2011 Legislative Report
State Fiscal/Budget Issues:
While many of the new revenue measures Maryland Nonprofits and others supported failed in
2011, two of Maryland Nonprofits suggested general fund revenue measures were approved, at
least in part: raising the tax on alcoholic beverages and returning to the General Fund sales tax
revenues shifted to the Transportation Fund in the 2007 special session.
The increased sales tax on alcohol, from 6% to 9% effective July 1, 2011 will yield over $85
million next year. While less than half of the amount projected from the proposed “dime a drink”
excise tax increase (actually an equivalent per gallon increase imposed at the wholesale level),
the $85 million is approximately the amount we had understood possible from legislative leaders
at the beginning of the session. The legislation also dedicated its additional funding for FY ‘12 to
education aid and school construction and to the developmental disabilities waiting list. $15
million remains dedicated to the DDA waiting list on an ongoing basis.
HB 72, the Budget Reconciliation and Financing Act of 2011, repealed the shift of 5.3% of sales
tax revenues to the Transportation Trust Fund that was enacted in the 2007 special session.
That represents a return to the General Fund of approximately $200 million per year.
The Fiscal Year 2012 General Fund budget of $14.7 billion represents over $1 billion in cuts
from current service levels, primarily in teacher and employee benefits, Medicaid provider rates,
K-12 school funding, and funding for higher education and local governments. The budget plan
also incorporates $254 million in new fees assessed against hospitals and nursing homes
(essentially a funding cut) and $64 million of increased vehicle registration fees. The ‘ongoing’
cuts represent about a 40% reduction in the state’s “structural deficit”, leaving over $1 billion in
additional cuts to be made over the next two years to reach the legislature’s goal of eliminating
this shortfall by the end of FY ’14.
The legislature enacted the Governor’s proposed governance structure for Maryland’s health
insurance exchange (required by the Affordable Care Act) although several specific provisions
were removed for further study and legislative action next year. We will also continue working
with the MD Citizens Health Initiative, DHMH and others to promote awareness of the small
employer tax credit, already in effect under the ACA, to nonprofits and other small employers.
At the same time, however, state cuts to funding for Medicaid providers threaten the
effectiveness of Maryland’s recent eligibility expansions. Revenue increases will be necessary
to prevent even further cuts in the next two years.
Other Legislative Positions
House Bills 518, 591 & 926/Senate Bills 677 & 714 – Constitutional Amendments to Protect
Transportation Funds – Opposed - All of these measures would freeze sales tax funds in the
TTF, prohibit planned transfers in the next two years (requiring much deeper cuts in general
fund programs), and would provide a ‘protected status’ to transportation over education, health
and safety needs. All failed
House Bill 620 – Tax Credit Evaluation – Support - Would have required periodic review and
re-enactment of many tax credits (also considered ‘tax expenditures’). Legislation passed
House but failed in Senate.
EARNED INCOME TAX CREDIT
House Bill 632/Senate Bill 473 – EITC Notice By Employers – Support - Requires employers to
provide notice to employees of possible eligibility for the Earned Income Tax Credit. This may
be most effective way to reach eligible working individuals. Imposes essentially no cost or
burden but probably would significantly reduce number of eligible potential recipients not
accessing the credit. Enacted
House Bill 723/Senate Bills 339 & 663 – “Aggregating” Contributions of Business Entities -
Support – These would have closed MD’s most egregious campaign finance loophole that
permits common owner(s) of multiple LLC’s or business partnerships from making maximum
contributions from each entity, and would treat these in similar way as current law for
corporations, aggregating contributions from commonly-held entities. Failed
Senate Bill 666 – Fraudulent Transaction with Charities - Support – The bill would have created
a new criminal offense when charities or churches are led to enter contracts by intentional
misrepresentations. (serious cases of this type arose in Prince Georges County and could not
be prosecuted because Maryland does not have a general fraud statute – there are
prosecutions pending in DC, and perpetrators have been convicted for similar schemes in
House Bill 902/Senate Bill 643 - Source of Income Discrimination/ The Home Act – Support –
Would have prohibited refusal to rent to tenants based on their legal source of income or use of
housing payment vouchers. Failed