Annapolis: Legislature Braces for ACA Repeal despite Congress’s Failure

The Maryland House of Delegates on Friday adopted its version and a Senate version of the Maryland Health Insurance Coverage Protection Act to plan for the potential loss of $4 billion in annual Medicare and Medicaid dollars that flow to the state annually, should the Republican-controlled Congress succeed in repealing the Affordable Care Act.

The loss of funding could result in 400,000 Marylanders losing their health coverage, according to analysis from the Maryland Department of Legislative Services released in January to assess the impact of repeal.

But during floor debate on Friday morning, Warren Miller, R-Howard, asked if the measure could be delayed pending the outcome of a scheduled 3:30 vote in Congress on the American Health Care Act, the GOP’s replacement to the ACA.

“There is a very good possibility there could be no repeal,” Miller.

Miller’s comments were correct and several hours later U.S. House Speaker Paul Ryan announced there would be no vote and conceded that the AHCA failed to win the support of GOP majority.

“Obamacare is the law of the land and will remain the law of the land until it is replaced,” Ryan said at an afternoon press conference announcing his decision to cancel a vote on his plan. “We’re going to be living with Obamacare for the foreseeable future…I don’t know how long it’s going to take to replace this law.”

Congressman Andy Harris, Maryland’s only Republican in Congress, originally lauded the Ryan plan as a way to reduce costs for patients while increasing the quality of health care, but by Friday Harris pulled his support.

Democratic leaders in Annapolis and Washington fear the GOP Congress will continue attempts at repeal before the end of Trump’s first term.

“Today, tens of millions of Americans can breathe a small sigh of relief as President Trump, Speaker Ryan, and House Republicans failed to eliminate their healthcare coverage—at least for now,” said Rep. Elijah Cummings of Maryland’s 7th District in a statement.

Being prepared

Del. Bonnie Cullison, chair of the health insurance subcommittee, said regardless of what happened Friday the state should be prepared for potential changes. She said the state needed to brace for repeal or drastic changes that could result in loss of coverage or a spike in premiums and other costs.

“We need to be prepared and we’re going to have to look at some other ways to deliver [health care] services,” She said.

She said options may be limited to bringing back high-risk pools like the Maryland Health Insurance Plan (MHIP), a public health plan established by the legislature in 2002, the Health Insurance Safety Net Act, to cover individuals who could not get coverage due to pre-existing conditions or who were deemed uninsurable. The program established 41 medical conditions that automatically qualified individuals for enrollment.

Coverage under MHIP was supported by premiums, a 1% assessment of hospital rates and federal grant funds. The plan was phased out in January 2014 when coverage became available under the ACA. Those who could still not afford coverage qualified under the Medicaid expansion if their incomes were 133% of the poverty level or less.

“But we’re not looking favorably on any of our options right now,” Cullison said. ‘We’re going to have to look at some other ways of delivering the service.”

“There may be very high premiums but it would cover the people who absolutely need health care and don’t have it,” she said. She said it could be a stopgap against medical bankruptcy and would hopefully include a prohibition against lifetime limits on coverage.

“These are out there as options but we are not looking favorably on any of our options right now,” Cullison said.

Minor amendments were adopted on Friday to make the bills identical and final passage is expected next week. The Senate passed its version March 18 in a party-line vote, 33-14.

by Dan Menefee

Annapolis: Democrats Blast Hogan Silence on Bay Cleanup Cuts as Administration Fires Back

Democrats in Annapolis Thursday railed against Republican Gov. Larry Hogan for not doing enough to protect the Chesapeake Bay under the Trump administration’s proposed cuts to the Bay cleanup plan and under a new EPA administrator historically hostile to environmental regulations.

“The Bay can’t speak for itself obviously and needs a spokesperson,” said Senate President Mike Miller, leading a press conference of House and Senate Democratic leaders. “Obviously the person in the highest office in the state is not speaking out for the Chesapeake Bay, so we’re here to say this Bay is ours, it’s the largest estuary in the world…and we’re going to protect our Chesapeake Bay.”

(The world’s largest estuary, where fresh water combines with saltwater from the ocean, is at the mouth of the St. Lawrence River, according to numerous sources. The Chesapeake is the largest in the U.S.)

Miller, whose home overlooks the bay at Chesapeake Beach, said progress has been made to bring back the canvasback duck and rockfish populations and establish oyster sanctuaries “and we’re not going to retreat,” Miller said.

Conspiracy of silence

Sen. Paul Pinsky, D-Prince George’s, said the Hogan administration has been guilty of a “conspiracy of silence” since the federal budget came out last week with $73 million in proposed cuts to the Chesapeake Bay cleanup program, which was enacted in 2010 to put the Bay on pollution diet to reduce nutrients flowing into it.

