The Maryland House Ways and Means Committee unanimously approved a pandemic aid bill that expands payments to low-income Marylanders and exempts some who received unemployment benefits from state income taxes.
Changes to the bill first proposed by Gov. Larry Hogan are being billed as the “largest anti-poverty bill in state history.” The legislation, which was introduced in the legislature in late January, is moving at lightning speed and could be on a fast track to the governor’s desk possibly by the end of the week.
The bill finalized by the committee Wednesday afternoon appears to represent a compromise among the House and Senate and the governor.
“This is, I think, one of those rare moments where pretty much everyone in Annapolis has been pulling in generally the same direction,” said Del. Eric Luedtke, D-Montgomery and chairman of the Ways and Means revenues subcommittee. “It’s required a tremendous amount of work. We still have a ways to go on it, but I think we can be proud of the product the House helped produce here.”
Hogan, who announced the bill prior to session, called the effort his top priority. Both House Speaker Adrienne Jones and Senate President Bill Ferguson similarly said that a relief package targeting the working poor with aid to food banks and housing and utility assistance was a priority.
Under the changes passed Wednesday by the full House Ways and Means Committee, workers eligible for the earned income tax credit would see a significant jump in their benefits for the next three years.
Under Hogan’s plan, nearly $270 million in direct payments would go those eligible for the earned income tax credit. Families would receive $750 in additional payments while individuals will receive up to $450. A total of 400,000 people would be eligible, and no application would be necessary.
The House committee Wednesday also approved language increasing the payment for a family with two children earning $25,000 per year to roughly $4,000 over the next three years in addition to the proposed instant payment.
Individuals who qualify would receive a $300 instant payment from the state as well as an additional $540 annually for the next three years, bringing the total state payment to more than $800 this year and nearly $2,000 over three years.
Hogan’s proposal, passed by the Senate, would have permanently exempted unemployment benefits from state income taxes.
The bill amended by the committee limits the tax exemption on those payments to two years. The panel is also recommending the exemption be means-tested based on income. An individual who earns less than $75,000 and families earning less than $100,000 in tax year 2020, including their unemployment benefits, would be exempted.
Under Hogan’s original proposal, local governments would have seen a $180 million reduction in revenues. The vast majority of that would have come from the income tax exemption. the Senate version of the bill left those provisions intact.
“We are aware of the issue from the counties,” said Luedtke. “The means testing does reduce, somewhat, the fiscal impact on the counties. There is still a fiscal impact.”
Exactly how much of an impact was not immediately known. Luedtke said the state is looking at options to help local governments offset the costs “not the least of which is if the federal stimulus is passed … it does include, as of right now, direct aid for local governments.”
“That’s not a bridge to die on,” said Del. Jason Buckel, R-Allegany. “Everyone is taking a hit from people working three jobs to companies to state government. Everyone is taking a hit.”
About 40,000 workers who applied for unemployment but have yet to receive a check would still receive the one-time payment of $1,000 proposed in the Senate version of the bill.
Luedtke said lawmakers were focused on targeted relief and called the bill “the largest anti-poverty bill in state history.”
Hogan’s $1 billion proposal was sent to the House and Senate in late January. The Senate passed the bill, leaving most of Hogan’s proposals untouched but added $520 million in additional assistance, including one-time payments to those who have been waiting for unemployment benefits — some as long as 10 months.
The House appears to be moving to reduce some of the $520 million added to the bill by the Senate.
A revised fiscal analysis was not available, but Luedtke said the bill will likely come in at a cost of around $1.2 billion including about $300 million in budget changes related to the Senate’s proposals.
Businesses would receive assistance, including from Hogan’s proposal to forgive state loans that were part of earlier pandemic aid efforts.
The House is also keeping Hogan’s proposal to allow businesses that collect sales tax to keep a portion of those taxes. Hogan had proposed allowing businesses to keep up to $3,000 per month for the next four months.
The House is recommending a maximum of $9,000 over three months.
Hogan proposed exempting businesses from potential increases in their unemployment taxes because of pandemic-driven layoffs.
The House version of the bill would likely keep that proposal but also allow businesses to delaying paying any unemployment taxes to the state until next January.
Luedtke said the deferred payment proposal would effectively act as a no-interest loan made possible by federal loans to the state to help bolster its own unemployment insurance trust fund. The low interest rate to the state works out to about $20 million if the state has to repay the federal government. Businesses and nonprofits with 50 or fewer employers would be eligible. The total amount of aid is estimated at $1 billion if every business eligible takes advantage of the program.
Luedtke said that there is a possibility that the federal government could forgive those state loans. If that happened, the businesses would not have to catch up on their payments by Jan. 31, 2022.
The vote of the full House Ways and Means Committee leaves open the possibility that leaders could bring the bill for a vote before the full House of Delegates on Thursday and, using a procedural move, send a final version to the Senate for approval on Friday.
Under such a scenario, a finalized bill could be on Hogan’s desk before the weekend.