Hogan proposes end to state income taxes on military pensions

Gov. Larry Hogan marked Veterans Appreciation Month on Thursday by renewing his call for elimination of state income taxes on Maryland’s military retirees.

At a State House news conference, Hogan contended that such a move is needed to keep the state’s military retirees from moving to states that already have that exemption, such as West Virginia and Pennsylvania. He said he will submit legislation doing away with such taxation when the General Assembly reconvenes in January for its annual 90-day session.

Hogan, a Republican, noted that he originally proposed a full exemption in 2015 when he first took office. The General Assembly amended his proposal to allow an exemption on the first $10,000 of military pay. The governor said that when he resubmitted legislation for a full exemption in 2017, the Democratic-led legislature never brought it up for a committee vote.

The governor promised to enlist veterans’ groups to lobby for next year’s bill.

“The people deserve to have this bill voted on [next] year up or down in the House and Senate chambers,” Hogan said.

Asked about the cost in lost tax revenue, Hogan declined to answer, saying it wasn’t the time to get into details. Cost concerns were among the reasons the legislature’s fiscal committees balked at the previous proposals.

Maryland is home to about 400,000 veterans, but not all of them would benefit.

The Department of Legislative Services estimated that last year's administration bill would have benefited about 55,000 military retirees at a cost of about $32 million to the state and $20 million to local governments at the end of a five-year phase-in period.

Sen. Douglas J. J. Peters, a Gulf War veteran who sits on the Senate Budget & Taxation Committee, said he supports the concept and has sponsored such legislation in the past. But the Prince George’s County Democrat said the committee in the past has balked at the cost of the proposal.

Peters said the committee decided even before Hogan was elected to take an incremental approach, increasing the exemption in intervals of $5,000. He said the committee passed legislation last year that would have raised the exemption to $15,000 — a measure that failed in the House Ways & Means committee. Peters said that proposal has a good chance of passing next year.

If Hogan wants a 100 percent exemption, Peters said, the governor should propose a way to offset the lost revenue. He noted that Hogan last month proposed expanding an existing exemption for first responders to include correctional officers. The senator said those two proposals could end up competing for the same dollars.

“We have this balancing act we have to do to be fiscally responsible and we have a limited amount of money,” said Peters, former chairman of the Senate’s Veterans Caucus.

Fred L. Shinbur, chairman of the Maryland Veterans Commission, said Hogan’s proposal would mostly benefit career service members who put in the 20 years it takes to receive a full military pension.

Shinbur, a retired Army chief warrant officer with 36 years of service, praised the proposal and said it would mean a lot to veterans in general and himself personally. He said it would do a lot to help keep military retirees in Maryland, giving the example of employees at Aberdeen Proving Ground who collect pay there after their military service.

“They take it back to Pennsylvania and spend it,” he said.

At the same news conference, Hogan escalated his dispute with Democratic Attorney General Brian E. Frosh over a monument to veterans in Prince George’s County that a federal appeals court determined to be a constitutionally impermissible religious symbol on public property. Hogan had directed Frosh to intervene to keep the Peace Cross, but the attorney general told Hogan Wednesday that the timing is wrong for filing a brief in the appeals process.

Hogan on Wednesday accused Frosh of a “dereliction” of his duties. On Thursday he amplified his charge, saying he was “very disappointed” and insisting that “we don’t have any other attorneys” to represent the executive branch of government.

“When the state takes a position that we have to file suit, he has to file suit,” Hogan said.

Frosh insisted he has not declined to file suit. The attorney general said a letter from Hogan specifically directed him to file suit once procedural issues in the case have been resolved.

“The procedural issues have not been resolved,” Frosh said. He said that while the appeals court found the cross’ placement unconstitutional, it did not order its removal but left the question of a legal remedy to a lower federal court.

mdresser@baltsun.com

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