Yesterday, the Montgomery County Council voted overwhelmingly to increase the county’s minimum wage. The current minimum wage in the county is the same as the state and federal minimum wage, $7.25 per hour. Under the plan passed by the council, the county minimum wage will rise in annual increments: to $8.40 in October 2014, $9.55 in 2015, $10.75 in 2016 and $11.50 in 2017. The Washington Post characterizesthese efforts as “part of a national movement by state and local governments to address growing wage inequality where Congress has not.” Indeed, the move by Montgomery legislators is part of a coordinated regional effort alongside the District of Columbia and Prince George’s County. Lawmakers in Prince George’s are now expected to pass a similar measure today on the minimum wage after having delayed action until Montgomery held its vote on the wage. The District is expected to follow suit shortly on some…

Maryland’s unemployment rate was 6.7 percent for the past two months, according to data released today by the Bureau of Labor Statistics (BLS).  This is down from 7 percent unemployment in August. In part this decrease is due to about 9,500 fewer unemployed Marylanders, and about 8,400 more who are now employed. Both these numbers are headed in the right direction, which is heartening. However, there are also still 29,300 fewer Marylanders in the labor force compared to the peak last January. A smaller labor force helps the unemployment rate go down, but it hurts our economy. Some may leave the labor force due to retirement, to return to school, or through migration. However, BLS only counts those who have been working or actively looking for work recently as members of the labor force.  Many folks who would like to work fall off the count because they have been unemployed…

Yesterday we discussedthe November meeting of the Spending Affordability Committee and highlighted its concerns about increased borrowing costs crowding out the ability to pay for new initiatives and savings that Maryland is seeing from implementing the Affordable Care Act. Today we will conclude our coverage of the November meeting by highlighting its findings regarding transportation spending and pension reform and look ahead to the committee’s final meeting before the start of the 2014 legislative session. Department of Transportation Budget The Department of Legislative Services noted that the transportation budget ended the 2013 fiscal year with more money than planned, both due to less spending and more revenue than expected. Spending on mass transit, including the Red and Purple lines, will increase in the coming years and peak in 2018, though total spending on roads and highways remains higher than spending on mass transit during this time. Capital Spending on Transportation…

At its November briefing of the Spending Affordability Committee, the Department of Legislative Services urged state lawmakers to maintain current levels of debt, citing increased debt service costs in the coming years. DLS also noted that Maryland will both save money and provide more residents with health coverage due to its implementation of the Affordable Care Act (ACA). Legislature Urged to Keep Debt at Current Levels At the briefing, DLS analysts warned of increasing costs of debt service, the money required to pay the interest and principle on bonds that Maryland has issued. DLS forecasts that these costs will crowd out Maryland’s ability to spend money on other projects in the coming years. The analysis and recommendation are in part a response to Governor O’Malley’s request, backed by the Capital Debt Affordability Commission, to increase debt authorizations by $75 million annually between 2015 and 2019 for the purpose of funding…

The costs of reducing Maryland’s corporate income tax rate outweigh any potential benefits, according to a recent report from the state’s Department of Legislative Services. Reducing the rate has receivedrenewed attentionin recent months, but this report should serve as a warning to policymakers of all stripes. The corporate income tax is an important source of income for the state. In fiscal year 2012, Maryland raised $877.9 million through the corporate income tax. This represented 5 percent of general fund revenue. These funds pay for many important programs and services—such as education, transportation, and health care—that benefit Marylanders and businesses alike. The DLS report projected the revenue that would be lost each year if Maryland were to reduce its corporate income tax rate by 1 percent, from the current rate of 8.25 percent to 7.25 percent: (Click to enlarge all figues) The DLS projects that the total cost of a 1…

Last week, both Governor O’Malley and President Obama expressed support for raising the minimum wage. In the coming legislative session, the Maryland General Assembly has the opportunity to act on these calls and increase the economic security and earning power of Maryland workers. On Thursday, President Obama expressed support for raising the Federal minimum wage to $10.10 per hour via the Harkin-Miller bill. The current federal minimum wage is $7.25. The Harkin-Miller bill would raise the minimum wage in three incremental steps of 95 cents over two years, after which the minimum wage would be indexed to inflation. Indexing the minimum wage to inflation is an important policy measure that would allow it to keep up with the cost of living so that workers’ earnings do not erode when policy makers fail to adjust the minimum wage even as prices increase. (click to enlarge) Source: Economic Policy Institute   While…