Maryland’s Legislative Business Impact For 2013

“How Not to Grow an Economy”

by Delegate Mike McDermott

As a result of the actions taken by the Maryland General Assembly during the 2013 Regular Session, we will continue to be a state that is “unfriendly to business”. Our Corporate Tax rates remain the highest in the region and our layers of government process insure that we continue to be slow to respond and costly for business start ups.
This year we saw the passage of Off Shore Wind (SB-275) and the Electric Tax subsidy that comes with the package. It seems insignificant to talk about a monthly consumer fee of $2.00 or less, but that rate can and will rise. The additional cost of power to our business community will be much greater and will insure that we will be less competitive while our consumers foot the bill with every item they purchase along with the additional costs of local government (paid by every taxpayer). It is tragic to see the state jump through hoops to craft this type of subsidy for unproven energy while, at the same time, enact a moratorium on accessing Natural Gas deposits in Marcellus Shale. Maryland could be energy independent sporting tens of thousands of new jobs with zero tax increases or subsidies. Instead, we allow political correctness to dictate our energy policy, and, in particular, our energy portfolio. Silliness costs money and jobs.
Maryland remains at the point of the spear when it comes to the implementation of Obama Care. SB-274 was passed this year and will have a significant impact in particular on small business and our health care providers. The expansion and costs going forward are significant and should give pause to any prudent business person. I strongly encourage you to read this bill and pay particular attention to the Fiscal Impact Statement provided by the Department of Legislative Services. You will see why the vast majority of states are not moving forward with the implementation.

In another blow to business, we added a Sales Tax to gasoline (HB-1515) and established an automatic tax increase mechanism for the current Gasoline Excise Tax already in place (24.5 cents per gallon). The Sales Tax will rise every year for 4-years and the Excise Tax is linked to the Consumer Price Index and will rise every July 1st beginning this year. Mass Transit will be the big beneficiaries of this tax and local governments will continue to suffer the loss of Highway User Revenues. With the additional Toll increases going into effect at the same time, areas like the Eastern Shore, dependent upon goods being trucked in, will see these transportation costs passed onto them at the register. Everything will cost more money.
Although many of us warned people of the coming “Rain Tax” (HB-987) as passed in the 2012 Regular Session, many jurisdictions will be under the mandate as of July 1st and will be required to collect this new tax. Most residential properties will pay a flat rate through their property taxes, but Maryland businesses, churches, hospitals, etc. will be taxed based upon the amount of impervious surfaces they have on their respective property. Any surface area that obstructs water from entering the ground directly will be taxed based upon square footage in most jurisdictions (think of large warehouses and parking lots). Once again, consumers will be footing the bill.
All of these additional taxes, fees, and regulations add up to significant money for any business owner. There were also efforts to raise the Minimum Wage in our state which often results in tightening of belts and the loss of entrance level jobs. No doubt we will see those bills again in the future. The passage of the governor’s Gun Safety Act (SB-281) has essentially outlawed many firearms currently being produced in Maryland. Those manufacturers offer significant employment and most of them are in the process of relocating their companies to other states. Not only will our state not be any safer as a result of this bill’s passage, but we will now suffer the loss of tens of millions in revenue not easily replaced.
There were a few legislative efforts that are noteworthy for the potential positive outcome which may result. We also have a new Secretary of the Department of Business and Economic Development, Dominick Murray, who seems to understand the problem with the state’s position and has expressed a determination to streamline the process. One of the biggest obstacles to our business and economic growth is the failure of state agencies to work together on issues simultaneously to cut the time associated expenses companies and entrepreneurs need so desperately when they are starting or expanding an enterprise in Maryland.
As a result of many complaints I have received from business owners who have been subjected to random inspections and significant fines by the state for minor violations, I introduced HB- 104. The bill would have provided a much-needed grace period to small businesses found in violation of state regulations, giving them time to comply before being unfairly fined. In response to the bill following the Committee Hearing in House Economic Matters, the Secretary of Labor and Licensing issued a letter establishing that his department would “only give warnings to businesses for first time offenses of minor violations of code.” This public policy announcement is a big win for Marylanders, and I intend to hold the department to their word.
One thing you learn quickly from Annapolis is to be concerned about any “Study” or “Work Group” established by the members through legislation.. It is not uncommon for a host of regulations and other barriers to business to come from these groups.. Therefore, let me provide you with a couple of the approved “studies” that will take place over the next year upon which future legislation may be based in 2014:

SB-1068 establishes the Commission to Study the Regulation of Payroll. One of their chief missions is to determine the feasibility and cost of establishing State licensure or registration of payroll service companies, including requiring qualifying examinations and the potential benefits of licensure or registration.

