2010 General Assembly Session Recap

The 2010 Maryland General Assembly session ended at 12 a.m. on April 13. During the 90-day session the Maryland Chamber took positions on 146 of the 2,700 bills introduced. Below is a recap of important business issues considered during the session. For more information, visit www.mdchamber.org.

Unemployment Insurance
The biggest issue of the session for most Maryland employers was the Administration’s unemployment insurance bill (SB 107). As introduced, the legislation would have liberalized several standards for granting unemployment insurance benefits in order for the state receive a one-time payment of $127 million in federal stimulus funds. While well-intentioned, the bill would have increased state borrowing from the federal government and increased long-term costs to employers. The Maryland Chamber stood united with other business organizations to insist on amendments to the bill that contained employer costs. The resulting compromise was enacted in a manner that will qualify the state for the federal funds, strengthen the long-term health of the unemployment insurance trust fund, reduce interest on late payments, and allow employers to use payment plans to extend unemployment insurance payments this year.

State Budget
The state operating budget was again balanced through heavy reliance on fund shifts and borrowing from special funds, and federal stimulus funds. Spending from state sources in the fiscal year 2011 budget will grow by 1 percent to offset declining federal revenues. Significant downside risks continue, with an uncertain economic recovery, an anticipated further loss of over $1 billion in federal stimulus funds next year, and an ongoing gap between state spending and revenues of over $1.5 billion. Major budget decisions will face the next General Assembly as task forces and study commissions report back on ways to contain major cost drivers in the state budget, including local aid, state employee retirement and health care costs, and teacher pension expenses.

Taxes
The General Assembly resisted efforts to raise taxes this session. The Maryland Chamber again successfully led businesses in opposition to priority bills (SB 354/HB 10, HB 584) that would have implemented a corporate income tax system of unitary combined reporting and jeopardized single sales factor apportionment for manufacturers. Legislation (SB 336/HB 395) passed that will require the Maryland Business Tax Reform Commission to conclude its work this year and offer final recommendations by December 15, 2010.

Other successes included:

• Passage of legislation (HB 484) to allow small businesses with real property tax bills of less than $50,000 to pay their taxes in semiannual installments, starting in 2011.
• Extending the research and development income tax credit through taxable year 2019 (SB 64).
• Defeating legislation (SB 913/HB 1177) that would have extended the duration of the 6.25 percent individual income tax bracket.
• Passage of legislation (SB 283/HB 470) to permanently extend the Higher Education Investment Fund, financed by a portion of the corporate income tax.
• Defeating legislation (SB 824) that would have imposed sales tax on out-of-state vendors that advertised in Maryland.
• Enactment of legislation (SB 106) granting a $5,000 tax credit to employers for each new hire of unemployed individuals from March 25 to December 31, 2010.
• Defeating legislation (SB 638/ HB 755) that would have required every Maryland employer to annually provide an electronic or written notice to employees who may be eligible for the earned income credit.

Workplace Regulation

Credit Reports and History: The Maryland Chamber successfully opposed legislation (SB 312/HB 175) that would have prohibited employers from using an applicant’s credit report or credit history when making hiring decisions. The issue is already well regulated at the federal level. Employers need the flexibility to use a variety of factors to determine the best candidate to fill a position. This is particularly true for employees who handle cash or financial information.

FMLA Expansion: The Maryland Chamber successfully opposed legislation that sought to expand Maryland employers' obligations under the federal Family and Medical Leave Act (FMLA). The bill (HB 1272) would have required employers to provide leave to employees to care for siblings, grandparents, grandchildren, domestic partners, and children of domestic partners. The legislation was too expansive and went beyond FMLA requirements. It would have also required Maryland employers to provide double the usual FMLA leave time, or 24 weeks, to eligible employees. However, the FMLA would not have recognized leave taken under the MD FMLA as federal FMLA leave.

Government Mandated Breaks: The General Assembly passed legislation (SB 789/HB 1299) that requires retailers with more than 50 employees to provide a 15-minute break for employees who work between four and six consecutive hours and a 30-minute break for employees who work more than six consecutive hours. As amended, the bills do not apply to restaurants; state, county and municipal governments; employers exempt from overtime pay requirements under the Fair Labor Standards Act; franchises with five or fewer employees on site; and those covered by a collective bargaining agreement or employment policy that includes a shift break policy equal or greater than this bill. The Maryland Chamber opposed the legislation. While well intentioned, we believe the legislation adds unnecessary new administrative burdens to impacted employers, most of whom already provide shift breaks to employees. The bills would not allow employers the flexibility sometimes needed to deal with emergencies that could require an employee to work for longer than six consecutive hours without a break. The passage of this legislation raises concern there will be efforts to expand it to other industries in the future.

