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Hogan Proposes More Than $1 Billion in Tax Cuts for Retirees

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Gov. Larry Hogan on Thursday proposed more than $1 billion in tax cuts for Maryland retirees.

“Today we’re taking a major step forward in those efforts by introducing the Retirement Tax Reduction Act of 2020, which will cut income taxes by more than $1 billion over the next five years,” he said at a news conference at the State House.

Hogan said that under the proposal, retirees who make $50,000 a year or less “will pay no state income tax whatsoever.” Retirees who make less than $100,000 a year “will see a tax reduction of no less than 50 percent — up to 100 percent,” he said.

The governor said the legislation would benefit more than 230,000 Marylanders. The proposal is “the largest tax reduction in Maryland in more than two decades,” he said.

Hogan said a major impetus for the proposal is having heard stories dating back to his first run for governor in 2014 from people who expressed affection for Maryland but said they could no longer afford to live in the state because of the tax burden.

“It will help keep tens of thousands of Maryland retirees from being forced to flee our state.”

Hogan was asked about the proposal’s chances of being passed by the General Assembly.

“If we’re having these discussions about how we have enough money to talk about fairly drastic increases in spending, I’d like at least part of the discussion to be about: ‘How do we let people keep some of their own money.’

“We actually have been successful on retirement taxes. We decided that we knew we couldn’t get the size of a bill that we’re announcing today through — but we did get targeted tax relief for retirees in several groups.”

Hogan pointed to the Hometown Heroes Act as an example. The 2017 legislation exempts law enforcement and first responders from paying state taxes on the first $15,000 of their retirement income. This year’s proposal would expand the law to eliminate state taxes on retirement income for law enforcement and first responders.

While Hogan is proposing tax relief, some Democrats have proposed modest tax increases on income that is not related to retirement or salary. On Wednesday a group of House Democrats unveiled 10 bills that would raise an estimated $2 billion for education improvements by 2030. The bills have not yet been filed.

Del. Julie Palakovich Carr, D-Montgomery, who sponsored one of the bills, spoke with MarylandReporter.com prior to Thursday’s news conference. She said her proposal would impose an additional 1 percent tax on capital gains and real estate properties. Carr said the proposal would not affect personal property taxes.

“If you look systematically at where our tax code is at a lot of Marylanders are actually paying more than their fair share at this point, for many working-class families and even upper-middle-class families. So we’re just making sure that our tax code is actually fair — that wealthy corporations and ultra-wealthy individuals are paying their fair share in terms their contributions to the state.”

MarylandReporter.com asked Hogan at the news conference how the proposal might affect the state’s economy.

“I haven’t seen the proposal and maybe I’ll let the budget secretary try to tackle that one. But I’m sure it would have some impact. But I haven’t seen any studies on that.”

Secretary of Budget and Management David Brinkley followed up on the question.

“It could be a hybridization of whatever they’ve done in the past. But we have to see how that affects corporate earnings and everything else here. We haven’t seen the details on that particular one so we can get back to you once we see all that. But it’s a repeat pattern of things that have come in the past and have been turned down by the legislature.”

By Bryan Renbaum

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Medical Marijuana Brought More Than $10 Million in Tax Revenue to Md. in FY 2019

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Medical marijuana produced more than $10 million in tax revenue for Maryland in FY 2019 – exceeding the amount of money the industry brought to state coffers during the previous two fiscal years combined, according to data provided by the Maryland Medical Cannabis Commission.

The latest numbers cover the period that ended on June 30, 2019. The total estimated revenue for medical marijuana for that fiscal year is $10,371,437. State expenditures for the fiscal year were $5,608,806.

In FY 2018 medical cannabis brought $3,508,494 to Maryland in tax revenue. State expenditures were $4,389,767. In FY 2017, the industry brought $4,234,017 in revenue to the state, while expenditures were $2,540,331.

Cannabis companies in Maryland made an estimated $96 million in the 12-month period from Dec. 1, 2017 to Nov. 30, 2018, according to the commission.

During the same period Illinois cannabis companies made $36.3 million, Massachusetts cannabis companies made between $25-35 million and New York cannabis companies made between $5-15 million, according to data from those respective states.

Maryland has an estimated 87 licensed cannabis shops, according to a spreadsheet provided by the commission. The majority are located in major population centers such as Baltimore City, Baltimore County, Howard County and Montgomery County.

The majority of prescriptions were written for chronic pain, severe pain, PTSD, severe or persistent muscle spasms and severe nausea.

Mitch Trellis, managing partner of Remedy, a medical marijuana dispensary in Columbia, said the hurdles to opening a cannabis shop in Maryland “are many and numerous.”

Remedy, a medical marijuana dispensary, is located in a nondescript strip mall in Columbia. The shop opened in 2017. (MarylandReporter.com photo)

Trellis said he began a working group in April 2014 but was not able to open his shop until the end of 2017. He said the application process alone took about 18 months.

