What our policy team is working on in the region
Last updated on April 19, 2023
Maryland’s 90-day legislative session has concluded with Governor Moore having passed, in one form or another, his entire 10-piece legislative package. Amendments accompanied several of the Governor’s key policy proposals, significantly impacting The Fair Wage Act, Keep Our Hero’s Home Act, and legislation surrounding broadband expansion. In the days before the session’s end, Senate and House leaders also came to an agreement on the state’s budget. This agreement included placing an additional $900 million in a savings account to help pay for the State’s costly education program – The Blueprint for Maryland’s Future.
The budget process continues to progress in DC, as the council reviews and prepares to amend the mayor’s proposed $19.7 billion budget. The United States House of Representatives will again utilize Congress’s oversight powers and is expected to take a vote on DC’s police accountability legislation this week. President Biden however has made it known that in the event this does pass Congress, which would be an uphill battle to begin with, he would veto it. In May, Mayor Bowser along with Chief Contee and City Administrator Donahue, will appear in front of the House Oversight Committee to discuss crime, safety, and city management.
Virginia legislators were back in Richmond for their one-day veto session to act on the 81 pieces of legislation that Governor Youngkin proposed changes to. Governor Youngkin’s three vetoes were sustained by the Republican controlled House and the majority of his proposed changes to other legislation were approved. However, there was no new budget presented, as conferees continue to work out a deal with a potential special session coming in June.
Congressional Intervention – Policing and Justice Reform Amendment Act
A disapproval resolution to nullify DC’s Comprehensive Policing and Justice Reform Amendment Act is expected to be on the House floor this week. While the resolution may make it out of the House, it will face an uphill battle in the Senate, and even then, the President has vowed to veto it if it reaches his desk.
Budget oversight hearings concluded last week; the DC Council now moves on to committee mark-up hearings before approving and sending a revised budget to the mayor in May. The mayor’s proposed budget did cut some existing programs, a result of the financial reality the city finds itself in with revenues falling and pandemic-era related federal funding drying up. Thus far, some of the more controversial budget proposals include a $35 million cut to the Emergency Rental Assistance Program, the addition of 342 traffic cameras, cancelled free Metrobus (projected cost of $45 million annually), cutting of vacant positions across government, cutting the DC Circulator service in half, a three year delay to the Building Energy Performance Standards (BEPS), and no continued funding for the “baby bonds” program (projected cost of $54 million). DC Council is expected to act on at least a few of these items, where funding will come from, is undetermined.
The legislation passed both chambers and is headed to the Governor’s desk, however it is far different than what was originally introduced. There will be no tax incentives included to help incentivize broadband deployment, rather the legislation calls for a study on certain incentives to be conducted by the Department of Housing and Community Development. This does leave the door open for potential incentives for broadband deployment to be introduced next session.
Fair Wage Act of 2023
The legislation passed both chambers and has already been signed into law by Governor Moore. Maryland’s minimum wage will now be $15 an hour starting January 1, 2024, two years ahead of the current schedule. While this does accelerate the rate at which the state reaches a $15 minimum wage, the legislation does not include automatic increases after that tied to the Consumer Price Index, which was a component the Governor had originally included and supported. Expect to see legislation introduced next session relating to minimum wage and the CPI.
Income Tax – Subtraction Modification for Military Retirement Income – Keep Our Heroes Home Act
Having passed both chambers, this legislation is headed to the Governor’s desk. It will result in an increase in the retirement exemption for military veterans, although not to the extent originally proposed by the Governor. The House and Senate reduced the Governor’s original proposal of the first $40,000 in military retirement income to be subtracted, regardless of age, to:
- For individuals at least 55 years old the subtraction modification is increased to $20,000 from $15,000 in current law.
- For individuals under 55 years of age the subtraction modification is increased to $12,500 from $5,000 in current law.
Economic Development – Build Our Future Grant Pilot Program and Fund
The legislation passed both the House and Senate and is headed to the Governor’s desk. It will allow the state’s Department of Commerce to provide sizable grants (up to $2 million) to certain infrastructure projects in targeted industries. This should result in incentivizing more investment into the state, resulting in additional jobs in traditionally well-paying industries.
Economic Development – Industry 4.0 Technology Grant Program
The legislation is headed to the Governor’s desk, creating a grant program for small and medium sized manufactures to implement Industry 4.0 technology or related infrastructure. Up to $1 million a year will be made available for eligible manufacturers between 2025-2028. The Board of Trade was happy to provide support for this legislation, which should result in additional private investment within the state.
While budget conferees continue to negotiate a revised budget, there is no sense of urgency on either side of the aisle. Both sides agree that they need more information regarding state revenues in the final quarter of the fiscal year before making a decision on additional state spending. A potential special session could take place in late June, after the primary elections, however it is important to note that technically, the Commonwealth has a spending plan in place through June of 2024.