by Kathleen Snyder, President & CEO, Maryland Chamber of Commerce
The stroke of midnight on April 10 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. Pressure, however, is already building for the governor to quickly call the General Assembly back for a special session to enact a revenue package to avoid the cuts, and possibly consider other issues. During the 90-day session the Maryland Chamber of Commerce took positions on 146 of the 2,580 bills introduced. Below is a recap of important business issues considered during the session.
Although the General Assembly enacted a $15 billion state general fund operating budget for fiscal 2013, appropriations of more than $500 million were contingent on the passage of other bills that would have transferred funding from the Injured Workers Insurance Fund, shared teacher pension costs with county school boards, raised taxes, and taken other cost containment measures. The failure of those bills would trigger $512 million in spending reductions in funding for K-12 education, higher education, local aid, research grants and investment incentive programs for life sciences companies, and state agency operations. A special session could address these cuts, but tax issues would be worrisome to the Maryland chamber and its members.
Debate over a variety of proposed tax increases to close the state’s budget gap consumed much of the regular session. Legislation to further increase individual income tax rates for individuals with incomes over $100,000 failed, but could be resurrected in a special session. The Maryland chamber opposed this tax increase because it would have meant some small business owners would pay more.
Once again, the Maryland chamber successfully led businesses in defeating other bills that would have implemented a corporate income tax system of unitary combined reporting, jeopardized single sales factor apportionment for manufacturers, and extended the sales tax to a long list of business and consumer services.
The Maryland Chamber was successful in obtaining changes to priority legislation that would have terminated many 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.
We supported the passage of legislation that will allow an individual or corporation to claim an income tax credit for costs incurred to obtain a federal security clearance for employees.
Small Business Procurement
Legislation was enacted with the support of the Maryland and Montgomery County chambers 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 meets either of the criteria.
A major disappointment to the Maryland Chamber and its business allies was the failure to raise more revenue for transportation. The Chamber supported legislation that would have brought in needed transportation revenue and provided a level of protection for funding designated for the Transportation Trust Fund. While the Chamber supported the intention of the bill, it urged for stronger protection of the trust fund 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.