“It took us close to four years to basically get to open.”

But Trellis said the wait was worth it.

“We’re the Number 1 store in the state by both sales and by patients served.”

Trellis said he has 32 employees and serves more than 2,000 customers per week. However, he admits that the cannabis industry in Maryland is tough.

“It is the most competitive state in America. There are more stores per square mile than anywhere else in America.”

Banking is a major hurdle for cannabis shop owners. Marijuana is illegal under federal law and banks are national and sometimes even multi-national entities. Because of this, most banks are not willing to accept deposits from cannabis shops because the federal government could revoke their FDIC (Federal Deposit Insurance Corporation) charter. If a bank’s charter is revoked, its deposits would no longer be federally insured.

Severn Bank in Annapolis is one of the few banks in Maryland that accepts deposits from cannabis shops. Trellis said Remedy deposits its money there.

“They’ve been very forward and very innovative in their processes and in their programs, and they’ve done a great job,” he explained.

Kevin Shin, co-founder and CEO of Grove Group Management, a financial firm based in New York City that invests in cannabis, said Maryland’s medical marijuana industry is lucrative.

Shin said the number of medical marijuana users in the state increased 20% from 2018 to 2019. He explained what that means for the industry.

“National conglomerates are trying to consolidate licenses making larger brands, so smaller operators have to work smart since there are enough sales to survive in the growth market. Sustaining sales and growing the medical consumer base will be key for dispensaries. Sales and distribution for processors and growers.”

But like Trellis, Shin said the hurdles are many.

“The typical hurdles of high capital requirements and operating costs while managing sales and margins will always be constant. You need financial discipline, a strong management team, and foresight to keep contingency funds for regulation changes that are bound to come.”

Shin said lack of diversity among cannabis shop owners is a problem in Maryland.

“In the first round, only one license was awarded to an African American-owned group and the commission has gone through leadership changes. Minorities including women need better representation as the state program evolves which will evolve.”

Eleven states have legalized recreational marijuana use. They are Maine, Illinois, Colorado, California, Alaska, Vermont, Oregon, Nevada, Michigan, Massachusetts, and Washington.

Fifteen states have decriminalized marijuana use. In 2014, Maryland followed that path by passing a law that makes possession of 10 grams or less punishable by a fine and a mandatory drug education program.

Concrete action on legalization is not expected during this legislative session. However, two bills have been filed related to cannabis. The House bill would prohibit medical marijuana users from being denied the right to purchase, own, possess or a carry a firearm. The Senate bill would allow an income tax subtraction modification for the expenses medical cannabis growers incur.

Last year the general assembly established a working group to study legalization for adult users.

Maryland’s medical marijuana program was established by the assembly in 2012. However, the program did not become operational until December 2017.

William Tilburg, executive director of the Maryland Medical Cannabis Commission, did not respond to a request by MarylandReporter.com for comment by the deadline for this story, nor did a spokesperson for Comptroller Peter Franchot.

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By Bryan Renbaum

Op-Ed: Kirwan Plan is a Union Cash Grab; Taxpayers Get the Tab

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The Kirwan Commission’s real aim is hiking teacher pay by $3 billion a year, and it is why the state teachers’ unions are so strongly backing it – more teacher pay. Kirwan aims at “making teacher salaries more competitive with other professions.”

The teachers’ unions, whose membership and coffers would boom, have even launched an expensive lobbying campaign to pressure political leaders to enact Kirwan’s pay hikes.

But Maryland’s teachers are not underpaid. Yes, some teachers, who are paid on a seniority rather than a performance basis, earn somewhat less than professionals with similar education and experience qualifications.

But most are highly overpaid. In aggregate, when all compensation (benefits, leave and job security) is accounted for, the average teacher earns as much as 40% more than those in comparable private sector professions.

No teacher shortage

Another false “crisis” that Kirwan’s massive pay hikes seek to remedy is the “teacher shortage,” with many teachers allegedly fleeing the profession. This is belied by the facts. Under 10% of Maryland’s teachers retired, quit, or were fired last year – less than half the leave rates for similar professional jobs. And they left the profession at a much lower rate than teachers across the country.

Maryland already spends a whopping 93 cents of every public K-12 education dollar on personnel (i.e., teachers and administrators) – not on instructional materials, facilities, or technology. That is the highest share by far in the country and 11% higher than the U.S. average (82%).

Statewide, Maryland’s per pupil spending averages about $16,000 per student, but the state’s economic and geographic diversity means district-level figures vary widely. Rural Talbot County spends very little compared to even the stingiest of states while Baltimore City spends the third most ($17,500) of the largest 100 districts nationwide, while ranking as the third worst in outcomes for all districts. Three other counties – Montgomery, Prince George’s and Howard – also rank in the top ten for per pupil spending nationally.

