Gov. Larry Hogan details promised tax breaks

Gov. Larry Hogan offered details Tuesday on a promised package of Maryland tax relief measures, including a decade-long break to lure manufacturers to Baltimore and other areas with high unemployment.

The Republican unveiled the outlines of his plan as state lawmakers prepared to gather Wednesday in Annapolis for the start of the annual 90-day legislative session. Hogan called the cuts "common sense."


"Anyone that isn't in favor of that probably doesn't deserve to be in the legislature," he said during a State House news conference. "I can't imagine how anybody could vote against these."

His comments drew a reproof from Del. Maggie L. McIntosh, the Baltimore Democrat who chairs the House Appropriations Committee.


"That's stepping over the line," McIntosh said. "We can disagree. It's all right. We don't have to demonize each other."

The comments came on a day in which the Democrats, who control the General Assembly, were gearing up for confrontation. Leaders in the House of Delegates and the Senate vowed to resist any long-term cuts to education funding formulas and threatened to pass new spending mandates if Hogan takes a hard line on the budget he announced last week.

"There may be some type of collision," said Sen. Thomas M. "Mac" Middleton, a Charles County Democrat who chairs the Finance Committee.

Among the proposed tax and fee breaks that Hogan detailed Tuesday — $480 million over five years — were a fivefold increase in the income tax exemption for retirees and a speed-up of a tax refund for low-income working families. He outlined plans to reduce fees for a dozen items such as birth certificates and fishing licenses, as well as to cut the annual filing fee for businesses from $300 to $100 over four years.


While Democrats chided Hogan for his rhetoric, they signaled support for two of his proposals.

McIntosh said she supports Hogan's plans to increase more quickly the earned-income tax credit for low-income families and to create tax breaks for manufacturers that move to Baltimore and parts of the Eastern Shore and Western Maryland, areas where unemployment is much higher than in the rest of the state.

"That's a proposal that as a Baltimore City resident I find very attractive," she said.

Hogan's proposal calls for a 10-year corporate income tax break for such companies. And employees of those companies earning less than $65,000 a year would be exempt from state income taxes for a decade.

"We've lost 28 percent of our manufacturing base because other states were stealing our manufacturers," Hogan said. "It was like spearing a fish in a barrel. It was too easy. We're trying to bring back the manufacturing base because there are a lot of hardworking people in the heartland of Maryland who want to work."

House Republican Leader Nic Kipke of Anne Arundel County predicted that the proposal would be well received by lawmakers on both sides of the aisle. "I think it will be very difficult to resist for purely political reasons," he said.

Not everyone was thrilled with the plan. Benjamin Orr, executive director of the liberal-leaning Maryland Center on Economic Policy, said Hogan's manufacturing proposals are fundamentally unfair.

"They would undermine existing businesses that pay their fair share toward essential services and they subsidize low-wage work," Orr said in a statement. "This won't create jobs; it will take resources away from schools and other building blocks of a strong economy and true job creation."

For low-income families, Hogan proposed that a small tax break take effect two years earlier than scheduled. Lawmakers passed legislation in 2014 that spread a 3 percent increase in the earned-income tax credit over four years. Hogan proposes having that increase take effect this year. A family of five earning $53,000 or less would qualify for the credit as would a single person making less than $14,000.

"The earned income [credit] is one of the best, most successful tools we have to help working people grow themselves and their families and move out of poverty," McIntosh said. "We need to do more in terms of expansion."

For seniors, Hogan is proposing an increase in the personal income tax exemption from $1,000 to $5,000 over four years. The administration estimated that 614,000 Marylanders over age 65 would benefit from the proposed change, which would amount to about $200 in tax savings per person.

Montgomery County Sen. Richard S. Madaleno Jr., vice chairman of the Senate Budget & Taxation Committee and a leading Democratic critic of Hogan, questioned the need for additional tax relief for older Marylanders. He noted that the state does not tax Social Security benefits.

Meanwhile, McIntosh warned that if the governor is inflexible on restoring spending sought by the legislature, lawmakers could add mandates.

"We don't want to go there. That is not what we want to do. We want to work with the governor," McIntosh said.

Hogan said last week that if the legislature's budget committees trim his proposed budget and "fence off" money to be used for programs they see as priorities, he would simply refuse to spend it.

McIntosh recalled that last year the legislature added a mandate requiring the governor to fully fund a public school funding formula that reflects the higher cost of educating children in about half of Maryland's jurisdictions. The governor had funded it at only 50 percent and refused to spend the money lawmakers put aside to restore full funding.

If necessary, McIntosh said, lawmakers could extend mandates to other programs where the governor now has broad discretion.

Hogan said last week that the budget he is expected to roll out next week will fully fund education, as the law requires, but McIntosh gave him little credit for that.

"He wants us to cut and roll back formulas" for the future, she said.

Largely absent Tuesday was the talk of bipartisanship that prevailed last year when Hogan was about to be inaugurated.

Instead, the Democratic presiding officers of the House and Senate vowed to resist any efforts to trim formula-driven education spending.

Senate President Thomas V. Mike Miller of Calvert County vowed that it would be "a cold day in hell" before Assembly Democrats agreed to any such rollbacks.

House Speaker Michael E. Busch of Anne Arundel County reminded the Democratic lawmakers in the room that "we are the policymakers."

"It's not that we don't want to work with the governor. It's just that we want an equal seat at the table," he said.





Hogan tax proposals

Gov. Larry Hogan detailed five proposals Tuesday to lower taxes and fees.

Manufacturing: A 10-year tax break for new manufacturing companies in Baltimore, Western Maryland, Lower Eastern Shore.

Retirees: Roughly $200 annual income tax break for those 65 and older.

Low-income families: Expedited increase in earned-income tax credit.

Small businesses: Reduction of annual filing fee from $300 to $100 over four years.

Fees: Reduction of 12 fees charged by state, including for birth certificates, handgun licenses and vanity license plates.