In a blow to Gov. Wes Moore’s top legislative priorities, a state Senate panel on Friday struck out the part of his minimum wage proposal that would ensure automatic yearly increases to the wage by tying it to inflation.
The state minimum wage still would increase from $13.25 per hour to $15 earlier than scheduled, though the bill passed by the Senate Finance Committee also pushed back the timeline Moore proposed for that hike.
The inflation-based increases had been a sticking point in recent weeks, with lawmakers expressing concerns about the cost to businesses and Moore saying that “families will fall further and further behind” because of inflationary pressures.
The move marked one of the first signs of friction between the new Democratic governor and lawmakers of his own party who control both chambers of the legislature. The two branches have largely agreed on priorities since Moore’s inauguration Jan. 18.
Senate President Bill Ferguson previously cited the cost to businesses as a reason to hold off on indexing the wage to inflation. He said Friday he appreciated the governor focusing on the issue in light of the challenges that individuals earning the minimum wage are facing with inflation, but the goal for lawmakers had been the acceleration to $15.
“This is a reasonable approach to try to help take care of our employees in an environment where things are more expensive and jobs are more competitive without being too onerous on our business community,” said Senate Finance Committee Chair Melony Griffith, a Prince George’s County Democrat, during the meeting Friday night.
In June, the consumer price index showed inflation had increased 9.1% over the previous 12 months, a recent record. While that annualized rate has since declined, it trended upward slightly in January to reach 6.4%, according to the U.S. Bureau of Labor Statistics.
The Fair Wage Act (SB 555 and HB 549), as initially drafted, would have indexed the minimum wage to inflation, replicating a similar policy that 19 other states and the District of Columbia have in place. The annual increases would be capped at 5%.
A legislative fiscal analysis of the original bill, using an estimate of the consumer price index in the region in future years, predicted Maryland’s minimum wage would hit $17.15 in 2030 and $18.80 in 2034 if the original bill passed.
The jump to $15, meanwhile, would take effect Jan. 1, 2024, under the amended bill passed by the Senate committee. Lawmakers previously scheduled the wage to hit that mark on Jan. 1, 2025, and Moore’s original plan was to begin that wage on Oct. 1.
Griffith said the delay from October will allow businesses more time to prepare for the increased labor costs.
A spokesman for the governor did not respond to a request for comment Friday.
The minimum wage proposal is one of three bills that Moore has personally lobbied for twice each in House and Senate committees, signaling them as both top priorities and legislation that could face an uphill battle, at least in part, in the General Assembly.
Maryland Policy & Politics
The other two would provide further tax cuts for retired veterans and establish a service year program for recent high school graduates.
Ferguson has said he believes those bills will pass, but the retired veterans tax cuts may need to be narrowed and the service year program will need to be balanced more with an existing service option lawmakers enacted previously.
The SERVE Act, as drafted, would allow recent high school graduates to participate in a paid year of service, earning a $15 per hour wage and a $3,000 stipend after they finish the year. Lawmakers revived a similar service program, Maryland Corps, last year but have not fully launched it.
While the Senate is potentially considering keeping both service programs, the House Appropriations Committee passed an amended version of Moore’s bill Friday that would repeal the entire Maryland Corps program. The Senate has yet to consider amendments to its version of the bill.
The other priority bill, the Keep Our Heroes Home Act, would exempt up to $40,000 of military retirement income from state taxes. Current law exempts $15,000 of military retirement income for individuals age 55 or older and $5,000 for those who are younger.
Other bills Moore sponsored also are moving along as lawmakers face an April 10 deadline marking the end of the annual 90-day legislative session in Annapolis. Those bills are mostly not controversial among the Democrats who control a supermajority of both chambers.
The Family Prosperity Act, which permanently extends an expansion of the Earned Income Tax Credit and expands the Child Tax Credit, passed the full House earlier Friday without any major amendments. And the Health Care for Heroes Act, expanding health care coverage for members of the Maryland National Guard and their families, also passed the Senate Finance Committee on Friday.