Taxes, health, homicides top General Assembly session agenda

Congress and the Trump administration will force Maryland’s political leaders to forgo their election-year tradition of limiting controversy when the General Assembly meets this week.

Instead, state lawmakers gathering Wednesday in Annapolis for the 2018 session will wade into the messy business of rewriting Maryland’s tax code and deciding whether any residents should have to pay more in state taxes.

They’ll try to tamp down skyrocketing insurance premiums and debate whether to set aside $110 million for health insurance for children in case Congress does not reauthorize the Children’s Health Insurance Plan.

And they’ll have a partisan fight over the best way to accomplish the widely shared goal of reducing the record homicide rate in Baltimore, where 343 people were murdered last year.

All of it will take place against the backdrop of election-year politicking, with lawmakers wary of taking tough votes that could be hard to explain to constituents.

But the issue mostly likely to dominate the annual 90-day marathon of legislating will be whether to return a windfall in state tax revenue prompted by federal tax changes, and if so, how much and to whom.

“It is an economic war,” Senate President Thomas V. Mike Miller said of the federal tax law, which inadvertently will pump hundreds of millions of dollars into state coffers next year unless lawmakers change Maryland tax code.

Miller, a Democrat, said he’d support an extended session or call for a special session in order to get the tax rewrite right.

“The question is, what do we do?” Miller said. “If the money is forthcoming, what do we do with it?”

Because so much of Maryland’s tax policy is coupled to the federal system, the overhaul passed by Congress late last year will cause state tax bills to go up. For instance, some state deductions can be claimed only if they also are claimed on a federal return — and those deductions may no longer exist in federal law.

Analysts still are calculating the details, but initial estimates have ranged anywhere from $100 million to $450 million a year or more in higher state tax bills for residents.

“If we don’t do anything, technically we’re going to be giving Marylanders a tax increase,” said Senate Minority Leader J.B. Jennings, a Baltimore County Republican.

Republican Gov. Larry Hogan has promised to return every penny to taxpayers, even though there are a lot of initiatives he thinks could benefit from a windfall.

“We don’t want to force a larger — potentially a half-billion-dollar more — tax increase to pay for them,” Hogan said.

But leading Democrats caution the state may need some of that money to insulate state programs from federal cuts. Some predict Democrats will draft a proposal to compete with Hogan’s plan.

“Absolutely, I think the Democratic leadership is going to focus on how best to help or protect Marylanders who have been harmed by this tax bill,” said Baltimore Del. Maggie McIntosh, a Democrat.

McIntosh, chair of the Appropriations Committee, said if there is a windfall for the state treasury, lawmakers will have to balance the need for tax relief against other priorities such as the Children’s Health Insurance Program, which could run out of money in April if Congress doesn’t pass another funding bill.

“If I know we have a windfall and I knew we had $100 million in less health care for kids, I know where my priorities would be, and it’s with the children,” she said.

House Speaker Michael E. Busch, an Anne Arundel Democrat, flatly said, “We’re not going to leave here with 142,000 kids without health insurance.”

Hogan, meanwhile, said in an interview Friday that he’s hopeful Congress will pay for the children’s health insurance program, and declined to speculate on what he would do if it didn’t.

Beyond looking for ways to shore up federal programs, some lawmakers see a chance to restructure how Maryland taxes its citizens. Sen. Rich Madaleno, vice chair of the Senate Finance Committee and a Democrat running for governor, taped a campaign video calling the situation an “opportunity to remake Maryland’s tax code.”

Even if there was consensus, proposals for rejiggering Maryland’s tax structure will not be simple to execute. Preliminary ideas on the table include labeling local income taxes a “charitable donation,” a maneuver for getting around the new federal limits on how much in state and local taxes can be claimed as a federal deduction.

The tax debate is certain to spawn acrimony as special-interest groups and others see an opportunity to gain advantages.

“There’s a possibility that there will be a lot of grandstanding,” said House Minority Leader Nic Kipke, an Anne Arundel County Republican.

Along with taxes, legislative leaders from both parties say they’re considering ways to stabilize Maryland’s individual health insurance market, where premiums have risen by double-digit percentages in recent years. But there’s no consensus on what to do.

“Something has to happen,” said House Minority Whip Kathy Szeliga, a Baltimore County Republican. “The premiums are skyrocketing with deductibles going up, and there hasn’t been any real move to fix the situation.”

