Gov. Larry Hogan said the RELIEF Act will be submitted as an emergency bill, and he's asking lawmakers to pass it immediately.
Maryland Gov. Larry Hogan announced plans Monday to ask lawmakers to approve a state coronavirus relief package of individual payments for lower-income Marylanders, help for small businesses and a slew of tax cuts that would cost about $1 billion.
Hogan said at a news conference that he had not discussed or negotiated the details of his proposal with leaders in the Democrat-controlled General Assembly ahead of the session, outside of broad discussions. The governor and top lawmakers have all pointed to coronavirus relief and economic recovery as their top priorities.
Democratic legislative leaders issued a statement after the governor’s announcement that did not endorse Hogan’s plan, but pledged to work with him on issues such as helping families, businesses and students “so 2021 can become the year of rebuilding and recovery.”
If approved by lawmakers and signed into law, the act would include initial payments to low- and moderate-income Marylanders, defined as those who have claimed the earned income tax credit. They would get payments of up to $450 for individuals and $750 for families, followed by a second round of payments of up to $150 for individuals and $250 for families.
The Hogan administration estimates 400,000 Marylanders would receive the payments, and they wouldn’t have to apply for them. The cost to the state budget would be $270 million.
“While Maryland’s economy is coming back faster than many other states, America is going through one of the worst economic crises” in its history, Hogan said.
Hogan also is proposing eliminating the need for people to pay local and state income taxes on unemployment benefits. That would cost the state about $180 million in missed tax revenue.
Small businesses would be in line for four months of sales tax credits under Hogan’s proposed RELIEF Act. Topping out at $3,000 per month and $12,000 for the four-month period, Hogan said the provision would allow businesses to have better cash flow to keep their doors open. More than 55,000 businesses would be eligible, allowing businesses to keep up to $300 million that would otherwise go to the state.
Hogan also wants to extend an action to prevent companies from facing higher unemployment taxes going forward, as businesses typically pay more taxes after they lay off workers. Hogan suspended employment tax increases in an executive order, and the RELIEF Act would put that decision into law. The savings to businesses is estimated to be $218 million.
Lastly, the act would exempt businesses from facing other potential tax increases due to participating in state loan and grant programs, a potential tax savings of $40 million to businesses.
The name “RELIEF Act” comes from “Recovery for the Economy, Livelihoods, Industries, Entrepreneurs and Families.” Hogan said the act, which comes with a $1 billion price tag, would be paid for by a combination of the state’s rainy day fund, other reserve funds and budget savings. His office has not made a copy of the bill public.
Hogan’s plan needs approval from the 188-member Maryland General Assembly, where Democrats hold a veto-proof majority in both the House of Delegates and the state Senate. Hogan said the package would be his priority for the legislature.
“We look forward to the governor working with us to accomplish these goals and demonstrating for the country what the true value of bipartisanship can be,” House Speaker Adrienne A. Jones and Senate President Bill Ferguson responded in their statement.
Hogan, Ferguson and Jones met periodically throughout the pandemic, but the governor historically has had a tense relationship with the legislature. The governor has had difficulty getting his priorities through the General Assembly, and lawmakers have complained Hogan has never appeared in person to promote his top bills, as prior governors have.
Del. Nic Kipke, the Republican leader in the House of Delegates, said he hasn’t see the details of the governor’s legislation, but agrees with its goals. Kipke said he wants to make sure it includes safeguards to make sure the help goes to struggling and small businesses.
“It’s really important to help the businesses that have been harmed without unnecessarily benefiting those that have been doing just fine,” said Kipke, who represents Anne Arundel County.
Kipke said he doesn’t take issue with using reserve funds and the rainy day fund to pay for the aid: “There’s no better definition of a rainy day than what we’re all going through right now.”
Sen. Bryan Simonaire, the minority leader in the Senate, said he likes that the governor’s proposal is targeted.
“It’s going to the right people who need it: The small businesses, the low- to moderate-income Marylanders who are struggling. A lot of them lost jobs,” said Simonaire, an Anne Arundel County Republican.
“The litmus test for any bill being considered by the General Assembly should be: ‘Will this help Marylanders get back to work and allow small business owners the room they need to survive and succeed?’” O’Halloran said.
Maryland isn’t the first state to propose direct payments to residents who are struggling financially.
California Gov. Gavin Newsom’s latest budget proposal, for the year that starts July 1, includes $600 checks for low-income residents. Like Hogan, the California Democrat defines those eligible as people who receive the earned income tax credit on their tax returns.
The District of Columbia and New Mexico used federal aid to make $1,200 payments to certain residents receiving unemployment. And Colorado is making $375 payments to those who are unemployed, using disaster funds and state budget savings in Medicaid.
Hogan has been pressured to use the state’s rainy day fund and a balance on the books from last year’s budget to provide more financial aid to Marylanders.
Montgomery County Council President Tom Hucker, who built a coalition called “Maryland United for COVID Now,” criticized Hogan’s plan as too little aid for too few people happening too slowly.
Hucker, a Democrat who previously was a state delegate, said Hogan should tap the rainy day fund (more than $900 million) and the budget fund balance (more than $500 million) to issue checks to all state residents.
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“The state has plenty of money,” Hucker said. “Without calling to empty them all, you could have a stimulus in a budget-neutral way.”
Hucker organized a video rally Sunday to call on the governor to provide more aid.
Comptroller Peter Franchot, a Democrat running for governor in 2022, also is among those pushing for more financial help. During the rally, Franchot said the governor should fund $2,000 aid checks for Marylanders. The cost: $925 million. He also proposed $250 million in assistance for small businesses.
Hogan said Franchot’s proposal “is just not possible” and would empty the rainy day fund, which would be irresponsible. Franchot responded by issuing a statement saying Hogan was “passing the buck to the legislature.”