If one adds in the $5.3 billion in unfunded teacher retirement benefits (for generous pensions and healthcare) that Maryland school districts and state legislature fail to fund, the current real cost of a public school student’s instruction increases dramatically.

No meaningful reforms

Those figures are no matter to the teachers’ unions and the education bureaucracy who want $4 billion dollars a year more by 2030 – without meaningful governance or instructional reforms.

To fund the new expenditures, Baltimore City would be required to double its district’s spending share. That would require hiking Baltimore’s already burdensome property taxes on homeowners and businesses, driving them out of the city and further shrinking the tax base.

Meanwhile, two recent polls by University of Maryland-Washington Post and Goucher College suggest – erroneously – that Kirwan is a hit with the public. They claim to find that taxpayers are willing to pay higher taxes to improve public education – as if educational excellence can only be achieved through more spending.

But both polls find that over three-quarters of state residents know “nothing” about Kirwan. Seventy-four percent of Goucher’s respondents say they support “personally paying more in state taxes to improve [public education].” But Goucher never asks how much.

The Post poll introduces Kirwan’s recommendations as “major new programs aimed at improving Maryland’s public school system.” Even after such a leading prompt, only a small majority of Marylanders favor raising income taxes by even a quarter percent – which would fund only a tiny fraction of Kirwan’s cost – while a majority opposes a half-percent hike. By 2030, income taxes would have to rise by 40% — four times the half-percent increase offered in the Post poll.

A 2018 poll conducted by the Maryland Public Policy Institute found that, when given a choice, voters overwhelmingly oppose more spending as the primary means of improving education: 72% agreed that “to improve learning opportunities in public schools, policymakers should refocus on reallocating resources more efficiently and effectively, instead of continuously increasing the education budget.”

Tough choices avoided

Marylanders – unsurprisingly – want better, high-quality schools on the cheap. The tough choices are simply being avoided by Kirwan’s backers; the result would be cuts in other discretionary state and local spending or dramatic increases in income, property, and sales taxes.

Since Kirwan’s training, certification, and professional development programming have no consequences for poor-performing teachers or those who fail to improve, nothing will change in schools.

With union protections and a seniority-based pay scale, the rotten apples get the pay bump just the same and the beleaguered students can expect no real benefit.

But the teachers’ windfall – higher salaries and plumped up pensions – will carry a dramatic cost.

The Kirwan proposals will put the Old Line State into the red to the tune of $19 billion and increase the unfunded pension and healthcare liabilities owed by the state by billions more.

Maryland taxpayers will continue to feel the burn for decades to come as these new pay and pension entitlements cannot be easily clawed back unlike the necessary instructional or governance reforms – if those are ever enacted.

Sean Kennedy is a visiting fellow at the Maryland Public Policy Institute, a non-partisan public policy organization based in Rockville, Md.

Kirwan Commission to Recommend Billions More to Raise Teacher Pay

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The Kirwan Commission on Innovation and Excellence in Education has begun hanging price tags on its recommendations for major education reform.

Dr. William English Kirwan

The commission chair, former University System Chancellor Brit Kirwan, has emphasized that the state would not just funnel more money into the status quo of Maryland public schools, but would require major changes in how education is delivered and teachers work to justify new spending phased in over 10 years.

Mandated school funding is already the second largest outlay in the state budget.

One of the commission’s major findings is that teachers are paid 25% less than comparable professionals with comparable education and responsibilities, one of the causes for a shortage of qualified teachers and students training to be teachers.

10% pay hike

The commission will be proposing a major bump in teach pay, raising pay for all Maryland public school teachers by 10% between 2020 and 2022, with a minimum teacher salary of $60,000 phased-in by 2024.

The commission is also proposing a new career ladder for teachers and additional certifications for teachers under the National Board for Professional Teaching Standards. This will raise average teacher pay in Maryland from the current $69,557 to $93,137 by 2029. In the final year of phase-in, the additional state spending is $1.3 billion, according to preliminary costs estimates by the Department of Legislative Services.

Accompanying these pay raises, the commission is also recommending a reduction in actual classroom teaching time from 80% of the current school day to 60%. This will give teachers more time “to tutor students who need intensive help and work together in teams to use data and observation to identify students who are falling behind and collaborate on getting them back on track, develop highly engaging and effective lesson plans, mentor new and struggling teachers and systematically improve the school’s instructional program using applied research.”

Based on the experience of high-performing schools around the world, the reduction of teaching time will be accompanied by an increase in class sizes justified by more effective curriculum.

“These reductions in instructional time will require an additional 14,685 teachers by 2029 to continue providing the same number of classes,” says the report. Price tag in final year 2029 is another $1.3 billion.

Staggering figures

Conscious that the numbers are staggering, at its Nov. 14 hearing Kirwan emphasized that these are only preliminary numbers.