Other workplace regulation successes included:

• Defeating legislation (HB 1320) that would have mandated that an employer pay an employee their normal compensation, less any government per diem, when the employee is called to jury service.
• Defeating legislation (SB 419) that would increase criminal penalties for violations of wage and hour laws from $1,000 to $2,500 as the maximum fine for a first violation. Subsequent violations are subject to a fine of up to $5,000. Each workweek for which an employer does not pay the wage required under Maryland Wage and Hour Law is considered a separate offense. Additionally, legislation (SB 418/HB 1246) that would have provided that an employee who prevails in a claim of unpaid wages be awarded treble damages, plus a new penalty of two times the amount of unpaid wages, plus attorney’s fees and cost was defeated.

Stormwater Regulations
The Maryland Chamber and its business allies successfully advocated changes to the stormwater regulations set to take effect in May 2010. The Chamber worked with developers, environmentalists and government officials to develop compromise regulations to address the concerns outlined by the business community and local governments. The emergency regulations will give developers more time to complete their projects before having to meet the new, stricter stormwater management rules. The compromise will “grandfather” some additional projects that were already in the planning pipeline. It will also give developers additional flexibility for redevelopment projects in designated growth areas.

Civil Liability
Maryland businesses again were the targets of numerous bills that would have exposed them to increased liability and lawsuits. Legislation (SB 279) was passed over the Chamber’s objection that will subject health care providers to additional lawsuits from individuals alleging that a business filed a false claim for payments in a state health program. Legislation (SB 118, SB 119) opposed by the Chamber also passed to send to the voters this fall a constitutional amendment that would raise the minimum dollar threshold for cases in which a jury trial may be requested to $15,000. The Maryland Chamber helped to defeat the following bills:

• Legislation to increase the cap on noneconomic damage awards for lawsuits alleging personal injury or wrongful death resulting from medical malpractice (SB 769/HB 622).
• Legislation that would have increased class action lawsuits by allowing up to treble damages for certain violations of the Consumer Protection Act (HB 1150).

State Procurement
Legislation (SB 71) passed with the Chamber’s support that will extend the Small Business Reserve Program through 2016, in order to assure that small businesses have access to state procurement contracts. The Maryland Chamber was successful in defeating bills (SB 785/HB 1317) that would have imposed unprecedented wage and collective bargaining mandates on employers and other persons that receive or benefit from a state economic development subsidy or capital improvement of more than $250,000. Legislation (HB 1238) was also defeated that would have required businesses with a state construction contract to provide a state-mandated level of health insurance for their employees. Bills (SB 844/HB 721) that would have forced all Maryland companies that have state procurement contracts to participate in the federal E-Verify system and be subject to additional sanctions for employment violations were not enacted.

Health Care
Most new state health care initiatives were deferred as Congress enacted sweeping new health care legislation. However, this will set the stage next session for significant state legislation to implement the federal law, including establishment of a health insurance exchange and major modifications to group and individual health insurance laws. The Maryland Chamber had success with the following state health care legislation this session:

• Amending legislation (SB 328/HB 933) to give hospitals more flexibility in offering financial assistance to patients with financial hardships.
• Defeating legislation (SB 181) that would have allowed dependents to stay on insured’s health insurance policies up to age 30.
• Defeating a new health benefit mandate (SB 1028/HB 1091) to provide additional coverage for individuals with autism spectrum disorders.

Business Campaign Expenditures
Numerous bills were introduced in an effort to limit the ability of businesses to make indirect expenditures in elections, a constitutional right affirmed by the U.S. Supreme Court in its Citizens United decision. The Maryland Chamber was the only group to successfully oppose these bills, and maintain the right of businesses to fully participate in the political process.

Transportation Funding
The General Assembly passed legislation (SB 229/HB 710) to appoint a Blue Ribbon Commission on Maryland Transportation Funding to study the state’s short- and long-term transportation funding needs. The Maryland Chamber supported the bills. The Commission will review and make recommendations on a number of items, including: current Transportation Trust Fund (TTF) funding sources and the structure of the TTF; transit and highway construction and maintenance funding needs; options for public-private partnerships to meet transportation funding needs; and options for sustainable, long-term revenue sources for transportation. The Commission will submit an interim report by January 2011 and a final report by November 2011. The bills appoint representatives from the business community to the Commission.