Maryland Senate committee scales back Hogan tax relief proposals

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Photo above: Sen. Ed Kasemeyer, chairman of the Senate Budget and Taxation Committee.

By Len Lazarick

A Senate committee voted on four of Gov. Larry Hogan’s tax relief proposals Friday, significantly scaling back three of them and outright killing a fourth.

Average taxpayers will see little to no immediate effect of any of the measures as passed by the Senate Budget and Taxation Committee.

PERSONAL PROPERTY: The committee did vote to cut personal property taxes for small businesses with less than $10,000 of physical assets, but the relief won’t happen for two years.

AUTOMATIC GAS TAX HIKES: Hogan’s proposal to stop automatic gasoline tax increases passed two years ago was stripped from SB589, but the committee did vote to limit increases triggered by the Consumer Price Index to 3%, rather than 8% cap in current law.

With inflation still under control, the CPI is not expected to go above 2.5% in the near future, a legislative analyst told the committee.

“It goes up, but it never goes down,” said Sen. George Edwards, R-Garrett. But he conceded the new CPI cap “is better than what’s in there.”

MILITARY PENSIONS: A proposal to totally exempt all military pensions from taxes over four years was replaced with a plan to increase the current exemption of $5,000 in retirement pay to $10,000. This tax exemption for military retirees has passed the Senate in past years, but died in the House Ways & Means Committee, according to its main sponsor Sen. Doug Peters.

FIRST RESPONDER PENSIONS: The Hometown Heroes Act, SB594, a bill to exempt up to $29,000 of the pensions of police, firefighters and other first responders, was defeated based on its cost — $3 million next year rising to $11 million in fiscal 2020. This applies to any first responder retiring over age 50. In Maryland, anyone over 65 has a state income tax exemption on pension income up to $29,000, the maximum Social Security benefit.

Four senators opposed the committee’s unfavorable report on this administration bill: Sens. Addie Eckardt, R-Dorchester; Edwards; Andrew Serafini, R-Washington; and Roger Manno, D-Montgomery, who had sponsored his own version of the hometown heroes bill before Hogan introduced his.

RAIN TAX: The Senate has already passed its own version of Hogan’s repeal of the so-called “rain tax,” a stormwater remediation fee. But even if a county actually repeals a tax to fund treatment of polluted stormwater in an effort to meet a federal mandate to clean up the Chesapeake Bay, the county must still submit a plan to remediate stormwater and the money to pay for it.

Responding to Friday’s action by the committee, Doug Mayer, the governor’s deputy communication director said, “Providing for tax relief is the number one issue Marylanders want to see addressed and why Governor Hogan has been fighting to implement his legislation…. What is very clear is that the conversation in Annapolis has changed.

“This year we will pass a budget that not only doesn’t raise taxes but actually cuts them, something that hasn’t been seen around here for a very long time, ” Mayer said. “We thank the leadership in the House and the Senate for working with us to make this happen.”

“At the start of the session legislators dismissed the notion of changing how Maryland’s gas tax worked. Seeing positive changes now is very encouraging. The governor will continue to push for common-sense and transparency to be restored to this process.”