Area lawmakers expect revenues, spending fight
EASTON — The next Maryland legislative session, which starts again in January, will be a battle of spending and revenues, according to Mid-Shore lawmakers at a legislative preview luncheon Thursday, Nov. 17.
The luncheon, annually hosted by the Talbot County Chamber of Commerce and sponsored this year by Express Employment Professionals, offers Talbot County locals an opportunity to hear straight from those who represent them in the state legislature about just what will be the big ticket items of discussion for the upcoming Maryland General Assembly.
Sen. Addie Eckardt, R37-Mid-Shore, said the state’s spending is outpacing its revenue projections, as it has at times in the past.
Estimations place Maryland at a $400 million budget shortfall, which is to increase to $800 million in two years, she said. She said Republican Gov. Larry Hogan in his budget last session left a little cushion “that would have sustained us throughout the now downturn again, with the lack of revenues being realized,” and that was met with an additional set of mandated spending.
Del. Chris Adams, R-37BWicomico, said 80 cents per dollar of revenue the state gets goes toward mandated spending — education, pensions, to name a few — “which means the governor has very little control over real policy that we can use to reduce expenses, and it creates a real problem.”
Adams talked about the Maryland Economic Development and Business Climate Commission, which was put together by the legislature, mainly Senate President Mike Miller and House Speaker Michael Busch, both Democrats. The commission looked at Maryland’s economic competitiveness after holding public meetings all across the state and made a series of recommendations.
He said it found that the state’s revenues count on nearly 9 percent of wages, but 25 percent of the state’s economic output is federal spending.
“A week and two days ago we had an election. This election will have some significant consequences on tax policy and economic policy,” Adams said. “We know that the federal government is holding a $19.5 trillion debt. We as a country employ 22 million people in federal, state and local government, and at the same time our country is only employing about 10 million people in manufacturing. This is upside down.”
Adams said people can expect the incoming Republican presidential administration, run by President-elect Donald Trump, will deal with “sprawling federal bureaucracy,” which will be a significant challenge for Maryland, considering how dependent it is on federal employment.
Eckardt said Maryland is doing “much better than other places in the mid-Atlantic and the country.” The state’s business ranking has increased, and it has outpaced Virginia on several initiatives, including employment.
But revenues are still less than expected.
“Income tax was down; corporate tax was down; sales tax was down,” she said. “They were offset by a little bit of leftover that inflates those a little bit, but the reality is there’s an actual shortfall of about $400 million.”
Del. Johnny Mautz, R-37BTalbot, said revenues will drive a lot of the discussion in Annapolis this upcoming legislative session. Another revenue estimate is set to be released in December, so the outlook may change, he said.
But, one things about revenues that won’t change, he said, are “the 1 percent that pays the largest portion of revenues in taxes.”
“We’ve lost a lot of that 1 percent and they’re not coming back,” Mautz said. “What’s happened is that 1 percent has left Mar yland because of our taxing. They’ve been replaced by weekenders who are second-homers, and that has a big impact on our revenues.”
There will likely be a lot of discussion on how to keep that one percent, but it’ll go back to tax policy, which is handled at a committee level, Mautz said, “and the individuals who control that committee, I don’t think they have any intention of changing the taxes.”
That relates back to Adams’ point on the business climate commission, also known as the Augustine Commission named after chairman and retired Lockheed Martin Chief Executive Officer Norman Augustine. The commission gave 33 regulation recommendations, five of which were passed as bills. It also gave 14 tax policy recommendations, one of which made it through the legislature last session.
“It has me concerned, because when you have a (commission) in a bipartisan fashion start making recommendations for the legislature to act, in my humble opinion, we have not done that yet,” Adams said.
“We have a governor who is really active to reduce tax and our fees and expenses, who has tried to deal with regulations, with the different bureaucracies that we have in the state, but it really is going to take some advanced stuff through the legislature through legislation to make the business climate better and they haven’t done that quite yet,” he said.
Sen. Addie Eckardt