“These numbers will not reflect any savings that will be made based on the savings of other work groups,” Kirwan said. “No one should leave this room writing or reporting these figures as being the number for any work group. It is a gross number. It has not been netted out.”

“It would be inaccurate to simply add together each element and characterize this as a total cost,” Kirwan went on. “Cost overlaps have not been fully adjusted. Cost savings have not been incorporated.

The commission has not yet tried to work out formulas for how the state and local governments will share in the new costs.

As the costs estimates are rolled out, commission members also noted that there may be additional costs for new buildings associated with increasing the number of teachers or class sizes.

Commission member Crag Rice, a member of the Montgomery County Council, also noted that if you raise the salaries for some, other employees of county government will want similar raises.

By Len Lazarick

Op-Ed: Hogan’s worst nightmare is Trumpcare by Barry Rascovar

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Maryland Gov. Larry Hogan’s worst nightmare is starting to come true. Trumpcare has passed the U.S. House of Representatives. If the Senate finds a way to give President Trump what he wants, it could spell a heap of trouble for Hogan in 2018’s general election.

The Republican Party’s mania with obliterating Barack Obama’s massive health insurance law has led the majority party in Washington to ignore common sense.

“Repeal and replace” is a GOP obsession – though an estimated 24 million people could lose their insurance, tens of millions more could be out of luck due to pre-existing conditions and medical programs for the poor could be cut 25%.

It also would damage the nation’s economy. That’s especially true in Maryland, where healthcare is one of the state’s biggest employers.

It is almost certain to be the No. 1 issue in the 2018 mid-term elections, even if the Senate approves a diluted Trumpcare bill.

What a devastating state of affairs for Republican Hogan. Until the House vote last week, he appeared in excellent shape to win a second term.

Now he has to figure out how to tiptoe around this explosive issue that already is proving highly unpopular.

Unfavorable poll numbers

A Washington Post-ABC poll last month found 61% of Americans opposed Trumpcare. A Quinnipiac poll the month before found Trumpcare support stood at just 17%.

Most Americans, it appears, would rather stick with the existing – though seriously flawed – Obamacare medical insurance program and fix parts that aren’t working well (“keep and improve” as opposed to the GOP’s “repeal and replace”).

Wait until the Congressional Budget Office issues its cost and impact analysis of the House-passed version of Trumpcare. It could expose the bill’s soft underbelly. Public resistance could grow louder.

For Hogan, House passage of Trumpcare might be the beginning of bad news.

He could be trapped in a nearly untenable position: A Republican who might have to disavow his own party leaders in Washington to survive.

Hogan won election in 2014 by promising “no new taxes.” Does that mean he will let Trumpcare’s 25% cut in federal Medicaid funds lay waste to Maryland’s health programs for the poor and near-poor? Where would he find hundreds of millions in state dollars to cover those unfunded programs?

How does he run for reelection with Trumpcare hanging over his head?

Justifying the Republican plan

How does Hogan justify to voters his party’s plan to let insurance companies charge outrageously high premiums – or deny coverage entirely – for people with “pre-existing conditions”? This could be anyone with acne, anxiety, depression, diabetes, obesity, cancer, pulmonary problems, asthma or even allergies.

How does he tell older working Marylanders that under his party’s plan their insurance premiums could jump an unaffordable 500%?

How does he explain a cut of $600 billion in taxes that supported Obamacare – a massive windfall for wealthy Americans, insurance companies and medical device companies?

How does he justify $880 billion in healthcare cuts to Medical Assistance for the poor?

Hogan & Company should be praying that the Senate junks the House bill and takes a few years to figure out what to do next.

Otherwise, the GOP across the country – including here in Maryland – could take a shellacking for its all-out effort to appease its conservative base.

Gift to Democrats

There’s no doubt Democratic candidates for Maryland governor will tie Hogan to Trumpcare.

Every candidate will be running ads with tales of how middle-class and working-class Marylanders would be hurt, how lives hang in the balance.

It is a gift from heaven for Democrats.

One Republican pollster called the GOP’s insistent quest to wipe out Obamacare “political malpractice.”

Until recently the notion of Democrats regaining control of the House by picking up 24-plus seats next year appeared wishful thinking. Thanks to House Speaker Paul Ryan’s determination to pass a draconian Trumpcare bill, that’s no longer the case.

Little wonder Democratic House leader Nancy Pelosi – the former Nancy D’Alesandro from Baltimore’s Little Italy – was practically giddy.

Every Republican will be vulnerable, unless he or she disowns the GOP’s No. 1 issue and risks losing support from Trump’s supporters. “This vote will be tattooed to them,” Pelosi vowed.

That includes Republican Hogan, who has made an extensive effort to distance himself from Donald Trump and his controversial comments and proposals.

That may not be enough to give him immunity from this highly contagious political disease.