Presiding officers Busch and Miller said the session will open with an override of Hogan’s veto last year of paid sick-leave legislation.

Although Hogan has announced plans to introduce a competing paid sick-leave bill this year, Busch and Miller say it’s not necessary. They are confident they have enough votes in their respective chambers to reach the required three-fifths’ majority to reinstate the law the Assembly passed last year requiring many businesses to offer paid sick leave.

Leaders in both parties and from across Maryland emphasized in interviews that the state must help Baltimore reduce its record per-capita homicide rate. New York City, whose population is 13 times larger than Baltimore, had 53 fewer homicides last year.

But Republicans and Democrats are philosophically divided over the best way to help the city. Hogan and other Republicans are calling for longer jail terms for violent offenders, while Democrats talk about getting more police officers onto the street, expanding job training and providing better mental health services for violence-wracked communities.

“The problem is we’re not putting criminals behind bars,” Hogan said.

Kipke, leader of the House’s 50 Republicans, called for “what many of us believe to be long-overdue reforms that we consider truth in sentencing.”

“There’s sort of a rotating door of violent criminals who are coming in and out of our prisons and into our neighborhoods,” Kipke said.

Many Democrats are skeptical that a get-tough approach is the most effective policy.

“It is very shortsighted to think we can address violence in Baltimore by exclusively focusing on [police] deployment,” said Sen. Bill Ferguson, a Baltimore Democrat. “The only way we deal with this challenge is a comprehensive violence reduction plan that includes law enforcement and criminal justice initiatives that are partnered with real human and community development.”

Baltimore has 500 fewer officers now than in 2013, when 3,000 were on the force. The governor was reluctant to pick up the tab for putting more police officers on the street.

“We pay for everything in the city,” Hogan said. “At some point, the city has to take responsibility.”

The upcoming session offers Hogan, a popular Republican in a Democrat-leaning state, his last chance to push legislative initiatives ahead of his closely watched re-election bid.

The governor has not unveiled his full agenda, but in addition to a tax overhaul he has promised to seek tax breaks for retired first responders and military veterans and to expand a job-creation tax credit program passed last year. Hogan also has promised to bring back for the fourth year his plan to take congressional and legislative redistricting out of the hands of lawmakers and entrust it to an independent commission.

Miller and Busch, meanwhile, have promised to expand Maryland’s ban on assault weapons to include bump stocks, an accessory used by the Las Vegas massacre shooter to increase his rate of fire on concertgoers.

Democrats also plan to expand Maryland’s first-in-the-nation law against price-gouging of generic drugs to include regulating expensive brand-name drugs.

That initiative is among the top priorities for the Legislative Black Caucus, led by Baltimore Democrat Del. Cheryl Glenn.

Glenn said she also expects House and Senate leaders to help her swiftly pass legislation that would expand Maryland’s newly launched medical marijuana industry to explicitly include more minority-owned businesses — the top concern of the 51-member caucus for the second year in a row. Similar legislation failed to pass in the final moments of last year’s session, and some members of that influential voting bloc have threatened to “take a knee” and obstruct progress in the session until medical marijuana legislation is passed.

Democrats and Republicans say they again expect President Donald J. Trump and his administration’s policies to dominate much of the discussion in Annapolis.

Environmentalists, for example, hope action — or inaction — by the federal government could motivate Annapolis lawmakers to step in.

Trump pulled out of the international climate change accord known as the Paris Agreement, and prominent state lawmakers plan to push Maryland to state its allegiance to the deal anyway. Activists want the state to ban a common insecticide called chlorpyrifos, which Trump’s Environmental Protection Agency has kept on the market after the Obama administration proposed a ban.

“Everyone is sort of waiting to see how the national conversations drive state politics,” said Kristen Harbeson, political director of the Maryland League of Conservation Voters.

The Maryland Senate will convene with one of its members facing federal corruption charges. Baltimore Sen. Nathaniel T. Oaks is scheduled to go on trial about a week after the session ends in April.

Hogan, who pushed ethics reforms embraced by the General Assembly last year, said he thought Oaks should step down while under indictment.

Miller said Oaks intends to remain in the Senate despite the ongoing legal issues.

“It would be unfair for me or the ethics committee to unseat him,” Miller said. “Senator Oaks under the law is presumed innocent. He’s shrouded in the cloak of innocence, and it’s the job of the federal government to remove that cloak.”

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