“The program, the resources and the oversight…have been cut and not a word from the second floor,” Pinsky said. “It is a conspiracy of silence and it is guilt of omission.”

“Without that program we are going to slide backwards not only losing that $73 million but the oversight and push from the federal government. Without that we have a major problem,” Pinsky said.

Pinsky said Hogan’s support of a bill to weaken penalties on oyster poachers and the firing of scientists, had become an act of commission. He was referring to the recent firing of Brenda Davis, blue crab fisheries manager at the Maryland Department of Natural Resources who spent 28 years at the agency.

She was supposedly fired for setting limits on the size of crabs that could be harvested after July 15 every year to 5 ¼ inches.

Lawsuit compelled enforcement

Maryland’s Bay cleanup plan was the result of a lawsuit won by the Chesapeake Bay Foundation in 2010 that compelled the EPA to enforce the 1972 Clean Water Act. Under a consent decree, states in the Chesapeake Watershed, from New York to Virginia, were required to implement plans to reduce nutrient pollution, bringing the Bay into compliance with the Clean Water Act by 2025.

Kim Coble, the foundation’s vice president for environmental protection and restoration, said the “bay is improving” because of a 35-year state and federal partnership that started with President Ronald Reagan.

“Our ‘State of the Bay’ report this year has the highest reporting level we’ve ever had,” Coble said. “We have improved water clarity and the [population] of oysters and crabs and underwater grasses are coming back. And all of this is at risk.”

Administration pushback

The administration answered the Democratic leadership with a little sarcasm and it defended Hogan’s record on the Bay.

“With two weeks left in the session, we wish that the majority leadership would focus on doing their jobs here in Annapolis instead of focusing on Washington, D.C. partisan politics,” the statement said. “The governor has already made it clear that he will always fight for the Chesapeake Bay and that he opposes hypothetical cuts at the federal level.”

“Our administration will continue to support the Bay at record levels in the state budget, which has included over $3 billion for the Bay since taking office. We are happy to see that the presiding officers have seen the light on Bay restoration funding, given their support for the past administration raiding over $1 billion from restoration efforts.”

“President Miller and Speaker Busch promised that their entire focus this session would be on Washington politics; at least that’s one promise they’ve delivered on.”

Rep. Andy Harris, the only Republican left in the Maryland congressional delegation, said last week: “The Chesapeake Bay is a treasure, and as a member of the Appropriations Committee, I am committed to working with the administration to prioritize programs within the Environmental Protection Agency that would preserve Bay cleanup efforts.”

By Dan Menefee

Maryland Commission would Monitor Health Care Coverage as Congress Replaces ACA

The Maryland Senate on Friday adopted the Maryland Health Insurance Coverage Protection Act to monitor congressional plans to repeal and replace the Affordable Care Act that could cost the state billions to maintain current coverage.

The intent of the bill, SB571, offered by Sen. Thomas “Mac” Middleton and 31 other Democratic co-sponsors, is to study ways to prevent 400,000 Marylanders from losing health insurance and plan for a potential loss of $4 billion in federal Medicaid and Medicare dollars that flow to the state each year.

Sen. Jim Brochin, D-Baltimore County, was the only Democrat not to sign on as a co-sponsor.

Sen. Thomas “Mac” Middleton

A plan released by U.S. House Speaker Paul Ryan March 6 cuts $880 billion from the Medicaid program and $673 billion in premium subsidies to those who purchased insurance through the exchanges, according to Congressional Budget Office report released last week, page 6.

Under Ryan’s plan, the American Health Care Act, the CBO estimated that 24 million Americans would become uninsured by 2026 from the loss of Medicaid funding and the eventual loss of federal subsidies available to those with incomes between 133% and 400% of the federal poverty rate.

Middleton’s bill is expected to pass in a final vote this week. A cross-filed bill in the House is co-sponsored by all 91 Democrats and six Republicans but there’s been no action on the bill since its hearing on March 10.

The Act would set up an 11-member commission, including the Maryland attorney general, to complete a study on the potential impact to Marylanders and devise plans to mitigate the loss of Medicaid and Medicare funding.

The commission would be authorized to convene workgroups over the next three years and report back to governor and legislature.

Big federal subsidies

The federal government currently subsidize 95% for Marylanders who became insured under the Medicaid expansion when the state fully implemented the ACA. This brings about $2.8 billion in annual Medicaid support in 2017 and the state’s share is just $70 million.

