Posts about Maryland Legislature

According to other members of the committee, Gilchrist incorrectly thought the measure had failed in the delegation vote, so he thought he was supporting the wishes of the county by voting against it.

However, we also know that committee chairwoman Maggie McIntosh had concerns about the bill's ability to pass on the floor of the House. THe House has considered a tremendous number of new taxes and fees this session, and just last week approved raising income taxes.

McIntosh feared "fee fatigue" would doom the bill even though it would only indirectly create a new fee. McIntosh voted last in the committee vote, and there is no guarantee that she would have voted yea if hers had been the 13th and deciding vote.

Along with Councilmember Mary Lehman, the bill's champion on the Council, County Executive Rushern Baker personally worked hard to support the bill. Just Friday he released a press release reaffirming the need for the bill. As Baker is himself a former delegate, the committee warmly received his testimony during last week's hearing and he regularly reached out to leadership to check the bill's status and reinforce it as an executive priority.

The outcome likely would have been different had the delegation vote not been so close. It passed with the minimum 12 votes, with 9 opposed (two were absent). As DC experienced during its attempt to pass a container deposit in the 1980s, the industry opposition successfully couched the issue in racial and socioeconomic terms. They specifically appealed to central and south county residents in their tactics, relying on robocalls to mislead constituents and flood delegate offices with comments, and running ads on predominantly African-American radio stations and in newspapers.

These tactics prompted Delegate Veronica Turner, a co-sponsor of the statewide version of the bag fee, to switch positions, because she believed her constituents were vehemently opposed.

In response, advocates supporting the bill canvassed grocery store parking lots in Turner's district in Oxon Hill, and collected more than 300 signatures over a couple of weekends. They reported that shoppers were extremely supportive of the proposal once they learned that it was intended to reduce litter and create a fund for environmental restoration.

Turner was reportedly open to reversing her position, but she then fell ill and was hospitalized, and has since missed the rest of the legislative session. Her absence prevented a delegation subcommittee from giving the bill a favorable report, leading to the impression that the bill had died in February. (Perhaps this is the vote Gilchrist was remembering.)

Delegate Barbara Frush, who introduced the bill in the House, has faith that the county will eventually have a bag fee. The delegation leadership will change next year as part of the state's redistricting, potentially putting a stronger ally in the chairmanship.

In addition, the county has extensive environmental obligations, including reducing trash in the Anacostia River and dramatically improving stormwater management, and a bag fee would address both. While the county cannot enact a fee this year, other options are still on the table. The problems aren't going to go away on their own.

All told, this is expected to raise about $500 million toward the $1.1 billion gap.

The committee plan did not restore the recently-expired bracket for households making more than $1 million per year, often called the "millionaires' tax." That flaw kept Maryland from making its income tax more progressive. It also make it harder to close the budget gap.

However, a compromise emerged in the full Senate. Instead of creating a higher bracket, the top bracket rate of 5.75% for those earning above $500,000 would apply to all income instead of just income above $500,000. The additional funds of about $30 million will be used as aid to schools and counties.

Maryland's regressive taxes

The state's current tax system, like most states, is regressive. Higher income earners pay a smaller share of their income in taxes than lower income earners.

A December 2011 report by the Maryland Comptroller's office shows that the first 80% of earners pay about 6% of their income in state taxes. As household income rises above $100,000, the effective tax rates fall to a low of about 3% for those with more than $500,000 annual income.

The table below shows the percent of income different groups pay, including the effects of federal deductibility of state tax and the federal earned income tax credit.

Maryland 2008 effective tax rates by household income:

These are similar to the results of a study of 2006 Maryland taxes. The first 80% pay about the same share of income, but then the percentage begins to drop off steeply, with the highest earners paying the smallest share of their income.

The 2008 effective rates included the state's "millionaires' tax," an income tax bracket at $1 million per year which ended last year. Removing that likely increased the spread between what the top 1% and other income groups actually pay.

Progressive effects of Senate Committee plan

A quick analysis by the Institute for Taxation & Economic Policy (ITEP) of the proposal that passed the Budget & Taxation committee shows that the plan slightly decreased the average tax burden for the first 40% of taxpayers, and raised it for the next 59% but somewhat less for the top 1%.

Effects of Senate Budget Committee proposal on different income groups:

The actual effect on the overall tax burden between different income groups would have been fairly small, although it would have narrowed the 2.3 percentage point gap between the very poorest residents and the most wealthy by 0.3 percentage points. The narrowing between other groups would not have made any significant dent in the overall regressive nature of Maryland taxes.

The committee plan allowed Maryland to avoid significant reductions to Medicaid, education, higher education and public safety.

