Job tax credit, unemployment insurance move forward

Today, exactly halfway through the legislative session, two of Gov. Martin O’Malley’s high-profile business initiatives took significant steps forward.

The governor, by the way, was not on hand to see them – he’s in Iraq, visiting soldiers.

While he was away, his unemployment insurance legislation appeared to move toward compromise, with business groups saying a host of proposed amendments address most of their concerns. The governor’s plan would have expanded benefits to qualify the state for $126.8 million in federal funds. The amendments reduce benefits by about the same amount. See our brief story here and stay tuned for more coverage.

Earlier in the day, the Senate passed a job creation tax credit proposal championed by the governor. The amended bill upped the credit from $3,000 to $5,000 for each unemployed worker hired by Maryland companies.

Del. Kumar P. Barve, D-Montgomery, said Friday he expects the House to make a similar change to the plan.

The Senate bill passed 47-0.

Terror trials? Not in our state

As federal officials scout sites to hold high-profile trials of suspected terrorists, top Republican state senators delivered a preemptive strike of their own Thursday.

They wrote to Gov. Martin O’Malley, urging him to do what he can to remove Maryland from the list of possible sites.

“These terrorist trials will certainly jeopardize homeland security and could unnecessarily endanger the lives of Americans,” wrote Sens. Allan H. Kittleman and Nancy Jacobs. “The federal court where the trials will be held will most certainly become a target for a new terrorist attack.”

Federal officials are looking for a place to hold the trial for Khalid Sheikh Mohammed, the alleged mastermind behind the Sept. 11 attacks. Kittleman, the minority leader, and Jacobs, the minority whip, expressed concern over the proximity of federal courthouses in Greenbelt and Baltimore to population centers and government facilities.

DLLR secretary by day…

A mostly humdrum budget hearing held at least one interesting tidbit about newly confirmed labor Secretary Alexander M. Sanchez.

His department – Labor, Licensing and Regulation – oversees everything from mortgage brokers to sports agents to barbers, and monitors the state’s financial sector and enforces workplace regulations.

If that wasn’t enough, the department was responsible for coming up with requirements for mixed martial arts referees after the sport was legalized in the state. The first MMA bout was held last year in Baltimore. Sanchez said the event drew more than 5,000 spectators, including the secretary himself.

“Sir, were you there as a participant?” asked Del. John L. Bohanan Jr., D-St. Mary’s.

“Just an interested observer,” Sanchez replied.

Job credit changes rejected by Senate

An attempt to further expand a proposed job creation tax credit died on the Senate floor this morning, but the bill – without the amendment – did gain preliminary approval and moved toward passage by the full chamber.

Sen. Alex X. Mooney, R-Frederick and Washington, proposed expanding the program to $28 million. The measure, which faced bipartisan opposition, failed 39-7.

A Senate committee last week raised the amount of individual credits for hiring unemployed workers to $5,000 – Gov. Martin O’Malley originally proposed $3,000 – but left a $20 million cap in place. The original proposal would have covered 6,666 hirings while the amended proposal would cover 4,000.

“We’re talking another 1,600 jobs that could be created under this bill,” Mooney said of his amendment.

Given Maryland’s less-than-rosy fiscal outlook – the state faces annual deficits of more than $2 billion for the foreseeable future – members of both parties cast votes against Mooney’s measure.

“Given where we are now fiscally, we don’t know where we would get the other $8 million,” said Sen. Ulysses Currie, D-Prince George’s, the chairman of the Budget and Taxation Committee.

Sen. J. Lowell Stoltzfus, R-Lower Shore, said he “regretfully opposes” the further expansion of the tax credit program. Stoltzfus voted in favor of the bill in committee.

“We have to look at things other than the government picking the winners and losers,” Stoltzfus said.

The measure will return to the Senate floor for final passage. A House committee is looking at the bill’s twin, which has not been amended to $5,000, and is expected to vote on it this week.

A little help from the feds

Remember the December blizzard? It happened about four or five feet of snow ago, before “snowmageddon” and having to take your life in your hands every time you navigate the snow mountains on your street.

The federal government — now that it’s open again — remembers. President Obama signed late last week a disaster declaration for the storm.

The storm dropped more than two feet of snow in parts of the region and the state Department of Transportation spent nearly $27 million cleaning it up. The disaster declaration means state and local agencies are eligible for federal matching funds.

The state still doesn’t know how much will be reimbursed and when, wrote Shaun Adamec, a spokesman for Gov. Martin O’Malley, in an email. Auditors have to go over expenses large and small incurred during the storm, a process that could take several weeks.

“The Presidential declaration begins that calculation process,” Adamec said.

And then there’s round two (and three, depending on how you score your blizzards). The state is looking for federal help on the back-to-back February storms. The final cost figure hasn’t been tallied, but initial estimates put highway clean-up alone at “well in excess of $50 million,” according to Adamec.

Still AAA

State Treasurer Nancy Kopp announced this afternoon all three rating agencies have maintained Maryland’s AAA bond rating, the highest available.

AAA may not mean what it once did – many of the exotic mortgage-backed securities that collapsed so spectacularly as the housing market crumbled were also rated AAA – but state officials have touted the rating as a key indicator of the state’s fiscal health.

Gov. Martin O’Malley includes that fact in most speeches that touch on the economy, which seems to be most of them these days. Maryland is one of seven states with a full slate of AAAs.