The state also stands to lose its Medicare waiver, which is the only program of its kind in the country that allows hospitals to charge Medicaid and Medicare the same commercial rates charged to insurance companies, normally much higher than what Medicaid and Medicare reimburses in other states. The waiver also allows the state, not the federal government, to set the rates.

The waiver brings around $2.3 billion in additional funding to Maryland hospitals annually.

ACA decreased number of uninsured

When Maryland fully implemented the Affordable Care Act in 2013 the unprecedented expansion of Medicaid added 291,000 Marylanders to the Medicaid rolls by 2016, according to analysis by the Maryland Department of Legislative Services.

This was accomplished by raising the income eligibility to 138% of the federal poverty rate for all individuals under 65 who were enrolled beginning January 1, 2014. Previously Medicaid eligibility had been restricted to low-income parents with children, the elderly and the disabled, and the reimbursement rate was a 50-50 cost sharing arrangement with the federal government.

Under the expansion, the federal government kicked in 100% of the cost of new Medicaid enrollees from 2014 through 2016. But that was scheduled to get a gradual trim to 90% by 2020 and remain in effect indefinitely. The state would pick up the other 10%.

Maryland’s share to cover the Medicaid expansion in 2017 is around $140 million and the federal government will kick in around $2.8 billion, 95% of the total costs.

The state costs were expected to grow to $350 million by 2021, with the federal match rising to $3.5 billion.

Ryan cuts

But the Ryan plan would reduce federal government participation for new Medicaid enrollees beginning 2020 and set the cost sharing at 50-50, the traditional cost sharing split that existed before the expansion.

If a 50-50 split were in effect the state’s Medicaid obligation this year would be $1.3 billion.

Middleton said in floor debate Friday that “there’s a reasonable certainty the feds will…hand back 50% of the costs.”

The Ryan plan would also affect the 143,000 Marylanders who qualified for subsidized premiums through the Maryland Health Benefit Exchange. The Ryan plan ends those subsidies, saving $673 billion in federal spending through 2026, according to the CBO report.

Maryland’s exchange has received $137 million in state funding and $425 million in federal funds since 2011. The exchange has 67 employees with annual salaries approaching $8 million.

by Dan Menefee

Commerce: Annapolis Looks at Taxing Online Sellers

Maryland retailers are again pushing for the state to collect sales taxes from online merchants not based in Maryland, helping them and potentially raising hundreds of millions for the state.

Brick and mortar stores are struggling to compete with online sellers in other states, retail business interests testified in Annapolis on Wednesday in support of the Main Street Fairness Act of 2017.

“When there exists a significant savings from online purchasing, the attraction of the cost savings often outweigh the shopping experience,” Barbara Nicklas, senior general manager for the Mall in Columbia told the House Ways and Means Committee.

She said collecting the online sales tax would close the “cost disparity” between online sellers and brick and mortar stores.

Steve Sachs, vice president of real estate with Willis Towers Watson-North America, said Maryland retailers should not be forced to compete at a “tax disadvantage” with online sellers. “You’re supposed to be paying state tax on sales.”

He said the absence of legislation to fix the problem has created a penalty to Maryland retailers.

“Common sense tells me that we should be protecting our own businesses in Maryland who employ our workers [and provide tax revenue] to the state of Maryland and our local jurisdictions.”

In written testimony, he said the retail industry in Maryland employs 238,000 workers and paid $4 billion in sales taxes in 2015.

Physical presence required

Under current law only online sellers with a physical presence in Maryland are required to collect the 6% sales tax.

In 2014, Amazon opened a warehouse in Baltimore and started collecting the 6% sales taxes on purchases from Maryland residents. The Comptroller’s Office estimated that sales tax receipts from Amazon would reach $169 million by 2017.

The bill, HB1213, would require online (remote) sellers without a physical presence in Maryland to collect the state’s 6% sales tax from Maryland consumers who make purchases online, but only when a remotes seller’s quarterly transactions are more than 200 or exceed $10,000 in sales.

A study by the Comptroller’s Office in 2011 indicated that $287 million in sales taxes from online sales would go uncollected by 2017. The Department of Legislative Services later updated the estimated loss to closer to $320 million.

P.J. Hogan testifying for NetChoice, a national trade association that promotes e-commerce, said Maryland might have difficulty collecting the tax from remote sellers based on lawsuits in other states where online retailers have relied on a 25-year-old Supreme Court ruling to avoid collecting retail sales taxes.

Supreme Court decision

A 1992 Supreme Court decision in Quill Corp. v. North Dakota affirmed that out-of-state retailers were only required to collect a sales tax from consumers in states where they had a physical presence, like a distribution center or sales office, according to the legislative analysis.