Increasing effective tax rates for upper income earners

From 2008-10, Maryland had a tax rate of 6.25% for income over $1 million per year. The bracket expired last year, which has contributed to the budget shortfall as well as making the tax system more regressive.

The bracket was pilloried by many conservative columnists and featured in a Wall Street Journal editorial after the Maryland Comptroller reported that the number of millionaires had dropped after the bracket was imposed. Editorials decried Maryland's "fleeing millionaires."

However, a more academic examination by ITEP found that millionaires overwhelmingly suffered a drop in income due to the recession. A similar examination by Governor O'Malley's office found that the number of millionaires dropped in the same percentages in a previous recession and rebounded in similar percentages.

Others have argued that it will stifle economic development in the state, but ITEP found no correlation between economic growth and income tax rate. By many measures, the highest income tax states performed as well or better.

Under the compromise plan, Maryland's state income tax would be well below the top income tax states and would still not near the top tier when adding in the highest rates imposed by some counties through the "piggyback" income tax.

The specific setup of the compromise plan could also create some problems, as taxpayers making $499,999 would pay significantly less in taxes than those making $500,001. Many higher-income Maryland residents around this cutoff will probably be paying a lot of money to accountants to play with deductions and tax shelters to avoid hitting the cliff.

It would have been much fairer to restore the "millionaires'" bracket instead, which would have raised more money and not created awkward discontinuities in the tax code. However, this compromise will raise some needed revenue and increase the percentage of tax paid by the top 1%. The Senate took a step in the right direction today.

The County Affairs subcommittee was unable to get 4 of 6 votes, as required by the Maryland constitution, to either recommend for or against the bill (or even to agree on "no recommendation"), but after 3 such votes it was eligible to move up to the full delegation anyway.

The bill's supporters withstood the pressure and protected home rule, allowing the Prince George's County Council to now take up the bag fee this fall. The county council voted 8-0, with one abstention, last month to support this measure. (The abstention was Karen Toles, who has been in the news this week for other reasons.)

The council's authority to enact a fee will take effect in October. Should the statewide bag fee bill also pass, the council will have 6 months to pass the county's program in order to be exempt from the statewide system.

The supporting delegates were sponsor Barbara Frush, Ben Barnes, Dereck Davis, Joseline Pena-Melnyk, Doyle Neimann, Michael Summers, James Hubbard, Kris Valder­rama, Anne Healey, Tawanna Gaines, Justin Ross, and Jolene Ivey. Delegate Ivey attended despite being on bereavement leave following the death of her father last week.

While the political climate remains challenging, the tide is turning. Chestertown, on the Eastern Shore, banned plastic bags outright. Howard County and Baltimore City have also expressed interest in a bag fee.

As these ordinances vary from county to county, stores with multiple locations will have more difficulty complying with all the laws, and consumers will need to remember which jurisdiction they are shopping in. A consistent statewide approach will do the most to reduce litter and be better for both retailers and shoppers.

The Community Cleanup and Greening Act, sponsored this year by Senator Brian Frosh (District 16-Montgomery County) and Delegate Mary Washington (District 43-Baltimore City), will copy the Montgomery County law and enact a 5¢ fee on plastic and paper checkout bags at all stores throughout the state.

Retailers will keep 1¢ of the fee. The Department of Human Resources will use fee funds to purchase and distribute free reusable bags to all low-income residents via community service centers and faith and social service institutions. The state will split the remaining proceeds between the counties, to pay for water quality improvement projects, and the Chesapeake Bay Trust, which will give out grants to restore the environment.

Baltimore, in particular, will benefit from a serious approach to litter reduction. As with the Anacostia River, the EPA has declared the Baltimore Harbor "impaired" by trash under the Clean Water Act, and the city faces steep fines for violations. The city currently spends upwards of $10 million every year to clean up litter; taxpayers are already paying a lot, and that burden will only continue to increase.

"Litter brings down the quality of life for residents," said Halle Van der Gaag, Executive Director of Blue Water Baltimore. "It is not only visually ugly but contaminates our waterways. Preventing it in the first place is more sustainable in the long-term."

The Senate's Education, Health, and Environmental Affairs Committee is holding a public hearing on SB511 on Tuesday at 1 pm; the House's Economic Matters Committee will hear HB1247 on Wednesday, March 14.

To show your support for the measure, send an email or find your representatives' phone numbers through the Surfrider Foundation. You can also participate in a Lobby Night next Monday, March 5, to go to Annapolis and meet with your legislators in person. RSVP by visiting www.mdlobbynight.com.