When virtually every healthcare group – from the American Medical Association to the American Hospital Association to AARP – as well as virtually every insurance group vehemently opposes the Republicans’ “repeal and replace” crusade, smart politicians should pay attention.

Failure by the GOP to “listen and learn” could prove fatal come November 2018 – both in Maryland and nationwide.

Barry Rascovar’s blog is www.politicalmaryland.com. He can be contacted at brascovar@hotmail.com.

It’s a Wrap: Hogan, Busch, Miller “Proud” of Annapolis Legislative Session

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“It was a great session,” Gov. Larry Hogan said about the just closed 90-day meeting of the Maryland General Assembly. “This is the way government is supposed to work…. This was all about compromise.”

“It was a session we can all be proud of,” House Speaker Michael Busch, sitting next to Hogan at a bill signing ceremony Tuesday morning. “This year your staff did a great job.”

House Minority Leader Nicholaus Kipke, R-Anne Arundel, told Capital News service that “despite the partisan efforts to kind of drag us into the D.C. post-election theater, we were able to pass some meaningful bills.”

Despite its many battles, Kipke said the 2017 session was the “most bipartisan” he has seen since he took office. Hogan concurred, telling reporters that 2017 was an “incredible, bipartisan session.”

It was so bipartisan that as Republican delegates talked the clock out on a bill expanding medical marijuana licenses, it was Kipke who made the motion to “adjourn sine die” at midnight, a role typically reserved for the House Democratic majority leader. This partially reflected bipartisan distaste for how the bill was written and forced on them by the Senate.

“We got everything done that needed to get done in terms of the legislation,” said Senate President Mike Miller. “We dealt with health care, we dealt with education, we dealt with environment and we dealt with public safety. So I think it was a very good year quite frankly.”

The two parties came together on several significant issues, most notably job creation, opioid abuse, anti-fraud measures, education, and environmental issues.

And in very Democratic Maryland, Republican Hogan continues to be the second most popular governor in Maryland, according to a Morning Consult poll released Tuesday based on an online survey over the last three months.

MANUFACTURING JOBS: The More Jobs for Marylanders Act (SB317) passed with strong bipartisan support. The law is designed to bolster manufacturing jobs in Maryland by offering tax incentives to companies that create jobs in high-unemployment areas and job training programs. Hogan considered the law a core piece of his 2017 agenda and signed it into law Tuesday.

Sen. Rich Madaleno, D-Montgomery County, often critical of Hogan, described a bipartisan process of senators who worked on the bill with administration representatives.

Mike Galiazzo, president of the Regional Manufacturing Institute, said the bill represented a good signal to manufacturers that Maryland was interested in promoting their businesses, which hadn’t gotten any tax breaks in 15 years.

The lone senator to vote against the bill, Sen. Roger Manno, D-Montgomery, had worked on his own version of tax incentives for manufacturers for three years.

Manno called the bill that was signed “a steak dinner for big business and a chicken box for the workers.”

OPIOID ABUSE: Maryland passed restrictions on the quantity of opioid painkillers that can be doled out by doctors in a single visit (HB1432); measures to increase the availability of naloxone — a drug that can counteract the effects of overdose (part of the HOPE act); and introduced steep penalties for people who distribute opioids that later cause the death of another person. The legislature passed a Hogan administration bill setting new penalties for distributing Fentanyl — an extremely potent synthetic opioid that has a high rate of lethal overdoses (SB539).

CRISIS TREATMENT: (UPDATED) The Heroin and Opioid Prevention Effort and Treatment Act of 2017 (or HOPE Act, HB1329), which passed late Monday with only one dissenting vote, is a broad response to the state’s opioid crisis. A key provision will increase reimbursement rates for community-based behavioral health providers over the next three years. Community behavioral health providers will receive reimbursement rate increases of 3.5% annually in the next two years and a 3% increase in the third year. This reimbursement increase was the key goal of the Keep the Door Open campaign.

PROTECTING TAXPAYERS: The Taxpayer Protection Act (SB304), a Hogan priority, makes it easier for the state to prosecute fraudulent filers for tax refunds and gives the comptroller’s office greater latitude to investigate tax fraud and identity theft. Comptroller Peter Franchot pushed hard for the legislation, holding conferences and events around the state to drum up support for the bill. It passed this year with unanimous support in the Senate and in the House of Delegates.

CLEAN CARS, WATER: Hogan administration environmental legislation included the Clean Cars Act (HB406), which increases the state’s budget for tax credits for electric vehicles, and the Clean Water Commerce Act, which expands the scope of the Chesapeake Bay Restoration fund to include sediment reduction, but does not include any new funding (SB314). Both had strong support from both Democrats and Republicans.

As always, a majority of proposed bills died, including some with significant support.