Hogan said a similar law to the proposed bill passed in South Dakota a year ago and was recently struck down on Monday in the South Dakota Supreme Court as unconstitutional based on the Quill decision.

He said the Maryland Attorney General has opined that the law would wind up in litigation unless the Quill decision is overturned or Congress passes legislation allowing for the collection of a sales tax without the requirement of a physical presence in the state where a sale originates.

by Dan Menefee

Op-ed: Marijuana legalization Shouldn’t be Held Hostage to Drugged Driving Concerns by Paul Armentano

Maryland lawmakers are once again considering legislation to regulate the adult use and sale of marijuana to those age 21 or older. Nearly six in 10 residents support this reform, according to a February Goucher poll. But opponents charge that doing so could pose a risk to traffic safety.

Such concerns are not all together unfounded, but deserve to be placed in proper context.

First, it should be stressed that driving under the influence of marijuana is already a criminal offense in Maryland. Nothing in the language of Maryland’s proposed adult use laws changes this reality.

Second, scientific studies consistently find that marijuana-positive drivers possess a comparatively nominal accident risk, particularly when compared with alcohol-positive drivers. In fact, the largest ever controlled trial assessing marijuana use and motor vehicle accidents, published in 2015 by the U.S. National Highway Traffic Safety Administration, reports that marijuana positive drivers possess virtually no statistically significant crash risk compared to drug-free drivers after controlling for age and gender.

By contrast, drivers with detectable levels of alcohol in their blood at legal limits possess nearly a four-fold risk of accident, even after adjusting for age and gender.

This finding is consistent with prior meta-analyses of crash risk data. For example, a review of 66 separate crash culpability studies published in the journal Accident Analysis and Prevention reported that THC-positive drivers possessed a crash risk on par with drivers testing positive for penicillin (Odds Ratio: 1.10 for cannabis versus Odds Ratio: 1.12 for penicillin) This risk is far below that associated with driving with two or more passengers (OR=2.2) and is comparable to the difference between driving during the day versus driving at night.

Further, data from states that have liberalized marijuana’s legal status show no uptick in motor vehicle crashes. Writing in December in the American Journal of Public Health, investigators at Columbia University reported, “[O]n average, medical marijuana law states had lower traffic fatality rates than non-MML states. …. Medical marijuana laws are associated with reductions in traffic fatalities, particularly pronounced among those aged 25 to 44 years. … It is possible that this is related to lower alcohol-impaired driving behavior in MML-states.”

A review of federal FARS data (Fatal Analysis Reporting Systems) further finds that trends in motor vehicle accidents in Colorado and Washington post-legalization are no different than crash trends in non-legalization states over this same period of time.

Nevertheless, the use of marijuana prior to driving ought to be discouraged and better efforts ought to be made to identify drivers who may be under the its influence. These include greater funding for the training of Drug Recognition Evaluators, the use of modified roadside field sobriety tests, and potentially the provisional use of roadside marijuana-sensitive detection technology, such as saliva test or breath test technology.

These efforts should not include the imposition of per se thresholds for THC or its metabolites, as such limits are not scientifically correlated with driver impairment.

Efforts should also be made to better educate the public with regard to the existing traffic safety laws, as well as to the evidence surrounding marijuana’s potential influence on driving. In particular, this messaging should stress that combining marijuana and alcohol greatly impacts driving behavior and is associated with far greater risk of accident than the use of either substance alone.

Such an educational campaign was implemented nationwide in Canada by the Canadian Public Health Association and could readily be replicated in the United States and promoted by groups like the American Automobile Association.

In addition to increasing public safety, implementing these steps would help assuage concerns that regulating the adult use of marijuana could potentially lead to an increase in incidences of drugged driving or limit the state’s ability to successfully identify and prosecute such behavior.

Adults’ consumption of and demand for marijuana is here to stay. It is time for Maryland lawmakers to acknowledge this reality. It is time to stop ceding control of the marijuana market to untaxed criminal enterprises and to regulate its adult use and sale accordingly.

Paul Armentano is the deputy director of the National Organization for the Reform of Marijuana Laws (NORML) and is the co-author of the book “Marijuana Is Safer: So Why Are We Driving People to Drink.”

Annapolis: New Septic Bill Struggles in the Senate

A bill to require Best Available Technology (BAT) for all new construction on septic everywhere in Maryland is struggling to survive in the Senate.

The bill, SB266, sponsored by Sen. Joan Carter Conway, D-Baltimore City, would establish a 2012 regulation issued under former Gov. Martin O’Malley into law that required BAT systems for all new construction on septic, even beyond the critical areas.

