A pandemic financial aid plan that includes a mix of direct payments, tax breaks and help for businesses is heading toward final approval in the Maryland General Assembly, with negotiations among delegates, senators and Hogan administration officials ongoing to smooth its path.
The state Senate already approved a version of Gov. Larry Hogan’s RELIEF Act, and members of the House of Delegates tweaked it Wednesday before it won unanimous, bipartisan approval from one subcommittee and two committees. That set up a debate and votes Thursday in the House.
“This is one of these rare moments where pretty much everyone in Annapolis has been pulling in the same direction,” said Del. Eric Luedtke, the Democratic House majority leader.
As revised by the House, the proposal includes one-time direct payments of $500 for families and $250 for individuals with low to moderate incomes, defined as those who receive an earned income tax credit.
The legislation also would eliminate the need for people to pay state and local income taxes on unemployment benefits received in 2020 and 2021, although it would limit that tax break to those who had income in those years of less than $75,000 for an individual or less than $100,000 for a couple.
Aid to businesses would include allowing small businesses to keep the sales taxes they collect for up to three months, up to $3,000 per month. Businesses that received state pandemic assistance, including grants and forgiven loans, would be exempt from paying state taxes on that money.
The newer version of the RELIEF Act also modifies about $520 million of funding that state senators put in for various programs. The House narrowed the extra spending called for in the bill to about $450 million. It includes grants to food banks and nonprofit organizations, aid to restaurants and hotels, energy assistance programs, $1,000 payments to people stuck in the unemployment system and funding for the state to hire additional unemployment claims specialists.
Lawmakers from both parties have expressed a desire to act swiftly to help those hurt most by the economic recession caused by the coronavirus pandemic, including low-income residents and small businesses.
As a result, the RELIEF Act, which stands for “Recovery for the Economy, Livelihoods, Industries, Entrepreneurs and Families,” has sailed through the state legislature. The period between the introduction of the bill and when it is passed could end up being as short as 3½ weeks. Typically, complex and high-dollar measures undergo scrutiny for nearly all of the 90 days in a legislative session.
As delegates worked this week on changes to the bill, they’ve kept senators in the loop in hopes of easing the bill’s final approvals. Representatives of Hogan’s legislative office and the departments of labor and commerce have been involved, as well.
However, the governor has yet to take a formal position on the revised bill.
“We’ve been engaged in good-faith discussions with the House and Senate on the RELIEF Act, and look forward to seeing what they are able to produce,” said Mike Ricci, a Hogan spokesman.
If approved Thursday in the House, the bill would go back Friday to the Senate, where senators would vote on whether to agree with the delegates’ changes.
The costs of the bill would be paid with state money, using part of the rainy day fund as well as other budget maneuvers. An updated fiscal analysis hasn’t been completed yet, but it could cost about $1.1 billion to $1.2 billion.
The newer, House version of the bill also would ensure that employers who laid people off during the pandemic don’t pay increased unemployment taxes for the next two years. And small employers with fewer than 50 workers would be allowed to postpone their payment of those taxes for one year.
Maryland Policy & Politics
The bill also would expand the benefit that individuals and families receive under the earned income tax credit for three years.
The expansion of the earned income tax credit will be particularly helpful to low-income workers, Luedtke said. The tax credit helps lower-wage workers, particularly those with children, keep more of their earnings by giving them a credit equal to a percentage of their income. The House proposal would increase that percentage for the state tax break.
“This will be the single biggest step Maryland has taken to attack poverty since the increase of the minimum wage to $15,” said Luedtke, a Montgomery County Democrat.
The RELIEF Act would not cover taxpayers who file using an individual tax identification number, or ITIN, instead of a Social Security number. That group includes people living in the U.S. without legal permission, who are prohibited from receiving many federal tax breaks such as the earned income tax credit.
Some Democratic lawmakers and state Comptroller Peter Franchot, also a Democrat, have pushed for ITIN taxpayers to receive help, too.
“They deserve relief as much as citizens do,” said Del. Jessica Feldmark, a Howard County Democrat.
Democratic lawmakers are working on another bill that might provide help to taxpayers without Social Security numbers.