Dear Friends,
This is an extremely busy time in Annapolis. As I write this, I have an afternoon of 5 bill hearings in 3 different committees. The topics range from teacher vetting, expanding opportunities for STEM teachers, enabling police officers to enforce traffic laws on certain private roads, making our tax system fairer, and making life safer for Jewish students and others who experience hate crimes on our colleges and university campuses.
It is a particularly challenging time for our state budget. We began session with a $3 billion shortfall and we anticipate the Board of Revenue Estimates to announce later this week that the national headwinds are having a negative impact on Maryland revenues. Our state relies heavily on the federal government in innumerable ways: we have over 160,000 direct federal workers whose jobs are at risk; we have thousands of contractors, over 1,200 of whom have already lost their positions; and many of our higher education institutions depend on federal grants to do essential research on a wide variety of issues, including trying to find cures for deadly diseases. They will be forced to make difficult decisions about their employees should those reductions proceed as expected.
The Governor introduced his budget that included cuts of nearly $2 billion and revenue of almost $1 billion. Accompanying the budget is a document called the Budget Reconciliation Financing Act, known as the BRFA, that makes statutory changes to balance the budget. There are many formulas in our law that dictate how certain services are funded, but if we have to alter the funding, we must also change what’s in statute, which happens via the BRFA. This year, the BRFA is particularly large, and was heard late last week with the Governor testifying before the committee on which I serve, the Budget and Taxation Committee. The Department of Legislative Services (DLS) provides an analysis of the BRFA that you can read here. Please note that while DLS makes certain recommendations, the General Assembly is not bound by this advice, and will make its own independent decisions.
Given this year’s unprecedented fiscal challenges, we must consider a variety of revenue options, along with additional cuts to services, to balance our budget. For that reason, I have recently introduced a bill that would tax business to business services. This bill is meant to generate discussion – there will be a hearing on the bill soon – and provides additional options for us to consider as we strive to meet our fiscal challenges. The sales tax has not kept up with how our economy has evolved. When we were manufacturing based, we taxed goods. We are now service-based, so this bill reflects the new realities of how our economy operates, imposing a 2.5% tax on business to business services. I do not do this lightly, but believe all options for revenue need to be considered.
We are attempting to craft a balanced budget in the midst of so many unknowns at the federal level. On March 14th, the federal government is due to run out of funding, so we anxiously await Congress’ actions and are concerned that significant cuts to programs like Medicaid could have an awful effect on our state. However, we must continue moving the budget process forward, given our 90-day time constraints.
While most of my attention this session has focused on the budget, our committee hearing process carries on and I continue to advocate for my bills that you can find here. We highlight a few of them below and will provide an update as (hopefully!) more of my bills move before our March 17th crossover date (the date by which bills must pass one house to be guaranteed a hearing in the other).
I hope you can join us for our Town Hall – see graphic below. You can submit questions here. My District 11 colleagues and I will look forward to seeing you online.
As always, I don’t take these difficult decisions lightly. We are living in extraordinary times, and I appreciate your consideration as we navigate them. As always, I welcome your feedback.
Sincerely