Gov. Larry Hogan killed the O’Malley-era regulation last summer and limited BAT system requirements to the critical areas only. Hogan told the Maryland Association of Counties that the regulation “created a cost-prohibitive burden for Maryland homeowners and businesses” outside the critical area. BAT systems can cost up to $7,500 or more per home than conventional septic systems.

Critical areas are considered to be within 1,000 feet of the Bay or coastal areas.

Vote falls short

On Thursday a 22-23 vote fell short of advancing the bill, but it was brought back to life moments later when Sen. Ulysses Currie, D-Prince George’s, asked to reconsider the vote, although he did not change his vote.

Currie’s motion to reconsider cleared the way for Sen. Thomas “Mac” Middleton on Friday to offer floor amendments that would prioritize BAT requirements based on available funding in the Bay Restoration Fund. The amendment would have allowed conventional septic systems outside the critical areas if funding was unavailable.

The amendments failed 20-26.

Shortly after Middleton’s amendment failed, Sen. Edward Reilly, R-Anne Arundel, offered amendments to revert back to requiring BAT systems in the critical areas only. Those amendments were laid over until this week.

“It makes no sense to put an enhanced nutrient removal system in the middle of a farmland 25 miles from any critical area in the state and require [homeowners] to pay any more than necessary,” Reilly said. “This focuses the efforts and the money on the most important parts of the state.”

Senate President Mike Miller originally voted against the bill on Thursday but had a change of heart Friday after Reilly’s amendments were laid over. He asked the body to reach a compromise.

“Let’s pass the bill,” Miller said.

Flush tax money

The measure, if passed, would provide funding, if available, from the Bay Restoration Fund — where the “flush tax” goes — to subsidize the cost difference between conventional and BAT systems, currently estimated at $7,500, according to a legislative analysis.

An $8,000 fine would be levied for any home not using a BAT systems where required.

O’Malley put the regulation in place just weeks after signing the controversial Sustainable Growth and Agricultural Preservation Act of 2012, which put tighter limits on septic in subdivisions but preserved some local control over septic use.

Rural lawmakers and local governments reeled at the time and said it would put too many restrictions on development and was an affront to property rights of farmers and landowners.

The Act established the size and scale of major developments using septic systems as a way to encourage development closer to priority funding areas that could be served by sewage treatment plants.

by Dan Menefee

Annapolis: Large Chicken Houses spur Health Concerns

With no help from their state representatives, some residents of the lower Eastern Shore have sought help from a Montgomery County Democrat to address health problems blamed on an explosion of large poultry operations.

Respiratory problems have been linked to ammonia, hydrogen sulfides and particulates venting from rows of large industrial fans in chicken houses. Large poultry operations have increased dramatically in the last decade, according to residents who testified in Annapolis on Tuesday.

Sen. Richard Madaleno, D-Montgomery, is sponsoring the Community Healthy Air Act, a bill that would require Maryland Department of the Environment to determine if the agency, and large scale poultry operations, are in compliance with Clean Air Act standards — specifically pollutants from concentrated animal feed operations, or CAFOs.

One-year study called too short

The one-year study would require MDE to monitor air quality near poultry operations, but Delmarva Poultry Industry, Inc., a nonprofit that represents chicken growers, says the one-year study would not be long enough to yield accurate results and questions “whether MDE has the money and expertise to do what this bill will require.”

“CAFOs can be significant sources of air pollution,” said Brooke Harper, chair of the Maryland-NAACP Environmental Justice Committee, before the Senate Education, Health, and Environmental Affairs committee on Tuesday. “Exposure to airborne contaminants have been associated with adverse health effects such as asthma and other respiratory illnesses.”

Harper said the required study under the bill, SB773, would help determine if Wicomico County’s 100 chicken operations are a cause of Maryland’s highest rates of lung and heart disease. She said Wicomico also has the highest rates of emergency room visits due to asthma.

Somerset County resident Sam Burley told the committee his quality of life has drastically changed since six chicken houses went up 240 feet from his home. He said the operation houses 275,000 birds and his property value has dropped dramatically.

“No law abiding citizen would think of going to his next door neighbor and taking something of value, but effectively that has happened to us,” he said.

He said he could smell chicken waste inside his home.

Chicken house dwarfs home

Somerset county resident Lisa Inzerillo showed the committee an aerial photo of her house dwarfed by a chicken house.

She said she asked her local officials to help zone the “Walmart style complex” away from her small farm, but instead saw officials giving deference to the poultry industry.