MEDICAL MARIJUANA: Tops among the failed bills was legislation that would expand the number of growing licenses for the state’s medical marijuana industry (HB1443) in an effort to increase diversity in business ownership. Sen. Joan Carter Conway, D-Baltimore, said she was “devastated” the House didn’t pass the bill before the midnight deadline. “We have a multi-billion industry with no minorities participating,” Conway said. “…I’m almost speechless.”

SANCTUARY STATUS: Latino delegates were outraged after the Maryland Law Enforcement and Governmental Trust Act (SB835) died in the Senate. The bill would have essentially made Maryland a sanctuary state by restricting the involvement of law enforcement agencies in Maryland with federal immigration efforts, banning state government agents from asking crime victims or suspects about their immigration or citizenship status.

Members of the Latino caucus walked off the floor at 4 p.m. Monday to demonstrate their displeasure that the Senate Judicial Proceedings Committee and Miller were blocking the bill.

Del. Jocelyn Peña-Melnyk, D-Prince George’s, shouted that Miller and committee chair Bobby Zirkin, D-Baltimore County, were “Democrats in name only” (DINOs). “Shame on you” she said of Zirkin. “I hope your district takes you out.”

Hogan was opposed to the bill as well.

The Capital News Service contributed to this article.

 

Annapolis: Generic Drug Price Gouging could be Penalized In Bill Sent to Hogan

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A prohibition on generic drug price gouging now heads to Gov. Larry Hogan’s desk for signature after the House concurred in Senate amendments Monday morning.

The House voted 137-2 for the bill, HB631, and the Senate approved it on Friday 38-7 with a handful of Republicans joining the Democratic majority. All but a few GOP delegates supported the measure.

The legislation would be the first of its kind in the country to hold drug makers accountable for drastic spikes in prices that can’t be justified. Under the new law, the state Medicaid program will notify the attorney general of a spike in drug prices, who can seek civil penalties of up to $10,000 per violation.

“Generic prescription drugs prices have been like the ‘wild’ west for many Americans” said Vincent DeMarco, president of the Maryland Citizens’ Health Initiative, moments before Friday’s vote. “There’s a new sheriff in town and his name is Attorney General Brian Frosh, who will protect Marylanders from price gouging, and this will also allow future AG’s to protect Marylanders.”

“Frosh will be able to take legal action to stop unconscionable price increases that hurt people without justification when there’s no competition in the market,” DeMarco said.

Subjective judgment

In floor debate Friday, Sen. Robert Cassilly, R-Harford, said the proper way to deal with price controls would be to set up a commission rather than allow the attorney general to make a “subjective” determination on what constitutes price gouging.

“If the state of Maryland wants to establish their own version of the FDA and engage in price controls we ought to do in the proper manner,” Cassilly said. “The proper manner would be set up some proper board or commission…or have it come under some aspect of our state bureaucracy.”

Senate Republican Whip Sen. Stephen Hershey. R-Queen Anne’s, said the law could actually harm competition.

“Generic drugs are one of the only indicators in the delivery of health care where prices are actually going down,” Hershey said prior to passage of the bill. “This bill is going to have a negative effect that could potentially eliminate some of the competition that is in Maryland and that is driving these costs down.”

The legislation was rolled out at a Jan. 10 rally in Annapolis three weeks after Maryland joined 19 other states in a lawsuit against six generic drug makers for market manipulation and anti-competitive behavior.

Frosh said a 2014 survey of pharmacists revealed that 25 “off patent” generic drugs saw price increases of 600% to 2000%.

He said normally prices “plummet” when patents expire and competition becomes “robust.” He said generic drugs have consistently run about 20% of the original patented price.

“What we allege is these companies conspired to fix prices.” Frosh said at the rally.

by Dan Menefee

Lawmakers Override Hogan’s Protect Our Schools Act Veto

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Maryland lawmakers voted Thursday to override Gov. Larry Hogan’s veto of a bill that would specify which measures could be considered when determining a school’s quality, prohibiting student testing from being one of them.

The bill restricts the state’s ability to intervene in failing schools, which opponents worry is intended to limit the creation of charter schools and voucher systems.

The House of Delegates passed the override of the governor’s veto 90-50, and the Senate passed it the same day, 32-15.

Hogan, a Republican, vetoed House Bill 978, known as the Protect Our Schools Act of 2017, Wednesday, saying the bill weakens school accountability, according to a release from the governor’s office. In the press release, Hogan urged legislators to put aside politics and sustain the veto.

The Maryland State Board of Education and the Maryland State Department of Education have sided with the governor in opposition to this bill, according to the release.

Thursday morning, advocates for the bill gathered at a rally to call for an override. Those present included representative from the Maryland State Education Association, the Maryland Parent Teacher Association and some lawmakers.

The bill would help accommodate the needs of the students and allow parents to be involved in the process, Delegate Mary Washington, D-Baltimore, told the University of Maryland’s Capital News Service. “We need to do more to end disparities (in education) … we cannot do that giving control to the state,” Washington said.

