The 90 day Maryland 2012 legislative session is 1/3 completed. The 1st 30 days featured introduction of bills and the budget; the second 30 days will focus on bill hearings; and the third and final 30 days will involve voting on bills in committee and resolving the budget issues. (This last 30 days is the period where things get done – good or bad.)
Here’s a brief look at the major issues facing the General Assembly during the next 60 days: (the 1st two are general and the rest are of specific interest to MAM members)
Gas Tax Increase: there are a variety of proposals to increase the tax ranging from the Governor’s idea to impose the State’s 6% sales tax (an 18 to 21 cent increase per gallon at today’s prices on top of the existing 23.5 cents per gallon tax) to more modest proposals to increase the existing tax by 5 to 15 cents. It is doubtful that there are enough votes in the House to pass any gas tax increase; however, things change rapidly in Annapolis.
Personal Income Tax Increase: Governor O’Malley’s budget proposal includes proposed changes to the personal income tax that would raise $180 million for the State in the first year and $110 for county governments. His proposal makes changes to the definition of taxable income by reducing itemized deductions by 10% for taxpayers with incomes between $100,000 and $250,000 and 20% for incomes in excess of $250,000. Also, the proposal includes reductions in the personal exemption depending on income ranges.
Since the Governor’s budget was introduced, there have been legislative proposals to reinstate the “millionaire’s tax” that expired at the end of 2010. This adds a higher rate of 6.25% on incomes over $1 million – the current rate is 5.5%. There are alternate proposals to repeal the 1997 10% rate reduction.
Corporate Income Tax: there are two Senate bills from the past: one to impose combined reporting (SB 269) and the other to impose the alternative minimum assessment (SB 248). In the House there are two bills to reduce the corporate income tax rate (the cost is around $100 million which means they are not likely to pass).
Tax Credit Review & Termination: last year HB 620 passed the House and died in the Senate Budget & Taxation Committee. This year the identical bill has been reintroduced in the House and now there is one in the Senate( HB 764 & SB 739). The bills provide that 29 tax credits will be terminated unless legislation is passed following a review and evaluation by the legislature to reinstate them. The process is spread out over a 4 year period beginning in 2013. The R&D tax credit would expire July 1, 2016 unless legislation is enacted at the 2016 session to reinstate it. The current expiration date is 2020 which was established at the 2010 session – a 10 year extension. MAM opposed HB 620 last year and will oppose these bills this year.
R&D Income Tax Credit – Increase in $6 Million Annual Cap to $18 Million: at MAM’s request legislation has been introduced in the Senate (SB 570) and a companion bill will be introduced shortly in the House to increase the cap from $6 million to $18 million. The existing cap has caused the authorized credits to be prorated resulting in applicants receiving just over 10 cents on the dollar. When the program was established (by MAM) in 2000, the $6 million cap was included. At that time the cap for a similar program in PA was $15 million. Today PA’s cap is $55 million while MD’s cap remains at $6 million.
Energy – Offshore Windmills: Governor O’Malley has reintroduced his proposal to establish offshore electricity generating windmills off of the coast of Ocean City. So that the developers can obtain financing for the construction of the windmills, the legislation provides a guaranteed income stream once they are up and running. Last year the proposals died in committee in both the House and Senate. They are back this year in slightly different form, but basically the same idea (HB 441 & SB 237). This year’s legislation is estimated to the impact Maryland manufacturers up to $375,000 more for electricity beginning as early as 2017 if the windmills are ever built. That estimate assumes an annual electricity consumption of 75 million kWh, which is the cap included in the legislation for manufacturers. The cost is based on a surcharge of 20 cents on 2.5% of electricity consumed up to the cap.
MAM (along with another manufacturing group) is negotiating with the Administration to reduce the surcharge thereby lowering the maximum exposure from $375,000 to around $100,000. The hearing in the Senate is on February 14th. MAM will oppose the legislation unless an agreement can be reached to significantly reduce the costs to manufacturers.
Please provide me with your thoughts regarding our position on the windmill legislation.
Again, thank you for your continued support allowing us to keep up the fight in Annapolis for Maryland manufacturing!
Gene L. Burner
President
Manufacturers’ Alliance of Maryland (MAM)
410-279-1264
gburner@mdmanufacturing.org
www.mdmanufacturing.org