She said the study would go far in determining the health impacts of chicken houses.

“We are not trying to do away with the poultry industry, but it is time they started respecting our right to clean air,” she said.

She told the committee that bio-filters on exhaust fans is widely used in Europe and would help mitigate much of the pollution from chicken houses.

Michelle Protani-Chesnick, a Wicomico County chicken farmer, said she was a responsible steward of her farm and has raised a family on her poultry farm with no adverse health issues to her family.

“We don’t have health related poultry problems,” she said. “We should be violently ill constantly and we’re not.”

Protani-Chesnick said she was concerned the study would not be done properly.

“You would really need to do a much longer [study] on more than just one farm to get an honest result,” she said.

Delmarva Poultry Inc., a nonprofit group that has represented the chicken growers since 1948, agreed that the results of a one-year study would mostly likely be inconclusive.

“Incomplete, inaccurate, and poorly gathered data could lead to conclusions that could impact how growers operate their farms,” the nonprofit said in a press release on Feb. 22. “These conclusions could lead to additional state environmental requirements. If a study is to be done, it needs to be done right and this bill, we believe, will not produce accurate results.”

They noted that the bill’s sponsor was not from the Eastern Shore.

By Dan Menefee

Annapolis: Maryland Annual Corporate Filing Fee would be Raised Based on Company Assets

Maryland businesses have come out strongly against a proposed change in the annual corporate filing fee that would go from a flat fee structure to a progressive tax based on a company’s assets.

The annual corporate filing fee is currently a flat fee of $300 in order to maintain the legal entity’s existence in the state; the progressive tax could climb as high as $4,000 based on a company’s fixed assets.

Sponsors of the bill say they’ve received massive support from constituents with small businesses.

“This bill is about fairness,” said the bill’s sponsor, Del. Vanessa Atterbeary, D-Howard County. “And it attempts to put businesses on a graduated scale based on their taxable assets.”

Fees would drop for 250,000 firms

Under the measure, HB691, 233,000 entities in Maryland would see the annual fee drop to $150 and another 19,000 would see a decrease to $200.  Around 11,000 businesses would continue to pay $300, according to the fiscal note.

In 2003, Gov. Robert L. Ehrlich raised the fee from $100 to $300.

“Essentially what we would like to do is not make Ben Kramer Save the Puppies LLC to have to pay the same amount as Under Armour,” Atterbeary said, using the name of a committee member.

But once fixed assets pass $50,000, the fee more than doubles to $750 and climbs north to $4,000 for companies with fixed assets above $200,000.

“Why should any small business pay the same exact $300 fee…as a Northrop Grumman,” said one of the bill’s cosponsors, Del. Dan Morhaim, D-Baltimore County, in testimony before the House Economic Matters Committee on Wednesday. He said he had received many complaints in recent years about the regressive nature of the tax.

“This does represent a tax break for entities we often say we want to support,” he said.

Del. Chris Adams, R-Dorchester, said the fee under the bill appears to be more of a tax increase than a fee increase.

“We’re getting away from the idea that there’s a fee that we pay for the privilege of doing business in the state of Maryland and moving [it towards a tax], Adams said. He challenged Morhaim’s testimony referring to the fee as a “tax.” Morhaim quickly apologized for the characterization.

Adams said many CPAs in his district complained more about the proposal than the current sick leave bill moving through legislature.

“I got more phone calls on this bill than I did the sick pay bill,” he said. “I got a lot of opposition from the business community on this one.”

Champe McCulloch of Maryland Associated General Contractors said the progressive tax would punish businesses that investment in Maryland.

“Do you as the General Assembly want to hold business that make substantial capital investments in Maryland in disdain and [assess] a higher fee because they are committed to Maryland and committed to investing in Maryland,” McCulloch asked the committee.

Assets don’t correlate with income

Many who testified against the bill said using fixed assets could raise the fee for companies with higher fixed assets, like trucks and tools, than a small firm with very little fixed assets that makes considerably more from services, like a law firm.

Mike O’Halloran, Maryland director of the National Federation of Independent Business, told the committee that the small businesses the bill aims to help can easily have more than $50,000 in fixed assets.

“You can get up to $50,000 in taxable assets fairly quickly,” O’Halloran said. He said a caterer he knew would see an increase simply because the kitchen equipment easily exceeds $50,000 in value.

Atterbeary said the proposal was revenue neutral.

The initial expenditures to administer the new fee structure comes to $500,000 in fiscal 2018 and $66,000 annually. Revenues are expected to increase by $435,000 annually.

But Maryland Chamber of Commerce in written testimony said the bill was an attempt at a revenue increase.

