine Commission, appointed by the presiding officers, comprised of Republican and Democrat legislators, business and labor leaders, and representatives from Maryland colleges and universities, is pretty straight forward: develop recommendations to improve Maryland’s business climate.

Last year the commission issued a list of 32 wide-ranging recommendations that enjoyed universal support. This year, its challenge was more daunting: to examine and issue recommendations to the tax structure, including business tax incentives, that may be impacting Maryland’s ability to be competitive in attracting, retaining and helping businesses succeed and grow.

Hopefully the governor and legislature can find common ground to agree on when the Augustine Commission issues its report.

Influential and non-partisan groups, including the Greater Baltimore Committee, have for years been calling for concrete steps to make Maryland more economically competitive, such as reducing tax burdens on small business and passing an Angel Investor Tax Credit to encourage private-sector support for startup businesses.

A number of workplace-related issues may take center stage this session. The two legislative proposals that are likely to generate considerable debate would provide for paid sick leave and mandatory retirement savings accounts for employees.

The paid sick leave legislation is not new to the General Assembly. It attracted considerable discussion and debate last year, but died in committee. The proposal, with some retooling from advocates, is expected to resurface this year and would mandate that businesses that employ more than 10 people provide paid sick leave.

The other workplace proposal attracting attention would require employers with more than 10 employees to establish a 401K plan or a state-approved savings plan and to deduct a determined amount from employee’s pay into the plan unless the employee elects to opt out of the program.

The Greater Baltimore Committee is monitoring and examining both issues. But as business owners know, legislation that imposes additional mandates will likely increase the cost to do business and increase administrative compliance.  Although these impacts are negative on all businesses it is particularly harmful to small businesses.

These issues invoke strong opinions on both sides of the debate and compromise could be difficult to attain as these two proposals run the legislative track this year.

All of this is not to say the “horses” noted here are the only ones to watch. As is true in many races, a dark horse or two may unexpectedly emerge that garners the attention of elected officials and the public as the always intriguing Maryland General Assembly session goes into high gear in the weeks ahead.

Don Fry is President and CEO of the Greater Baltimore Committee and a regular contributor to Center Maryland.

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