For more information about bag fees and the campaign supporting this legislation, visit the Trash Free Maryland Alliance.

The bill would make a new and much-needed regional hospital dependent on building the casino, a link that Baker specifically opposes. On the positive side, the bill would dedicate a portion of the gambling profits to the county's economic development incentive fund and education trust fund.

Baker was right to specify National Harbor as preferred choice for a casino

County Executive Baker says the casino should locate at National Harbor, because that picturesque Potomac River site would be a better draw for tourists than Rosecroft Raceway. Also, the existing transportation infrastructure would better support the anticipated traffic, and impose less of a burden on traditionally residential areas.

National Harbor. Photo by Geoff Livingston on Flickr.

By making the specific proposal for National Harbor, Baker is attempting to provide some much-needed local perspective and guidance in this brewing debate. Any casino that comes to Prince George's must be "high-end," Baker says. He wants the developer to invest $1 billion in the facility, to ensure it doesn't become a low-grade "slots barn."

State Senate president Thomas "Mike" Miller, whose support for Rosecroft Raceway is well known, rejected Baker's expression of support for National Harbor, and also opposes decoupling the casino from funding the county's new regional hospital.

Regardless of whether one agrees with Baker's decision, it's exactly the type of decisive action that the head of county government should take in this kind of situation. Indeed, this is the very type of action that I recently called for the county to take in its effort to lobby the GSA to relocate the FBI's headquarters to Prince George's.

Just as the county will ultimately be better served by articulating a specific site and vision for any new casino (e.g., National Harbor vs. Rosecroft Raceway; "high-end" vs. "slots barn"), so will it be better served by recommending to the GSA a preferred site for the relocation of the FBI headquarters, like the Morgan Boulevard Metro Station area.

Casino must not receive public subsidies

To ensure that the county wins and doesn't "crap out" on this move to bring Vegas to the Potomac, it must insist that not one penny of public money goes to assist the developers or the property owners at National Harbor in constructing the casino.

No tax-increment financing (TIF) districts, special assessment districts, public bond issues, or tax breaks—nothing. If expensive roadways, overpasses, and parking garages have to be built to accommodate the additional anticipated vehicle traffic, they must be fully funded and guaranteed by the developers.

Additionally, to alleviate the need for at least some of the expensive roadways and parking garages, the developers must be required to contribute a substantial sum to improve the public transit connections to National Harbor.

And no, this does not mean bringing Metro or the Purple Line to National Harbor. That would entail significant amounts of public expense that the county cannot afford right now. Frequent express bus service between National Harbor and one or more of the existing Metro stations should suffice.

This "no public subsidy" stance is important for several reasons. First, regardless of whether it is actually true, the county simply cannot afford the negative perception that this casino project is just the latest in a series of Upper Marlboro- or Annapolis-brokered developer sweetheart deals fueled by corruption, political favoritism, or some other under-the-table influence.

For example, people are already asking whether Sen. Miller's vociferous support for Rosecroft Raceway over National Harbor is the result of an off-the-grid deal between the senator and Penn National Gaming, the organization that recently bought the Rosecroft property out of bankruptcy.

To combat any perception of payoffs, bribery, or any other undue influence, this casino deal needs to be a squeaky-clean, completely above-board process that does not involve government handouts of any variety.

Second, this stance is consistent with the county's stated (albeit rarely followed) policy of incentivizing transit-oriented development and neighborhood revitalization efforts around its 15 Metro stations and in surrounding inner-Beltway communities.

In 2010, the Maryland-National Capital Park and Planning Commission launched a comprehensive, countywide community planning effort called "Envision Prince George's." Among the Envision recommendations (which were subsequently adopted and endorsed by the County Council) was the position that the county should focus 66% of its future growth around its 15 Metro stations and other densely-populated, inner-Beltway corridors.

To ensure that the county meets its TOD goals, Envision recommended that the county "[a]lign public expenditure policies and Capital Improvement Program (CIP) items with the goal of encouraging development in these areas and discouraging further sprawl development in other areas of the County."

Public funding of a National Harbor casino, both far away from a Metro station and outside the Beltway, is simply inconsistent with the county's stated TOD policies.

Third, the casino doesn't need public investment or subsidies. A casino is a natural moneymaker. If you build it, people will come, and they will spend a lot of money. Baker has rightly proposed that, in exchange for building a higher-quality casino, the developers should keep a larger share of the profits than the current 33% provided in state law, and possibly even greater than the 40% proposed by Senator Peters in SB 892.

Prince George's County certainly doesn't need a casino to be economically viable. But having one wouldn't necessarily be the worst thing in the world, either—as long as the county doesn't put any money on the table to get it.