“The State’s Department of Assessments and Taxation has imposed filing fees to offset the administrative cost to the State of updating corporate documents each year,” the Chamber said.  “To replace the traditional fee with a scaled fee is a veiled attempt to increase State revenue at the expense of small businesses.”

By Dan Menefee

MD Senate Finance Committee Approves Mandated Reimbursement Increases for Mental Health

Several hundred rallied in Annapolis Thursday in support of the Keep The Door Open Act, a bill that would increase funding for mental health and addiction treatment and tie the reimbursement rate for service providers to the Consumer Price Index.

A few hours later, the Senate Finance Committee voted to send the bill, SB 476, to the full Senate after 16 groups representing hospitals, service providers and nonprofits spoke in support of the bill.

Opposition from two cabinet officials at the hearing won a small concession from Finance Chair Thomas “Mac” Middleton, D-Charles, who added an amendment that would sunset the act in five years.

“Some of the testimony against the bill is very notable,” Middleton said.

Gov. Larry Hogan proposed a 2% increase in his fiscal 2018 budget. But supporters of the bill say a mandatory formula increasing payments based on the price index was needed to maintain a stable workforce and increase access to patients in their communities.

“This is really about keeping the door open for our constituents so they have access to mental health and substance abuse services in their community,” said the bill’s lead sponsor, Sen. Guy Guzzone, D-Howard County, at Thursday’s hearing. The bill currently has 33 co-sponsors in the Senate out of 47 members, including three Republicans. A similar bill passed the Senate and House last year but got hung up on differing amendments and was never enacted.

Guzzone said treatment should be available long before a patient ends up in the emergency room and easily accessible after release from the hospital. He said over a million Marylanders are in need of mental health and addiction treatment.

People in crisis

“We’ve been dealing with people in crisis, and having people end up in crisis in a hospital room is not the solution,” Guzzone said. “We need to [provide services] before they end up in the hospital.”

Under the bill, service providers would be reimbursed based on the Consumer Price Index averaged over the prior three years. Currently that average is 3.24% for the Baltimore-Washington region, according to the fiscal analysis.

General fund expenditures increase by nearly $179 million through fiscal 2022 and are matched by $170 million in federal Medicaid dollars over the same period.

Lori Doyle, public policy director for the Community Behavioral Health Association of Maryland, said inadequate funding would increase costs to the state in other areas and make it difficult to maintain a workforce.

Keeping people whole

“We’re going to continue to spend money on this population, It’s just a matter of where you want to spend it,” Doyle told the committee. “You can spend it in emergency departments, inpatient care and in our jails and prisons, or do you want to keep people whole and with their families?”

She said the federal reimbursement rate was paying just $10 to $12 an hour. “We used to hire college graduates but we can’t get them anymore,” she said.

She said 13 of Maryland’s 24 counties have a federally recognized shortfall in the mental health workforce and that “financial neglect” of service providers is evident in the rise of drug overdoses and suicides.

Brian Frazee of the Maryland Hospital Association said emergency room visits related to behavioral health have increased by 18% while all other visits have declined by 5%. He said Medicaid covered ER visits since 2013 have increased by nearly 30% at a cost of $47 million.

Administration says mandate inflexible

Marc Nicole, deputy secretary of Budget and Management, defended Hogan’s commitment to increase funding for service providers. He said the 2% increase when confronting a $544 million deficit demonstrated a clear commitment without the need for a mandate.

“These rate increases are mandated and quite costly,” Nicole said. He said the mandate would climb from $17 million in 2018 to $76 million by 2022. He said during that same period the fiscal deficit could reach $1.2 billion.

“We have shown our commitment on this,” Nicole said.

The administration should be allowed to make the funding decisions for service providers on an annual basis, he said.

Barbara Bazron, deputy director of behavioral health, echoed Nicole and said the compulsory rate increases in the bill create an “unsustainable fiscal impact” on the general fund that discriminates against other types of providers.

“The administration believes it is not fiscally prudent or socially responsible to mandate an expenditure that will likely balloon to $76 million,” she said. “By mandating that the administration dedicate Maryland’s scarce resources to only one type of provider [the bill] removes the flexibility for us to focus on all treatment providers.”

By Dan Menefee

80,000 Maryland Salaried Workers could get Overtime Pay under Proposed Bill

A bill that would make 80,000 more salaried employees in Maryland eligible for overtime pay is not sitting well with business and nonprofit groups, whose salaried employees often work more than 40 hours a week.

Del. Jimmy Tarlau

But the bill’s sponsor says companies have avoided paying overtime for decades by unfairly classifying hourly workers as salaried employees.

