2013 General Assembly Session in Review
At midnight on April 8, 2013, the General Assembly adjourned Sine Die. Maryland's business community fared well during the 2013 session. The Maryland Chamber's public policy team worked to ensure lawmakers understood the economic challenges Maryland businesses face, and the need to make Maryland more competitive. A well-coordinated effort between the Maryland Chamber and many business and local chamber allies helped keep lawmakers focused on economic growth and job creation. The Maryland Chamber took positions on 163 of the 2,610 pieces of legislation introduced. Below you will find a review of the business issues considered during this session.
The House and Senate agreed upon the $36.9 billion 2014 operating budget the weekend before the end of session. This budget is a 3 percent increase over last year’s budget, and is $500,000 lower than the budget proposed by the Governor. The 2014 budget includes significant investments in higher education and business development projects. Specifically, there are increased investments in both the Biotechnology tax credit and the Research and Development tax credit ($2 million each), along with the creation of a new Cybersecurity tax credit program ($3 million), and the extension of the Film tax credit for $25 million over two years. The operating budget required no additional tax revenues and also provides a surplus of $290 million, rainy day funds of $767.6 million, an additional $100 million in reserves to address sequestration, and reduces the structural deficit by $209 million.
The $1.5 billion capital budget was passed, which includes significant investments in education, health care, technology initiatives to spur job creation and leverage private investment. On education, the capital budget includes $300 million for school construction and large investments in the University System of Maryland, community and independent colleges. Investments in health care include $30 million for the Prince Georges Hospital Center, $15 million to the University of Maryland Medical Center, and $5.76 million for various hospital projects around the State. The capital budget also included investment in technology throughout the State including the One Maryland Broadband Network and a High Performance Computing Center at Johns Hopkins ($12 million).
With the structural deficit being nearly eliminated and the operating budget balanced, there was not a great deal of discussion of finding additional revenue through raising taxes. The Maryland Chamber pressed for an exploration to reduce the tax burden, especially on corporations. While those discussions did not lead the passage of any of the legislation to reduce the corporate income tax rate, there is growing bipartisan support for such a measure and we anticipate those discussions to flow into the 2014 session.
Once again, the Maryland Chamber successfully led the opposition to priority legislation (HB 1158/SB 469/HB 1246) that would have implemented a corporate income tax system of unitary combined reporting in Maryland. This legislation was narrowly defeated in the Senate Budget & Taxation by a vote of 7 to 6 and will continue to be an issue we will fight in the future.
Other successes include:
Passage of legislation (SB 631) that clarifies that the County Hotel/Motel tax should not be applied to corporate training centers, such as the Lockheed Martin training center in Montgomery County.
Passage of legislation (HB 1209/SB 436) that increases the Indemnity Deeds of Trust (IDOT) recordation tax exemption threshold from $1M to $3M and clarifies how recordation taxes should be applied to IDOTs by the counties.
Passage of legislation (HB 372/SB 202) that expands the current exemption for transfers between business entities within a corporation from the transfer tax to "business entities" which includes, partnerships, limited partnerships, limited liability companies, and corporations.
Defeating legislation (HB 11) that would have authorized counties to impose discriminatory property tax rates on business property.
The Maryland Chamber provided leadership in its support of several pieces of legislation aimed at protecting the integrity of the Transportation Trust Fund (TTF) and raising the necessary revenue needed to support the State’s transportation system. The Administration, in collaboration with the General Assembly leadership, put forth a transportation package (HB 1515) that will raise a significant amount of revenue to address our critical transportation needs. While the Maryland Chamber supported many aspects of this legislation, we remained diligent in seeking stronger protections of the TTF through a constitutional amendment which require a three-fifths vote of each House and a declaration of a fiscal emergency. The Maryland Senate passed a constitutional amendment (SB 829) at the same time they passed the compromise transportation funding package. The House did not take action on the constitutional amendment until the final day of session when it was slightly amended and sent back to the Senate in the late afternoon. The Senate accepted the final version of the bill in the waning moments of session, and the voters will decide on the matter at the polls in 2014.
Key provisions of HB 1515 include:
Phasing in a 3 percent sales tax on the price of gasoline over three years;
Dedicating part of the revenue raised by the federal Marketplace Equity Act (online sales tax) to the Transportation Trust Fund. If the Act fails, the State would phase in an additional 2 percent sales tax on gasoline;
Adjusting Maryland Transit Administration fares every three years based on the Consumer Price Index;
Indexing the excise tax on gasoline based on the Consumer Price Index; but, capping the increase at 8 percent per year; and
Establishes a workgroup to study local and regional transportation funding.
Advocating for public private partnerships (P3) as a mechanism to provide additional funding for the transportation projects, the Maryland Chamber worked with the Administration and other stakeholders to help ensure the passage of HB 560. This legislation streamlines the P3 process with predictability and transparency while creating an avenue for businesses to submit unsolicited ideas.
