Maryland lawmakers on Tuesday began scrutinizing Gov. Larry Hogan’s pandemic relief plan that includes stimulus payments to low-income residents and a series of tax breaks.
“He wanted to provide relief to Maryland families and businesses that was both immediate and easy to receive,” said Ali Keane, a lobbyist for Hogan who presented the RELIEF Act to state senators during a public hearing.
The Republican governor’s proposal has multiple parts:
Making payments to low-to-moderate income Marylanders of up to $300 for individuals or $500 per family, followed by later payments of up to $150 for individuals or $250 per family. This group is defined as those who claim the Earned Income Tax Credit on their taxes.
Eliminating the need for people to pay local and state income taxes on unemployment benefits.
Giving four months’ worth of credits against the state sales tax to small businesses, up to $3,000 per month and up to $12,000 total.
Eliminating the increase in unemployment taxes paid by businesses that lay off workers in 2020 or 2021.
Exempting businesses from paying state taxes associated with pandemic loan and grant programs.
Allowing the state Department of Commerce to forgive up to $50,000 worth of loans in certain small business programs, provided it will help relieve financial effects of the pandemic.
Hogan and lawmakers from both parties appear to have reached a general consensus that they want to provide financial help to individuals and businesses struggling in the pandemic-induced recession, and the governor’s aides have met privately with Democratic leaders in the General Assembly.
Sen. Guy Guzzone, chairman of the Senate Budget and Taxation Committee, said during Tuesday’s hearing that “there’s a lot of good stuff in the bill,” though he didn’t offer specifics.
Guzzone, a Howard County Democrat, said Hogan’s proposal has the potential to help families and businesses that continue to struggle despite multiple state and federal financial assistance programs. It’s still unknown, he noted, what President Joe Biden’s administration and the new Congress will pass in terms of further financial relief.
Hogan has said that aside from the legal requirement to pass the budget, his RELIEF Act is his top priority for the General Assembly session. On the first day of the 90-day session, Hogan said that if lawmakers approve the budget and the RELIEF Act, then “I’d call it a huge success and call it a day.”
Hogan chose not to make his case for the RELIEF Act directly to lawmakers, instead sending a five-person team to testify during a video hearing: the secretaries of commerce and labor, the deputy budget secretary and two of his lobbyists. Now in his seventh legislative session as governor, Hogan has yet to appear at a public hearing in support of any of his bills.
Senators had no questions for Hogan’s team after they outlined the details of the RELIEF Act.
The name “RELIEF Act” comes from “Recovery for the Economy, Livelihoods, Industries, Entrepreneurs and Families.” All told, the cost to the state — between making the stimulus payments and losing out on taxes it would collect — is estimated to be about $1 billion, spread out over a couple of years.
But the cost could be higher than the governor estimated: His team predicted that not collecting taxes on unemployment benefits would result in a $70 million loss over two years, while nonpartisan analysts for the legislature put the loss closer to $275 million over two years.
“It is far better for the state to forego some tax revenue now than to ask businesses and entrepreneurs to start over from scratch if their businesses shut down,” said Kelly Schulz, the state secretary of commerce.
The loss of taxes collected also would trickle down to local governments. Large jurisdictions with high unemployment — including Baltimore City and Baltimore County — could miss out on more than $20 million of taxes this year that would have been paid by people receiving unemployment.
Senators did hear from two people who signed up to speak in favor of the bill.
Isabel Molina said she’s been out of work since April, when she was laid off by a division of Johns Hopkins Medicine. She supports the part of the bill that would eliminate state and local income taxes on unemployment benefits.
Molina said she did not have taxes taken out of her unemployment payments, so she’s “cringing” at the thought of doing her tax return this year.
And Mike O’Halloran, state director of the National Federation of Independent Business, said the provisions for businesses are “a logical next step in reigniting Maryland’s economy.”
The House of Delegates Ways and Means Committee will hold a public hearing on the RELIEF Act on Feb. 4.