The bill, HB665, would increase the salary cap for white-collar and service workers currently exempt from overtime pay to $47,476 up from the current $23,660. That would be $913 per week, up from $455 weekly.

“This salary level has not been changed since 2004 and is now less than the poverty level for a family of four,” said Del. Jimmy Tarlau, D-Prince George’s, in testimony before the House Economic Matters Committee on Tuesday.

The bill mirrors a rule change to the Fair Labor Standards Act attempted by President Obama but now tied up in court. The rule change was to go into effect on Dec. 1, but U.S. District Court Judge Amos Mazzant III in Texas, granted a nationwide injunction against the rule change a week before it was to take effect.

Tarlau wants to advance the rule change at the state level because of low expectations that President Trump’s new pick to head the U.S. Department of Labor, R. Alexander Acosta, will defend the ruling in court. Maryland’s Wage and Hour Law has traditionally been tied to the federal standards, according to the legislative staff analysis.

By classifying ordinary workers as “supervisors,” companies have exempted many of their workers from receiving overtime pay, Tarlau told the committee on Tuesday.

“This means that a supervisor at a McDonald’s who makes $455 a week might be working 76 hours a week without extra compensation and might actually only be making $7/hour or less than the minimum wage,” Tarlau said. “We ought to close this loophole and restore this law’s coverage and the right to overtime pay to what they were back when America was a great place for working Americans.”

Fewer workers qualify for overtime

Ross Eisenbrey, vice president of the Economic Policy Institute, told the committee that 60% of the population was covered under federal law up until 1975 and received overtime after 40 hours of work. He said currently less than 8% of working adults receive overtime pay because of the low salary threshold.

If passed, the income levels would have to be recalibrated every three years, following a formula based on the wages of the poorest area of the U.S. It would be the 40th percentile of full-time wages “in the lowest-wage Census Region,” which is currently the Southeastern United States and calculates to $913 per week, or $47,476 annually.

But nonprofit and business groups say raising the income threshold for the exemption is unaffordable.

“Our workforce is the backbone of the community services,” said Lauren Kallins, director of government relations for the Maryland Association of Community Services, which represents over 100 service providers for people with intellectual and developmental disabilities. “We are Medicaid providers. Unlike other businesses we are also prohibited from passing on costs or fees to the people we support.”

Kallins said most of the providers are nonprofits operating on thin margins due to the Medicaid reimbursement rate that is only a smidgen above the minimum wage.  She said 67% of the workforce she represents, roughly 13,000 salaried employees, would be eligible for overtime pay under the bill.

Cailey Locklair Tolle, president of the Maryland Retailers Association, said the bill would reduce wages and benefits, discourage bonuses and advancement opportunities and reduce hours and income stability to workers. She also said a small business owner would be unable to allow exempt workers with children to work from home if they were reclassified as hourly employees.

Restaurants impacted

“In our industry we have a very narrow profit margin and very high labor costs,” said Melvin Thompson of the Restaurant Association of Maryland. He said if the bill passes the industry would likely move to reclassify chefs and managers to hourly status, which would affect morale and reduce the fringe benefits they receive as exempt employees.

“Many of those employees have worked hard to reach a management level and they would view the reclassification as a demotion,” Thompson said.

Tarlau said companies could either pay the overtime or hire more workers. He said the time off to spend with family was sacrosanct and and the intent of the Fair Labor Standards Act.

“Overtime regulations serve a double purpose,” Tarlau said. “By requiring time-and-a-half pay after 40 hours in a week, they discourage excessive work hours but they also more fairly compensate employees who do work long hours. If an employer needs to keep an employee at work beyond the 40 hours of a normal work week, making it harder for the employee to care for her family, engage in civic life, or even work a second job, [the employer] should pay for that time.”

The Fair Labor Standards Act was a Roosevelt-era law that established the 40-hour work-week and provided for overtime pay at 1.5 times the hourly rate for workers. Since it was enacted in 1938 it has been adjusted for inflation eight times, most significantly in 1975 during the Ford administration and then not until 2004 when the Bush administration set the exemption floor at $23,660.

White- and blue-collar workers have been made exempt from overtime by merely giving them a title.

Texas ruling

The Texas court agreed that “any employee employed in a bona fide executive, administrative, or professional capacity” was exempt from overtime but also found that Congress made no salary test for the exemption. But the U.S. Department of Labor appealed, insisting the 1938 law gave them the power to set new salary thresholds for white-collar workers through regulation as had happened under the Ford and Bush administrations.

by Dan Menefee