The federal government’s increasing reliance on state and local enforcement of immigration policies is costing Maryland money that could be better spent in other ways. As a new report from MDCEP explains, this is especially a problem with what are known as immigration detainers — the practice of state and local police holding people for longer than otherwise required. Today, the Maryland Senate’s Judicial Proceedings Committee is holding a hearing on legislation (SB 554/HB 29) to limit the costly enforcement of immigration detainers in Maryland. Immigration detainers are triggered when someone is arrested for what often is a traffic offense or other misdemeanor. Fingerprints obtained by local police are sent to a database maintained by the federal government. If an administrator at the Department of Homeland Security suspects the individual may be in violation of federal immigration law, they can issue a request that a local agency hold the individual…

Maryland residents filling out their tax forms and paying their monthly utility bills might be surprised to find out that one of the companies that 526,000 of them write checks to has been dodging its fair share. The utility company actually has received more money from the federal government than it paid in taxes over the past five years — for an effective tax rate of negative 33 percent – according to a new report. Pepco is far from alone. It is one of 26 Fortune 500 companies, including Boeing, General Electric, Priceline.com, and Verizon, that paid no taxes at all in the last five years, despite combined profits of $170 billion, according to research by the Institute for Taxation and Economic Policy and Citizens for Tax Justice. Their study of  288 highly profitable companies and found that one third paid a tax rate of less than 10 percent between…

Raising Maryland’s minimum wage to $10.10 an hour is vital to the state’s economic prospects, but – as legislation proposed in Annapolis shows – that’s only half the battle.   In addition to raising the hourly wage rate, HB 295/SB 331 would require the state to annually increase the minimum wage based on the growth in the Consumer Price Index, a measure of inflation. This would address an important problem: the purchasing power of the wage decreases over time as prices increase, and periodic increases at unpredictable intervals adopted by the legislature tend to lag far behind the need. The legislation now being considered in Annapolis would not only raise the wage to catch up to  the price increases of recent years, but provide a way for the minimum wage to keep up with increasing costs in future years as well, without requiring additional legislative action.   Doing so makes sense. Given…

With the General Assembly’s budget committees about halfway through their hearings, the biggest challenge facing lawmakers is how to continue investing in services that Marylanders rely on every day. As the committees debate and amend the budget proposal, they are guided, in part, by the Department of Legislative Services’ (DLS) in-depth budget analysis. Last month DLS cautioned that the governor’s budget—while balanced—does not leave enough of a cushion at the end of the year to account for unexpected expenses during the year. Subsequently, as the committees work through each agency’s budget, DLS offers a menu of recommended cuts for each agency. While the legislature cannot add new money to the governor’s budget proposal, they can cut spending in some areas and transfer those funds to other priorities elsewhere in the budget.  DLS is recommending several good solutions, including: Replacing $30 million allocated for debt service reduction with proceeds from anticipated sales…

By closing a loophole in the way corporations report their earnings, Maryland can make its tax system fairer and generate needed revenue for schools, public safety and other services. The Senate Budget and Taxation Committee will take up legislation today that would close the door to a range of currently legal accounting tactics businesses use to avoid paying taxes to the state. The Maryland Center on Economic Policy will join others in testifying in support of the Business Relief and Tax Fairness Act (HB 1298/SB 395). The legislation  would treat a parent company and its subsidiaries as one corporation for state income tax purposes, a concept known as ‘‘combined reporting.’’ Combined reporting provides a more complete and accurate accounting of the profits corporations earn from their activities in Maryland. For example, under current law, a company can  establish a subsidiary in a state with a lower tax rate and shift…

Later today, the House Economic Matters Committee will hold a hearing on legislation that would incrementally raise the minimum wage in Maryland to $10.10 per hour by 2016. The bill would also increase the tipped minimum wage from 50 percent to 70 percent of the full minimum wage. Doing so would provide an immediate benefit to hundreds of thousands of workers in Maryland and their families, as well as benefit Maryland’s economy overall. As Maryland continues its slow recovery from the Great Recession, an increase in the minimum wage is needed to help workers’ earnings keep pace with a rising cost of living amid declining wages. This is particularly true for Maryland residents in the lowest 20 percent income bracket, where wages have declined by $1.24 per hour since 2009, according to a recent study by the Economic Policy Institute. But the same study shows that raising the minimum wage would…

A newly released report by the Center on Budget and Policy Priorities gives Maryland high marks in its use of fiscal planning tools in creating the state budget. Maryland received a score of 8.0 out of 10 to rank second among all states, indicating that the state has strong systems in place facilitate both long-term planning and mid-course correction. As the authors of the report point out, having a sound method of fiscal planning is important in improving Maryland’s business climate, managing ups and downs in the economy, and effectively providing public services. (Click to enlarge) Source: Center on Budget and Policy Priorities Like many states, Maryland’s budget has yet to fully recover from the Great Recession, which greatly reduced the amount of revenue coming into the state and challenged Maryland’s ability to invest in important public services such as education and health care. This is evident in the current…

Today was a busy week that saw the Department of Legislative Services provide its Fiscal Briefing and Governor O’Malley unveil his legislative priorities and give his final State of the State Address. Budget At the General Assembly’s Fiscal Briefing, Warren Deschenaux, director of the Office of Policy Analysis in the Department of Legislative Services, urged state lawmakers to be more cautious in their approach to the budget than Governor O’Malley. Deschenaux said that lawmakers should seek to craft a budget that leaves a $100 million ending balance rather than O’Malley’s suggested $30 million. The Washington Post characterizedthe critique of Governor O’Malley budget as narrowing Maryland’s structural deficit without raising taxes through “a large number of one-time fixes and perhaps overly optimistic assumptions.” We released our First Look at the Maryland’s Fiscal Year 2015 Budget. The Baltimore Sun produced an infographic on revenue and spending in Maryland’s budget. The American Federation…

Today, the Senate Budget and Taxation Committee will held a hearing on Senate Bill 8, which would reduce Maryland’s corporate income tax rate by .45% each year for 5 years, from 8.25% to 6%. We have submitted testimony opposing the bill, because cutting the corporate income tax in Maryland would harm the state’s economy and budget, and increase inequality. Hereis our recently released report on the impact of reducing the corporate income tax in Maryland, as well as a two-page Policy Snapshotthat highlights the key points from the paper. Last fall, the Department of Legislative services also released a study on the cost of a corporate tax cut in Maryland. You can also find the DLS Fiscal and Policy note on Senate Bill 8 here. The Washington Post also published a related blog post yesterday: Want to help the middle class? Don’t kill corporate taxes Check back here at Maryland’s…

This morning, Governor O’Malley released his FY 2015 Budget in a speech at the statehouse. In his proposed $39 billion budget, the Governor seeks to close Maryland’s $584 million revenue shortfall with no tax or fee increases while also increasing investments in education, innovation, public safety, and healthcare. Addressing the Gap between Revenue and Spending To close Maryland’s $584 million revenue shortfall, Governor O’Malley’s budget seeks to close the deficit without raising taxes. Instead, 74 percent ($457 million) of the revenue is made up through spending cuts while 26 percent (163 million) comes from the sale of old helicopters and other transfers and payments. The budget also leaves $800 million (5 percent of the General Fund balance) in Maryland’s Rainy Day fund and leaves $37 million unallocated. Over the longer term, the O’Malley administration projects that with this budget, the state will close its structural deficit by FY 2017 with…