The Maryland Chamber was an early supporter of the Governor’s Employment Advancement Right Now (EARN) Program (HB 227/SB 274) which creates a competitive grant process for workforce training collaborations between businesses, local government, and non-profits. The bill passed and the Governor’s Budget included $2.5 million for the first year of the program.
Other successes include:
Passage of legislation (HB 386/SB 203) to increase the mandated appropriation for the Research & Development Tax Credit Program from $6 million to $8 million annually and the ability of small businesses to receive a refundable tax credit under this program.
Passage of legislation (HB 803) to create a tax credit program to promote investment in CyberSecurity companies.
Passage of legislation (HB 328/SB 779) to clarify the duration which a company is eligible for the biotechnology tax credit program.
Defeating legislation (HB 1231) that would have added a greater administrative burden on companies receiving over $25,000 in incentives from the State.
The Maryland Chamber has been a strong advocate for maintaining the common law doctrine of contributory negligence for fault allocation in the state. There is currently a court case before the Court of Special Appeals which we fear may attempt to change that doctrine. In response to the case, the Chamber convened a group of stakeholders to craft legislation (HB 1182) which would maintain contributory negligence and joint and several liability and would establish a commission to study the fault allocation system in Maryland. The legislation did not pass out of committee.
Also, legislation (HB 78/SB 160) failed in the final hours of the session which would have removed the liability from landlords and property owners for cases where a dog causes an injury on their property and would have provided that the owner of a dog which has caused an injury would have a rebuttable presumption that the dog was dangerous.
Successes in civil liability include:
Defeating legislation (HB 130/SB 263) that would have awarded attorney’s fees and expenses in civil cases to the plaintiff.
Defeating legislation (HB 509) that would have established a False Claims statute which would have allowed private citizens to attempt to recover false claims of companies to the State.
Defeating legislation (HB 947) that would have allowed an individual to sue companies that formerly manufactured lead pigment in lead-based paint for the cost of abating lead paint hazards on their property.
The Maryland Chamber worked with other concerned stakeholders to defeated two costly employer mandate bills, paid sick leave and minimum wage, which would have been detrimental to the competitiveness and survival of Maryland businesses. Paid sick leave (HB 735) would have required all employers to provide up to 7 days of leave for the purposes of illness, medical care for their employees or their employees’ family members and, in some cases, of domestic violence. The minimum wage increase legislation (SB 683) would have raised the state’s minimum wage from $7.25 to $10 per hour, over a three-year period.
Other successes included:
The Chamber, however, was not successful in defeating HB 804. This bill will require employers to discuss and provide, when applicable, reasonable accommodations to pregnant employees.
Defeating legislation (SB 51) that would have allowed an individual to void a non-compete agreements when filing for unemployment benefits.
Defeating legislation (HB 1331, HB 1334, HB 1335) that would have extended benefits to pregnant employees; i.e. mid-size businesses providing 6 weeks of unpaid leave for a birth or adoption of a child and businesses providing short-term disability insurance for pregnancy.
The Maryland Chamber was successful in amending legislation (HB 1098/SB 290) which would have mandated the use of prevailing wage for a project receiving and funds from the State. The amended version of the bill creates a task force to study the cost of minimum wage on school construction projects in the State and how those projects are administered. The Maryland Chamber was also successful of defeating legislation (HB 956/SB 719) which would have mandated that a company which receives over $100,000 in economic aid from the state to provide a “living wage”, paid sick leave, paid jury service leave, and a number of other onerous workplace rules.
The most important health care legislation (HB 228/SB 274) dealt with the codification of the remaining structure of the State health insurance exchange (Exchange) as mandated by the Federal Affordable Care Act. One of the key provisions of this year’s legislation, and a key issue for the Maryland Chamber, was how the Exchange would fund the operating cost associated with its administration. The Administration chose to fund the exchange through an existing premium tax, which means that health insurance consumers and businesses will not be asked to provide additional funding for the Exchange.
Energy & Environment
During the final days of session, the Maryland Chamber, its members and other interested parties tried to bring some equity in the assessment of stormwater fees between the private and public properties with impervious surfaces. On Sine Die, the Maryland Senate amended HB 508 to establish a two-year delay on the assessment and require a workgroup to study the impact the stormwater fees would have on the State and Local governments’ budgets. However, this legislation died during the final hours of session due to crossover.
Additional successes include:
Helping to defeat a series of legislation (HB 337/SB 517, SB 601/HB 1274, HB 341/SB 513) aimed to prevent drilling of Marcellus Shale in Western Maryland.
Passage of legislation (SB 8) that will allow gas companies the ability to start the necessary infrastructure replacement projects needed around the state.
Thank you for your continued support of the Maryland Chamber of Commerce. If you have any questions, let us know.
Kathy Snyder, CCE