In the years following the recession, Maryland has fared better than many states. Today, the state’s median household income remains the highest in the country; the unemployment rate is lower than two-thirds of the nation, and nearly 135,000 jobs have been recovered since the Mid-Atlantic region hit rock bottom in February 2010.
However, as outlined in the Greater Baltimore Committee’s 2013 report, “A Compact for Competitiveness,” in order for Maryland to be truly competitive in a global economy we need to do more than just recover. In order to compete against the rest of the nation and the world, Maryland needs to build an economy that fosters innovation and entrepreneurship, enables our state’s businesses to grow, and supports the education and training of a world-class workforce.
The 2014 Legislative Session of the Maryland General Assembly saw numerous pieces of legislation aimed at these goals.
As the session began, I joined presiding officers Senate President Thomas V. “Mike” Miller and Speaker Michael Busch as they announced a joint legislative agenda for economic development. Throughout the session, the GBC urged lawmakers to make Maryland’s competitiveness a priority and to focus on legislation that would be beneficial to our state’s business community.
FY2015 Operating Budget
After forming a conference committee to work through differences between the Senate and the House of Delegates, the General Assembly agreed on the state’s $38 billion operating budget before the end of session last night.
As passed, the budget includes no new taxes, maintains a surplus of $879 million (including appropriations to the Rainy Day fund), and reduces the structural deficit by $125 million.
The budget supports a number of economic development initiatives, including the Biotechnology Investment Tax Credit ($12 million), the Research and Development Tax Credit ($9 million), the Maryland Innovation Initiative ($5 million) and the CyberMaryland Investment Tax Credit ($4 million).
The FY2015 operating budget also provides $6.1 billion for K-12 education and $1.4 billion for public colleges and universities.
Major Issues of the 2014 Legislative Session
Though less contentious than originally believed, the 2014 session produced passage of a number of high-profile initiatives.
Increased the Minimum Wage – In the final hours of the legislation session, the General Assembly approved Governor O’Malley’s key legislative priority, an increase in the state’s minimum wage. Though the bill was amended from the Governor’s original version, which tied future increases to inflation and increased the wage for tipped workers, the legislation as passed still increases the minimum wage to $10.10 per hour gradually until July 2018.
Decriminalized Marijuana – Another issue that came down to the wire was a move to decriminalize small amounts of marijuana. As the session closed, lawmakers voted to approve a measure that decriminalizes possession of less than 10 grams of marijuana. On a first or second offense, adults over the age of 21 in possession of less than 10 grams will be issued a citation and fined, but will not face a criminal charge or jail time. Individuals under 21 will face a mandatory court appearance and could be sent to drug treatment on a first offense, but would not face criminal penalties or jail time.
Expanded Pre-Kindergarten – Earlier in the legislative session, the General Assembly approved a modest expansion of the state’s Pre-Kindergarten program, which will allow 1,600 more children across the state to receive this important educational building block.
Increased Funding for the Film Tax Credit – After much debate, the Maryland Film Investment Tax Credit was finally approved at $15 million for FY2015, $11 million more than originally requested by Governor O’Malley. This was a hot issue during the session after producers of the popular Netflix show “House of Cards” threatened to cease filming in Maryland if the legislature did not provide millions in additional tax credits. The production has already received $26 million over two years in incentives from the state.
Recoupled the Estate Tax – Part of the legislative agenda jointly announced by Senate President Miller and Speaker Busch, the General Assembly voted to recouple the state’s Estate Tax to the federal level, incrementally moving the threshold at which estates are taxed from $1 million to $5 million.
Strengthened Domestic Violence Laws – A package of domestic violence bills was passed during the session, including a measure that allows judges to impose harsher penalties on abusers who commit acts of violence in front of a child and legislation to lower the evidence threshold needed to receive a civil protective order.
Failed to Overhaul the Bail System – One issue that was not resolved during the legislative session was a court-mandated overhaul of the state’s bail system. The Court of Appeals ruled last year that all defendants had the right to a lawyer during bail hearings. Though debated throughout the session, the legislators could not come to an agreement on how to change the bail system in order to comply with the court’s order. A $10 million stopgap measure to hire some of the lawyers that are needed was instituted in place of a long-term solution.