Kopp said in her written announcement that the ratings, which can translate to lower interest rates, would save the state about $6 million when the Board of Public Works sells $600 million in bonds on Wednesday.

Back to the drawing board

Sen. Thomas M. “Mac” Middleton said Thursday what he thought was a workable compromise on the governor’s unemployment insurance proposal fell apart because of a small, $1 million concession sought by labor and employee advocates.

Middleton has in recent days said he believed his work group of business and labor interests was close to a deal, with only a few minor tweaks to make. The governor’s proposal includes an expansion of unemployment benefits in three ways, with an expected cost to the Unemployment Insurance Trust Fund of about $20 million per year.

The group had found offsetting benefit reductions to get business groups on board, which they were until yesterday, said Middleton, D-Charles.

“Everything that brought them back to the table was there, and they rejected it,” said the chairman of the Senate Finance Committee. “I’m really, really puzzled.”

Middleton said the concession sought would have meant about $1 million more in annual benefits paid from the trust fund, which paid as much as $24 million per week in 2009.

He suggested lawmakers may “look beyond” the legislative committees and top lobbyists of the business groups at the bargaining table.

“I’m disappointed they aren’t there,” Middleton said. “I hope they reconsider.”

The unemployment legislation is on of Gov. Martin O’Malley’s top priorities this year. The benefit expansions would qualify the state for $126.8 million from the U.S. Department of Labor. That money would be used to boost the trust fund, and, in the governor’s original proposal, cover $83 million in tax breaks for businesses.

Business groups have already fought successfully against the tax break proposal, arguing that it would hurt the fund in the long run.

The UI saga continues, for now

Maryland lawmakers have for weeks refereed a tennis match as labor and business groups volleyed unemployment insurance proposals back and forth.

The senator running the show said Wednesday morning the game may finally be over.

“I thought we had a very, very good deal on the table,” said Sen. Thomas M. “Mac” Middleton, D-Charles. “My hope is that we can move forward today.

Middleton convened business, labor and employee advocates last night for the latest in a long and nearly constant series of meetings on Gov. Martin O’Malley’s unemployment insurance plan.

Middleton said labor groups are on board with the plan and had offered a small change that would need to be approved by business groups.

The governor’s proposal, filed as SB 107 and HB 91, would expand benefits available to Marylanders to make the state eligible for $126.8 million in federal funds. That one-time infusion would prop up the shrinking Unemployment Insurance Trust Fund and cover the $83 million in breaks for businesses this year.

Middleton has said the tax break portion of the legislation appears to be dead, as most business groups have fought against it.

Debate has centered on finding benefit reductions in other areas to offset the estimated $20 million annual cost of the governor’s proposed benefit expansion.

Marriage, with a twist

Every year, Maryland’s lawmakers are buried in legislation during their 90-day sprint of a lawmaking session.

There are typically more than 2,000 bills introduced. Some are big-time initiatives that bring out hours upon hours of testimony for and against and ride a very public roller coaster toward passage or defeat. Many aren’t paid much attention at all. Some are regular pet projects introduced by delegates or senators year after year.

And some catch us all by surprise.

Such is the case with HB 1021, which is titled “Family law – Prohibited Marriages – First Cousins.” Liam Farrell, of The Capital, spotted it first.

The bill synopsis does indeed appear to ban such marriages, but goes on to detail certain circumstances under which first cousins could wed – if the would-be bride and groom are both over 65, for example, or if one can show that he or she is infertile.

The bill was introduced by Dels. Henry B. Heller and Joseph F. Vallario Jr.

Misery loves company

Maryland is expected to tap a federal line of credit next week that will allow the state to keep paying unemployment benefits. When it does, it won’t be alone.

As with the unemployment issue, state officials have benefited from tougher economic climates elsewhere as bases for comparison – the jobless rate in Michigan, the housing market in Arizona and budgeting woes in California, to name a few.

When Maryland borrows from the U.S. Department of Labor to keep its Unemployment Insurance Trust Fund afloat, it will be the 28th jurisdiction to do so, following 26 states and the U.S. Virgin Islands. Those other states have nearly $30 billion in outstanding federal loans.

Julie Squire, the DLLR assistant secretary who oversees the unemployment insurance division, said the state has been able to put off borrowing until next week because of a low number of delinquent tax payments and steady claims numbers.

The Department of Labor, Licensing and Regulation expects to borrow $250 million interest-free and pay it all back this year. The infusion will keep the fund solvent until the end of April, when the first wave of tax payments is expected.

Here’s the list of other states that have borrowed. The dollar figures are in millions. And yes, that means California has had to cover a deficit in its trust fund that is more than three times larger than the deficit expected in Maryland’s state budget for next year.

State Loan Balance
Alabama $175.2
Arkansas $253.5
California $6,609.8
Connecticut $3.3
Florida $235.4
Georgia $1,137
Idaho $139
Illinois $1,382.1
Indiana $1,571.5
Kentucky $619
Michigan $3,326.4
Minnesota $372.9
Missouri $514.5
Nevada $183
New Jersey $1,116.5
New York $2,390.3
North Carolina $1,723.1
Ohio $1,857.3
Pennsylvania $2,130.5
Rhode Island $146.2
South Carolina $735.3
South Dakota $11.7
Texas $1,518.6
Virgin Islands $9.9
Virginia $170
Wisconsin $1,025.6
TOTAL $29,488.2