2012 General Assembly Session Recap
The stroke of midnight brought the 2012 Maryland General Assembly session to a chaotic end, with the failure of major tax and revenue bills raising the prospect of significant cuts in the state budget. However, pressure is already building for the Governor to quickly call the General Assembly back into special session to enact a revenue package that would avoid the cuts, and possibly consider other issues. During the 90-day session the Maryland Chamber took positions on 146 of the 2,580 bills introduced. Below is a recap of important business issues considered during the session. View all Chamber bill positions here.
Although the General Assembly enacted a state general fund operating budget for fiscal year 2013 of $15 billion, over $500 million of the appropriations were contingent on the passage of bills (SB 152 and SB 523) that would have transferred funds from IWIF, shared teacher pension costs with county school boards, raised taxes, and taken other cost containment measures. The failure of those bills will trigger $512 million in spending reductions in funding for K-12 education, higher education, local aid, biotech grants, and state agency operations. See a list of the contingent budget reductions here. The Governor is considering calling the General Assembly back into a special session for purposes of enacting the failed Budget Reconciliation and Financing Act and a tax bill. However, any issue could be taken up at a special session, and the scope and length of such a session is unclear at this point. The need to finalize state and local budgets will require the Governor and General Assembly to act quickly for any additional measures.
Debate over a variety of proposed tax increases for closing the state’s budget gap consumed much of the session. Legislation (SB 523) to further increase individual income tax rates for individuals with incomes over $100,000 failed, but could be resurrected in a special session. The Chamber opposed this tax increase due to its negative impact on small business owners. By increasing state and local individual income tax rates, this bill would have increased the gap with neighboring states and encouraged business owners to establish their domicile in other states, costing Maryland additional income taxes. Another part of the bill would have increased the cost of borrowing for small businesses by imposing county recordation taxes on indemnity mortgage deeds of trust.
However, the Maryland Chamber again successfully led businesses in opposition to priority bills (SB 269/HB 941) that would have implemented a corporate income tax system of unitary combined reporting and jeopardized single sales factor apportionment for manufacturers.
Other successes included:
- Defeating priority legislation (HB 1051) that would have extended the sales tax to a long list of business and consumer services.
- Striking from the Budget Reconciliation and Financing Act (SB 152) proposals to extend the state sales tax to downloads of digital products and sales by certain out of state vendors with Maryland-based affiliates.
- Defeating legislation (SB 249/HB 784) that would have imposed a 6.25 percent individual income tax bracket on high earners.
- Defeating legislation (HB 1472) that would have authorized counties to impose discriminatory property tax rates on business property.
Significant legislation (HB 443) was enacted with the Chamber’s support that will address key aspects of the state Health Exchange regarding the role of brokers, the licensing and certification of Exchange Navigators, and the rules governing the Exchange and private insurance markets. The Maryland Chamber was successful in persuading the General Assembly to tighten provisions authorizing the Exchange Board to selectively exclude health insurance carriers from the Exchange after 2016. Before exercising such authority, the Exchange will have to submit a detailed plan to the respective Senate and House committees before a General Assembly session, and wait 90 days before proceeding. Key issues will be addressed over the next year, including essential health benefits and fee setting authority for the Exchange. The Maryland Chamber also had success in resisting new employer health benefit mandates that would have required additional coverage for individuals with autism spectrum disorders (SB 1081/HB 1434) and in vitro fertilization (HB 1041).
The Chamber was successful in obtaining changes to priority legislation (SB 739/HB 764) that would have terminated all job creation tax credits, subject to a sunset review process. As amended, the bills will establish a process for the periodic review of 8 of the largest tax credit programs. Other successes included:
- Passage of legislation (SB 296) that will allow an individual or corporation to claim an income tax credit for costs incurred to obtain a federal security clearance for employees and construct or renovate a sensitive compartmentalized information facility.
- Passage of legislation (SB 1086/HB 1456) to require the Comptroller to adopt regulations that will require businesses claiming certain income tax credits to file the credit form by electronic means.
The Chamber was not successful in gaining passage of legislation (SB 570/HB 943) that would have expanded funding for the research and development income tax credit and allowed a refundable credit for small businesses.
Several bills were considered, and defeated, that would have increased the exposure of businesses to lawsuits. The bills included:
- Defeating legislation (SB 857, SB 924/HB 506, HB 507) that would have limited the use of expert witnesses in medical liability litigation.
- Defeating legislation (SB 351/HB 469) that would have liberalized the standard for the awarding of punitive damages.
- Defeating legislation (HB 1134) 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.
Legislation (SB 549/HB 456) was enacted with the support of the Chamber and other business allies that will expand the definition of what constitutes a "small business" under the Small Business Reserve Program. Current law requires small businesses within an industry sector to be below both a total employee size and a gross sales volume. This bill would allow an entity to qualify as a small business if it met either of the criteria. The Chamber was also successful in defeating legislation (HB 558) that would have debarred a company from contracting with the state or a local government if they, an affiliate, or a subsidiary required binding arbitration of certain employment disputes.
The Maryland Chamber worked with other concerned stakeholders to pass legislation (SB 272/HB 1364) that would bring clarity and fairness to the Workplace Fraud Act. The bills will establish reasonable exceptions from the burdensome employer-employee presumption, and correct a number of issues of concern within the law, including the need to establish predictable procedures and timetables for enforcement activities and resolution of disputes under the law. The Chamber supported the bill because it would help to establish a clear path to compliance of the law.
The Maryland General Assembly passed legislation (SB 16/HB 353) that will prohibit an employer from requiring an employee to work on days they spend four hours or more on jury duty. The Chamber opposed the bill, but helped to successfully amend the bill to narrow the scope of applicability to employees that work late night shifts, which conforms the bill to the Virginia law.
Other successes included:
- Defeating legislation (SB 667/HB 652) that would have required that court records and police records relating to a nonviolent conviction be shielded automatically three years after the person satisfies the sentence for the conviction of a misdemeanor and five years after a person satisfies the sentence for the conviction of a felony.
- Defeating legislation (SB 966) that would have added “employment status” to the list of protected classes under Maryland law, and would have allowed persons who claim employer discrimination due to unemployment to file civil action.
Energy & Environment
The Chamber and its allies worked to change legislation aimed at limiting development relying on septic systems (SB 236/ HB 445) by establishing four growth tiers based on specific land use characteristics. As amended, final decision-making authority over how counties determine the tier system is removed from the Maryland Department of Planning (MDP), and given to local jurisdictions. The amended bill also removes MDE authority to deny permits for major subdivisions, and provides some opportunity for major subdivision development in Tier III. The legislation now also provides for grandfathering by preliminary plan approval.
Additional successes include:
- Successfully opposing legislation (SB 237/HB 441) that would have created a carve out in the State Renewable Energy Portfolio Standard for energy derived from offshore wind. If the bill had passed, residential utility rate payers would have been required to pay an additional $1.50 per month and nonresidential ratepayers would have seen an increase of 1.5%.
- Helping defeat a package of legislation (SB798/HB 1204, HB 907, HB 296, HB 1034, HB 1170) that was aimed to slow down or stop safe and productive drilling in the Marcellus Shale.
The Maryland Chamber and its business allies supported legislation (SB 971/HB 1302) that would have raised needed transportation revenue and provided a level of protection for funding designated for the Transportation Trust Fund (TTF). While the Chamber supported the intention of the bill, it urged for stronger protection of the TTF through a constitutional amendment. Transportation funding is an investment in Maryland’s economic development and quality of life. The General Assembly failed to act on the legislation.