Highlights and Lowlights of the
2006 General Assembly Session

Wal-Mart Bill: There’s good news and bad news on this topic. The bad news is that the Maryland General Assembly voted to override Governor Ehrlich’s veto of the so called “Wal-Mart Bill,” mandating that large employers offer health insurance to their employees, or else pay a payroll tax to the State. The good news is that the law is currently under a court challenge and likely to be struck down because it violates federal law.

Son of Wal-Mart Bill: The Maryland Chamber defeated legislation that would have extended the “Wal-Mart Bill” payroll tax to every employer in Maryland.

Minimum Wage: The General Assembly overrode Governor Ehrlich’s veto of legislation to increase Maryland’s minimum wage from $5.15 to $6.15 per hour. The law took effect February 16. The Chamber defeated legislation that would have proposed an addition to the Maryland Constitution that would tie annual minimum wage increases to the rate of inflation.

Slots: The General Assembly failed to act on legislation to authorize carefully regulated slot machines at limited locations to fund public education.

Medical Liability Reform: The Chamber strongly supported legislation that would have provided meaningful tort reform for health care and helped to hold down runaway health insurance costs. This legislation would have made several tort reforms for medical liability cases, including setting a limit of $500,000 on noneconomic damages, allowing evidence that a person will be compensated from a collateral source, adjusting economic damage awards for taxes, adjusting the computation of future medical expenses, and other changes. The legislation was defeated.

Price Controls: The Chamber defeated legislation that would have imposed price controls on any good or service in the state’s economy during a state of emergency. The Chamber also defeated legislation that would have allowed the Attorney General and individuals to sue sellers of gasoline based on the price of the gasoline.

Association Health Plans: The Chamber advocated legislation that would have authorized an association, or group of associations, to offer a health benefit plan to their members and employees. Employers and employees need more choices, and choices are impossible without competition. Association health plans could give small employers an alternative. The legislation was defeated.

Consumer Driven Health Care: The Maryland Chamber supported efforts to change the direction of Maryland health insurance market to be more consumer-driven. Current state laws have produced a health insurance system that offers limited competition, little choice for employers and employees, and escalating costs. The Chamber urged legislators to consider an alternative that would allow employers to contribute to the purchase of health insurance and individuals to take greater responsibility for their health care choices. The legislation died, but will be studied further during the interim.

Security Breach Bill: Several bills would have imposed severe penalties and reporting requirements on businesses when the personal information of customers was divulged through a security breach. The Chamber originally raised concerns that the bill went too far. Thankfully, however, the Senate Finance Committee acted on feedback from the business community and amended the legislation to produce a bill that would have enhanced the protection of consumer information, without overreaching or subjecting businesses to needless lawsuits. The Senate passed the bill 46-0, but the bill died in the House Economic Matters Committee.

Estate Tax: The Maryland Chamber fought for estate tax reform. Prior years’ legislative action decoupled the Maryland estate tax from the federal tax, which has caused many complexities and additional costs in planning for the tax’s requirements. Attempts to do serious recoupling failed, but the Chamber won passage of legislation to reduce the tax rate to 16 percent on all estates over $1 million. This results in a savings of approximately $22,000 for estates that have $1,090,000 or more in value.

Tax Credit Disclosure: The Chamber defeated legislation that would have imposed onerous reporting requirements on thousands of Maryland businesses that receive tax credits, exemptions and development subsidies.

R&D Tax Credit: The Chamber advocated legislation that would have expanded the R&D Tax Credit, which is a necessary tax incentive for Maryland to compete with other states in attracting and retaining manufacturing operations and high technology companies. The House of Delegates passed the legislation, but time ran out before the Senate could vote on the bill.

Combined Reporting: The Chamber defeated legislation to require corporations that are members of a “unitary group” to calculate their Maryland income tax using a combined reporting method. The Maryland Chamber opposed this legislation because it would put Maryland businesses at a competitive disadvantage with neighboring states due to the complexity and ambiguity of combined reporting.

Interest on Refunds: The Chamber fought to pass legislation that requires the state to pay the same rate of interest on tax refunds as it charges taxpayers for delinquent taxes. For no apparent public policy reason, state law previously provided two different formulas for calculating interest – a high rate of interest (13 percent) for delinquent taxes and a low rate of interest (4 percent) in circumstances when interest is paid on refunds.

Tax Reform Commission: The Chamber defeated legislation to establish a commission to evaluate Maryland’s major taxes and overall tax structure, and to make recommendations for tax law changes. The Chamber opposed the bill because the commission didn’t include non-legislative and non-governmental members. Tax attorneys, CPAs and economists who specialize in tax matters should be included because they can provide valuable insights.

Tax Exemption Study and Sunset Bill: The Chamber defeated legislation that would have established a formalized legislative review of almost all of the subtraction modifications and credits currently provided in Maryland’s income tax code and almost all of the exemptions currently provided in Maryland’s sales and use tax code. The legislation would have also automatically terminated any tax modification, credit or exemption that was not affirmatively reestablished by law before a specified date.

Municipal Building Excise Tax: The Maryland Chamber defeated legislation to authorize municipal corporations to impose a building excise tax on all types of building construction. One of the positive aspects of Maryland’s state and local tax structure is that we do not have the myriad local level taxes that add layers of complication as exist in many other states.

Stem Cell: The Chamber advocated passage of legislation to establish the Maryland Stem Cell Research Fund because of the importance of biotechnology research to Maryland’s economy. The General Assembly adopted the Chamber’s recommendation to allow the Governor flexibility in future stem cell appropriations.

Healthy Air Act: The Maryland Chamber strongly opposed legislation that establishes an aggressive schedule and very stringent emission limits for nitrogen oxides, sulfur dioxide, mercury, and carbon dioxide from seven Maryland power plants. This legislation requires the State to join the Regional Greenhouse Gas Initiative (“RGGI”) by June 30, 2007, with the option to withdraw in 2009 if reliability is compromised. A regional approach, based on Federal requirements, would have achieved the necessary reductions in the most efficient way. Yet, Maryland has passed a new law that will have a limited impact on improving this region’s air pollution problems, because more than two-thirds of Maryland's air pollution is caused by out-of-state transport. Costs will likely be in the billions of dollars. The imposition of expensive pollution controls within Maryland will inevitably result in more expensive electricity for Maryland businesses and consumers and yield limited environmental benefits. Governor Ehrlich signed the bill into law.

Transit Funding Study: The General Assembly passed legislation to study Maryland’s mass transit funding needs and identify potential funding sources to address those needs. The Chamber supports the idea of a study to identify potential dedicated funding sources for mass transit.

Procurement – Commercial Nondiscrimination Policy: Legislation was enacted that will establish a commercial nondiscrimination policy that prohibits the State from entering into a procurement contract with a business entity that has discriminated against subcontractors, suppliers, vendors, or commercial customers on the basis of race, color, religion, ancestry or national origin, sex, age, marital status, sexual orientation, or disability. The Chamber had originally voiced concerns about the bill’s lack of due process for businesses charged with discrimination complaints, but worked with other business organizations and the bill’s sponsors to provide a more balanced piece of legislation. An aggrieved party will be able to file a complaint with the State Human Relations Commission, which will investigate and make a recommendation to the State Board of Public Works.