SB-916 establishing the Task Force to Study Licensing and Continuing Education Requirements for Electricians. Their principle task will be to “review appropriate approaches for the licensure of electricians at the State and local level to protect citizens and provide for efficiency of electrical services across county lines.”
If you have an interest in these areas, please reach out to my office and we will make sure you have a good contact with an individual who will be serving on the Study Group. This is the best place to insure that you stay on top of any new proposals before they advance to proposed legislation.
There always seem to be new layers of regulations and permitting that are brought forward every year affecting various business sectors. This year was no different. Here are a couple of fields that will be impacted:

SB-280 Landscape Architects – License Renewal – Continuing Professional Competency Requirement. This bill will adopt regulations to require a licensee to demonstrate continuing professional competency by completing a certain number of hours of professional development activities as a condition of renewal of a license to practice landscape architecture.

HB-347 Professional Engineers – Firm Permits. This bill will alter the permitting requirements for engineering firms and creates a significant process through which future firms are to be permitted. It alters current practices of business and establishes fines for violations.
There were a couple of bills that sought to improve the business environment.

SB-273 Veterans Full Employment Act of 2013. This bill will require certain state licensing units and boards to give credit to certain former service members for relevant military training, education, and experience in connection with the issuance of certain occupational and professional licenses, certificates, and registrations. While many private organizations are working with our veterans to this end, it is good to see our state take this position as well.

SB-65 Workers’ Compensation–Claim Processing–Electronic Delivery of Decisions. This legislation will allow for certain decisions to be communicated through electronic means to the affected parties. It should speed up the process and reduce paperwork.
There are many bills which would have been problematic for business which did not pass through their assigned committee or failed in one of the two chambers. Most of them are sponsored by the Chairman of the sitting committee and that means we have probably not seen the last of them by far. If a bill is successful in one chamber, you will most likely see it again with a renewed effort in the coming session. I have provided links for a more indepth look at each piece of proposed legislation.
SB-576 Community Cleanup and Greening Act of 2013 (Bag Tax)-Chairman Bill
SB-554 Business Occupations and Professions - Private Process Service - Licensing and Certification-Chairman Bill
SB-528 Business Regulation - Shark Fin Soup - Prohibition on Sale or Consumption
SB-78 Maryland Home Improvement Commission - Guaranty Fund – Claims-Chairman Bill
SB-77 State Board of Plumbing - Continuing Professional Competency - Master Plumbers and Master Natural Gas Fitters-Chairman Bill
SB-57 State Board of Individual Tax Preparers - Prohibited Acts - Civil Penalty-Chairman Bill
SB-827 Streamlined Tax Administration Act of 2013 (Creation of a new Division of Business Regulation and Taxation within DLLR)
SB-469 Business Relief and Tax Fairness Act of 2013 (Combined Reporting)
HB-122 Commercial Law - Automotive Repair Facilities - Tire Repairs (Tire Removal)
HB-595 Workers' Compensation - Retaliation by Employer – Prohibition-Chairman Bill
SB-1062 Condominiums and Homeowners Associations - Attorney's Fees
SB-1059 Landlord and Tenant - Application Fees - Prospective Tenants Who Receive Housing Assistance
SB-179 Architects, Landscape Architects, and Professional Land Surveyors - Firm Permits-Chairman Bill
SB-794 Real Property - Regulation of Common Ownership Community Managers
SB-725 Business Regulation - Junk Dealers and Scrap Metal Processors - Holding Period for Junk and Scrap Metal
It is also important to recognize the legislators who were honored by Maryland Businesses for Responsive Government (MBRG) for outstanding contributions and consistently pro-business voting records. I was proud to be on this list for another year along with some of my colleagues on the Eastern Shore: Receiving awards during a recent ceremony in Annapolis were Delegates Steve Hershey, R-36-Queen Anne's; Jay Jacobs, R-36-Kent; Charles Otto, R-38A, Somerset; and Del. Mike McDermott, R- 38-B Worcester. All of us received 100% ratings from the past several legislative sessions when it came to votes impacting Maryland business.
I strongly encourage you to stay informed on the various bills impacting our state in each session. I provide regular updates during the interim and my weekly “Field Notes” on activities happening during any Session of Maryland’s General Assembly. You can sign up and review any of my press releases or postings at delegatemcdermott.com along with receiving Twitter and Facebook updates.