Bill Sponsor Delegate Eric Luedtke, D-Montgomery, acknowledged the common goal that both sides of the argument shared. “I’m glad we can agree every kid deserves a good education,” Luedtke said on the floor.

Although the State Board of Education opposes the bill, people who are involved in the everyday lives of children, like teachers and parents, support the bill, according to Luedtke.

Multiple delegates opposed to the bill referred to it as a “status quo” initiative on the floor, saying the bill will not bring any noticeable change that would benefit students.

Delegate Nicholaus Kipke, R-Anne Arundel, the House minority leader, said on the floor that this bill is not complicated.

“It traps students in failing schools and lessens accountability in the bureaucracy in education,” he said. Kipke made a point to say the legislation is regressive and takes tools away from the state.

Since both chambers voted to override the governor’s veto, the bill will become law July 1.

By Cara Newcomer

Annapolis: Paid Sick Leave Bill Sent to Hogan, Who has Pledged a Veto

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Five years in the making, the Maryland General Assembly on Wednesday passed a widely supported but controversial paid sick leave bill, HB1, which Gov. Larry Hogan has vowed to veto.

Democratic lawmakers are promising an override at the start of the 2018 session, saying they will defend the rights of 700,000 Marylanders to take paid sick leave without fear of losing their jobs.

As the votes went up on the tally board , the bill’s lead sponsor, Del. Luke Clippinger, a Baltimore City Democrat, lauded the efforts of fellow delegates and called on Gov. Hogan to sign the bill. A broad coalition of unions and progressive groups supported the bill.

“This has been five years… a lot of people have worked very hard to come to the day when nearly 700,000 Marylanders will be able determine they can take the day off to get better as opposed to losing their jobs…I certainly call on this governor to sign this bill when it comes to his desk.”

Veto-proof majorities

The bill cleared the House of Delegates by a veto proof majority, 87-53, concurring with Senate amendments and avoiding the need for a conference committee so close to the end of session – which Clippinger wanted to avoid. There were no votes to spare in case of a veto when the Senate passed the measure 29-18 Monday.

With the 90-day session over next Monday, the legislature cannot send it to Hogan for action, as it did with 27 other bills last week.

If successfully overridden in 2018, the sick leave bill requires companies with 15 or more workers to offer 40 hours of annual paid sick leave. Part-time employees working only twelve hours a week would accrue paid sick leave under the mandate.

The bill originally had offered seven sick days. Any business that currently offers five days of flexible paid leave, whether vacation or sick, complies with the bill.

A job killer, business groups say

The bill saw strong opposition from business interests during the session as a “job killer” and a “debilitating mandate” on small businesses struggling to stay afloat.

Mike O’Halloran, Maryland’s director of the National Federation of Independent Business, said the Democratic majority had failed to consider bipartisan input.

“If implemented this bill would cost thousands of jobs, a majority of which would disappear from small businesses,” O’Halloran said soon after the House vote. “[More] than a dozen reasonable and responsible amendments were offered to lawmakers to help Maryland small businesses mitigate the impact of this mandate. Unfortunately, although these changes were supported in a bipartisan manner, the legislature chose not to listen to the pleas from Maryland’s job creators.”

Clippinger’s bill overshadowed a competing bill offered by Hogan at the beginning of the session that would require companies with 50 or more employees to provide 40 hours of annual paid sick leave, as most already do.

Hogan’s plan also budgeted $60 million in tax incentives for smaller companies with 50 or less employees that offered paid leave.

But even support among Republicans was tepid at the start of the session because of mandates on businesses.

Three Democrats opposed

While passage was mostly along party lines, several Democrats voted against the bill because of the impact on small businesses.

“I was concerned this bill was going to hurt the businesses in my district,” said Del. Ned Carey, D-Anne Arundel. “I heard from many that they may have to close their doors or lay people off to get below 15 employees…this could mean the loss of jobs.”

“Many of the businesses in my district are just scraping by and there are times business owners go without a paycheck,” Carey said.

“I don’t have a lot of big businesses in my district, most are mom and pop businesses that can’t afford to offer paid sick leave,” Carey said in interview. “Businesses with 15 or 16 employees will be forced to rethink their staff levels and consider letting some people go.”

Eric Bromwell, D-Baltimore County, grew up in the restaurant businesses working alongside his brothers and mother at The Bromwell Inn in Overlea. He said the family originally lived above the restaurant and “put everything they made back into it.”

“Small business is a part of who I am and how I grew up,” he said. He said his mother very much wanted to offer paid sick leave and health insurance but could never afford it. “It’s a very delicate balance between helping the employees or hurting the business.”

He said this was especially true for family owned restaurants, which would have trouble staffing shifts during the holidays.

“If you have people who’ve accrued sick leave throughout the year it will become a lot harder than it already is to cover shifts during the holidays,” he said.