This committee voted 3-2 in support. Unfortunately, a bill needs 4 votes to earn a "favorable" rating from the committee—and that is how it "lost." But the committee can reconsider the bill if it wants, or the full county delegation of 24 delegates can take up the bill without a favorable report from the committee. If it's going to move forward any further, though, residents of Prince George's County need to contact their delegates now.

The plastics industry is paying for hundreds of robocalls, giving legislators the impression that there is strong public opposition. Supportive county residents and workers need to call and email and have their voices heard.

All Prince George's delegates are important, but one particularly important vote is Delegate Veronica Turner (District 26). She is a member of the County Affairs Committee, but was absent the day of the vote.

As DC has seen over the last 2 years, making the cost of single-use bags transparent by charging a nickel for them is a powerful motivator to switch to reusable bags. Three-quarters of DC residents say they have reduced their use of plastic bags, and businesses large and small have saved thousands of dollars by not having to buy as many bags.

Volunteers are picking up fewer bags during river cleanups, and grant money is flowing to green businesses and nonprofit organizations (including mine) that work to restore the Anacostia River, creating jobs. Low-income residents have received thousands of free reusable bags.

DC Councilmember Tommy Wells authored the bag fee as a step toward removing trash from the Anacostia River. But 50% of the river's watershed is in Prince George's County, making county the most important piece of the restoration puzzle.

Prince George's County spends $2.5 million each year picking up litter, and with new limits on trash pollution in the Anacostia River, the public expense is only going to go up. Shoppers pay more for food and other products because retailers add the cost of those "free" bags to prices—as much as $37.50 per year for the average shopper. There is no such thing as a free bag.

Finally, it's a matter of home rule. The County Council voted 8-0, with one abstention, to endorse PG 402-12. County Executive Rushern Baker has taken this campaign on as a personal project. If county leaders want to proactively address an environmental problem, why should the General Assembly interfere?

For example, in Montgomery County, the state will build a $63 million interchange at Georgia Avenue (MD 97) and Randolph Road, to speed up traffic near the Glenmont Metro station. With ramps and longer crossings, the interchange will further degrade pedestrian access to nearby shopping from residences.

For the amount spent on this project, the county could build much of the long-discussed Georgia Avenue bus rapid transit project from Wheaton to Olney instead.

Montgomery County is pushing another grade-separated interchange at the Veirs Mill Road (MD 586) and Randolph Road. Based on past experience, we can expect that the planned Veirs Mill bus rapid transit project (the county's largest bus route) will continue to lose out to the expensive interchange for priority.

The interchange would not only compete for funds with this proposed rapid bus corridor, it would also make conditions much worse for the many pedestrians who cross these roads to stores and bus stops at the intersection. Read the whole list of the county's priority transportation projects here.

In Prince George's, despite numerous setbacks, the 6,000-acre greenfield Westphalia development project outside the Capital Beltway and miles from the nearest Metro station still maintains a top ranking on the list from local elected officials. The price tag for the road infrastructure to serve this massive tract of largely undeveloped land is $460 million.

The transportation projects would convert Pennsylvania Avenue (MD 4) into a freeway from the Capitol Beltway to Woodyard Road (MD 223), and add 4 interchanges along the way. The Westphalia plan calls for adding 14,000-15,300 new residential units and up 6 million square feet of commercial space.

The county transportation lists also contain important transit, bike, and pedestrian projects, but often these proposals languish while road projects advance. Other important transit, pedestrian, bicycle, and complete streets solutions never even make the list. We need to fund projects that meet the growing demand for more transportation choices that save time, energy, and money.

If Marylanders are asked to pay more, each dollar must be invested wisely. Residents need better and more affordable transportation choices. So where should this money go?

First, let's fix Maryland's existing infrastructure, like our aging roads, bridges and transit systems. Then, let's build modern transit to move more people efficiently and competitively, while providing alternatives to congested highways like the Beltway, I-95, and I-270. It's long past time for critical rail investments like the Purple Line, Baltimore Red Line and MARC expansion, and better bus service.

At the local level, state revenue to local governments should go to fix and maintain local street connections, sidewalks, and bikeways for existing communities.

Moreover, given high unemployment, smart growth transit options can help the economy. Public transportation and road maintenance are the biggest job creators. According to the Surface Transportation Policy Partnership, investments in road maintenance projects create 9% more jobs than spending on new highway capacity; increasing transit capacity creates 19% more jobs than new highway capacity.

If Marylanders are going to pay more, we deserve to know what the money will buy. We need a bill that that specifies smart, fix-it-first policies for the state. Otherwise, we're just throwing our money into the dark.