GBC Legislative Advocacy
Below are just some of the pieces of legislation that the GBC advocated for or against in Annapolis during the 2014 legislative session.
Strategic Investments in Emerging Sector
Understanding that Maryland’s future success depends heavily on our ability to grow emerging industries, the GBC successfully supported initiatives that incentivize growth in emerging sectors, including:
PASSED – HB740/SB603. Establishes a Cybersecurity Investment Fund within TEDCO in order to provide and leverage additional funding for Maryland cybersecurity companies.
PASSED – SB570. Increases the amount of credits that the state can award for Reserach and Development Investment from $8 million to $9 million.
PASSED – HB741/SB601. Creates the Maryland E-Nnovation Initiative Program, which allows Maryland insurance companies to purchase credits against insurance premiums or corporate income taxes and uses the proceeds to fund scientific and technical research.*
Building a Highly-Educated Workforce
Today’s children need state-of-the-art education and training to be prepared for the jobs of tomorrow. The GBC strongly supported legislation and policy initiatives that provide increased funding for workforce training and innovative educational tools, including:
PASSED – HB811/SB876. Establishes the Summer Career Academy Pilot Program to provide necessary skills and workforce training to students who are struggling to meet the Maryland College and Career Readiness Standards in high school.
DID NOT PASS – SB821. Provides that all students have equal access to digital technology in the classroom on or before the 2016-2017 school year. The bill would have established a Technology Infrastructure Program in order to improve the digital landscape in our children’s schools. Unfortunately, this measure did not pass the General Assembly this year.
A Competitive Business Climate
The Greater Baltimore Committee supports initiatives that make it easier to do business in Maryland and opposes any attempt at implementing policies that are prohibitive to business growth.
Legislation successfully opposed by the GBC as detrimental to strengthening Maryland’s competitiveness for business growth and job creation includes:
DID NOT PASS – HB887, an attempt to require combined reporting for Maryland companies.
DID NOT PASS – HB968, legislation seeking to mandate that private sector employers institute a sick leave policy would have resulted in an estimated $165 million in additional cost to Maryland businesses.
DID NOT PASS – HB1298/SB395, would have reduced fees collected by the Maryland Department of Assessments and Taxation but also would have adopted the combined reporting method for tax calculation purposes.
Ensuring a Fair and Equitable Tax Structure
PASSED – The GBC successfully supported HB739/SB602, part of the legislative agenda announced by Senate President Miller and Speaker Busch, which recouples Maryland’s Estate Tax with the Federal Estate Tax, thereby removing the disincentive of the current law when residents consider their retirement venues.
DID NOT PASS – Currently, limited liability corporations and sub-chapter S companies pay a maximum tax rate that is much higher than the corporate tax rate due to the combination of state and local taxes. The GBC strongly supported SB590 and SB858, both of which sought to reduce taxes paid by these “pass-through” entities. Unfortunately, neither measure passed the General Assembly this year.
Government Partnering with Business
PASSED – When it comes to providing useful and meaningful economic development tools, government is often an important partner for our state’s businesses. The GBC successfully supported HB510, reauthorizing the highly-successful Sustainable Communities Tax Credit Program. The program, which provides tax credits for the revitalization of historic buildings, has supported tens of thousands of jobs and pumped hundreds of millions of dollars into the economy since its inception.
PASSED – Maryland’s anchor institutions are oftentimes both major employers and stabilizing forces in their communities with a great potential to affect positive change. The GBC successfully supported HB742/SB600, which created the Regional Institution Strategic Enterprise Program, which provides a vehicle by which Maryland’s anchor institutions can make targeted investments in their surrounding communities.*
*Part of the legislative agenda for economic development jointly announced by Senate President Miller and Speaker Busch.
As always, if you have any questions about any of the issues from the 2014 legislative session, please feel free to contact me.
Donald C. Fry
GBC President & CEO