Del. C.T. Wilson, D-Charles, also voted against the bill, as did four Senate Democrats. Sen. Ed DeGrange, Anne Arundel and three from Baltimore County, Jim Brochin, Kathy Klausmeier and Bobby Zirkin.

Some businesses support it

Not all small businesses opposed the bill.

Clifton Broumand, founder and CEO of Man & Machine, a company that produces waterproof computer keyboards, said the talk of onerous regulations was “a side issue.”

As a small business job creator, he said his biggest asset was his employees.

“If my employees can’t take care of themselves, they can’t be efficient for me,” he said in testimony before the Senate Finance Committee on Feb. 10.

“The main issue here is providing paid sick leave,” he said. “There can be a way, and all of you have the opportunity to figure out a way that everyone can have paid sick leave in Maryland.”

Broumand said he provides 15 days of leave annually for his employees, and the week off between Christmas and New Year’s Day.

He said passage of the bill would level the playing field.

“The concept of a level playing field is an honorable thing for everybody,” he said. “If I’m doing this, everyone else should have to.”

by Dan Menefee

Annapolis: School Scoring Bill sent to Hogan, who Promises Veto

by

Democrats in the Maryland General Assembly on Tuesday passed legislation establishing parameters for school evaluations that the state school board strongly opposes and Gov. Larry Hogan has promised to veto.

The House went along with Senate amendments, and sent the bill to Hogan, who called it “an utter disgrace.”

If the bill is delivered to Hogan’s office by Monday, he has six days to act on it, giving the legislature the chance to override a veto before it adjourns April 10. It is one of several bills Democratic leaders hope to send to Hogan in time to override promised vetoes.

The Protect Our Schools Act would set standards for a plan to improve student outcomes that the state must submit to the U.S. Department of Education under the 2015 Every Student Succeeds Act (ESSA).

The sticking point for Hogan and GOP lawmakers is that the bill does not sufficiently weigh academic achievement when assessing schools. In that case the state could lose nearly $250 million in federal funding, a legislative analyst suggested.

Advocates for the teachers union scoffed at the notion the Trump Department of Education would reject any state plan, since ESSA gives much wider latitude for the states to set policy than under No Child Left Behind, the federal law it replaced.

The bill also restricts the state Department of Education’s ability to intervene in failing schools, which opponents worry is intended to limit the creation of charter schools and voucher systems.

Academic indicators raised

The bill specifies which measures could be considered when determining a school’s quality and prohibits student testing from being one of them. As introduced, the academic indicators amounted to 55% of the total score for a school, but the Senate raised that to 65% Tuesday and the House accepted the amendment.

“Members of the legislature just voted to trap thousands of our kids in failing schools and jeopardize over a billion dollars in education funding over the next five years – all to protect the teachers unions and preserve the unacceptable status quo,” Hogan said in a press release. “It’s an utter disgrace and one of the most irresponsible moves our legislature has ever made.”

Republicans opposed the bill largely on the grounds that it undermines school choice and makes it more difficult for students in struggling schools to get an effective education.

Several Republicans expressed concern that the bill would prevent the state from improving struggling schools for several years. Senate GOP leader J.B. Jennings attempted a filibuster, but the Democratic majority limited debate after about 15 minutes.

Concern about charter schools and privatizing
Sen. Paul Pinsky, D-Prince George’s, defended the bill, saying emphatically that it “does not remove charter schools” and that it only prevents the state board of education from approving charter schools without local input. However, he also said that part of the motivation for the bill is a concern that some leaders in the state department of education want to privatize schools, introduce vouchers, and “destroy our public school system.”

The State Board of Education, now dominated by Hogan appointees, held an emergency meeting last week to reinforce its earlier opposition to the legislation, which preempts its role in setting policies to implement ESSA that it has been working on for over a year.

Sen. Steven Hershey, R-Upper Shore, described the bill as part of a “battle between the school board and the teachers’ union” and said he was “not convinced that this entire body knows what it’s doing.”

He proposed an amendment that would have delayed the effects of the bill until five other specific states with highly ranked education systems come forward with similar plans; the amendment was rejected. This amendment was modeled on a Democratic redistricting reform measure that also required action by five states, which Republicans had derided as an excuse to do nothing about gerrymandering.

Sen. Rich Madaleno, D-Montgomery, insisted “this is not a partisan issue, this is not about who is president or who is governor.”

“This is our one chance to in fact be a national leader to set up the most comprehensive set of standards to determine how schools succeed and how they don’t,” Madaleno said.

Baltimore City schools were repeatedly cited as examples of places where students would benefit from being able to move out of struggling public schools and into charter schools or, through a voucher, pay down the cost of a private school.

Sen. Nathaniel McFadden, D-Baltimore, a former school administrator, defended the Baltimore public school system, saying that “they may not have succeeded to the extent that some would like to see but our efforts are strong.”

Reporting also done by the Capital News Service

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