According to a report by the Public Interest Research Group (PIRG), Maryland received a C grade for transparency in government spending this year. The grade, which is based on the state’s transparency website, is a half step down from last year’s C+.

By Becca Heller

Becca@MarylandReporter.com

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A bill to raise the minimum wage to $10 an hour died in the Senate Finance Committee on Wednesday.  It was defeated in an 8-3 vote with several senators explaining that they opposed the legislation in spite of their sympathy for low-wage workers because the timing was not right for a wage increase.

By Ilana Kowarski

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Gov. Martin O’Malley’s proposed gasoline tax hike that was late arriving for this year’s General Assembly session is now clearly on a fast track for passage. The House of Delegates gave it preliminary approval Wednesday night — just five days after its first hearing.

The Democrat-dominated House easily beat back Republican attempts to modify the bill, HB1515, indicating more than enough Democrats are on board to pass it as early as Thursday.

The legislation raises an additional $1.6 billion or more in revenues for the Transportation Trust Fund. The bill applies a sales tax rising to 4% over the next three years; and the gas sales tax would rise to 6% if Congress does not pass legislation allowing states to collect an Internet sales tax by 2015.

Quick action in committee

There was a hearing on the bill late Friday afternoon. The House Ways & Means Committee worked on the legislation that night and Monday morning, then passed it Monday afternoon on a 15-4 vote.

Drew Cobbs of the Maryland Petroleum Council had been told that there would be a work group on the bill to include stakeholders, but that never happened.

Republicans made two attempts to change the aspect of the tax hike that they found most galling: It is indexed to inflation and would go up automatically without action by the legislature.

“This is the first time in the history of the state that (a tax) has been indexed to inflation,” said Del. Ron George, R-Anne Arundel, at a news conference.

Automatic increases tied to inflation

“The gas tax will go up and it can never come down,” said Del. Herb McMillan as he offered an amendment to remove that provision. “This gas tax puts us on autopilot and locks us out of the cockpit.”

Maryland is now about in the middle of the states with its 23.5 cent per gallon gasoline tax, but Republicans said the tax hike would make the state’s tax levy the 5th highest in the nation.

“This smacks poor people and the middle class right in the mouth,” McMillan said.

House Majority Leader Kumar Barve, D-Montgomery, pointed out that the income and sales tax are equivalent to indexed since people pay more as income and the price of goods rise.

McMillan’s amendment failed on a 50-84 vote.

No to capping increases, no to stronger lockbox

House Minority Whip Jeannie Haddaway-Riccio of the Eastern Shore sought to cap the increase in the gas tax at 1-cent per year, but that went down on a 50-81 vote.

Del. Susan Krebs, R-Carroll, tried to strengthen the “lockbox” provision of the bill by tying passage of the gas tax to enactment of her proposed constitutional amendment, HB176 that would require a three-fifths vote in both houses to use the transportation revenues for other programs. In the governor’s bill, transfers out of the Transportation Trust Fund require only a three-fifths vote in committee.

“Let’s put the trust back in the trust fund,” Krebs said. She said the constitutional amendment had been proposed nine years in a row without even a vote in committee.

The closest vote came on an attempt by Del. John Olszewski, D-Baltimore County, to put the revenues from marine fuels into the Waterway Improvement Fund, which has been drained as sales taxes on boats have declined and the cost of dredging has risen. The vote was 61-73 against that bill.

‘Shameful and plain wrong’ says one opponent

The galleries were nearly empty during the two-hour House debate, but one representative of gas tax opponents was looking on — Nick Loffer, state director of Americans for Prosperity.

“It’s unbelievable that the House of Delegates supports burdening Maryland’s families and businesses with the 5th highest gas tax rate in the nation,”  Loffer said. “Saddling families with yearly automatic gas tax hikes without a vote by their representatives is just shameful and plain wrong.”

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Dozens of people gathered outside the State House Friday to protest a proposed hike on the gas tax. Wielding paper stop signs that said “Stop the Gas Tax,” the group rallied around their spokesman, Nick Loffer, a grassroots director for Americans for Prosperity.

“We’re talking about a 60% gas tax hike which, if enacted, will give us the fifth highest gas tax in the country,” said Loffer. “That’s not okay in Maryland.”

The legislation, HB 1515, raises gas taxes in order to increase revenue for the Transportation Trust Fund (TTF), a joint-fund for statewide transportation needs. The rally was held prior to the bill’s hearing before the House Ways & Means Committee. Opponents bill are strongly critical of Gov. Martin O’Malley’s distribution of transportation money in the past, and feel that this bill enables him to clean up his mistakes at the expense of his constituents.

“The governor has mismanaged the budget for years,” said Loffer. “He’s stolen billions of dollars out of the Transportation Trust Fund. If you put all the money that he took and put towards his pet projects, his priorities and put it towards roads, we wouldn’t be in this situation at all.”

Most of the money transferred from the trust fund has been repaid, except for $1.1 billion taken since 2004 from local Highway User Revenues, which fund municipal and county transportation projects.

Loffer explained that the money in the transportation fund has been unevenly distributed for years. Though almost half of the fund’s revenue comes from the taxes on fuel, the majority of the money has been invested in mass transit and other public services that do not benefit drivers. Only 30% of the capital in the fund was put into roads, Loffer said.

Gas stations, drivers will be hit with increase

The bill would also raise the cost of gas significantly, putting a squeeze on gas stations and drivers across the state. It proposes to gradually raise tax rates on gasoline from 23.5 cents per gallon to 42.7 cents by fiscal 2018.

“The regular person’s gonna hurt,” said Roseanne Biggs, manager of a BP gas station in Clinton, MD. “It’s going to hurt our businesses, too, but we’re going to have to pass it on to the customer and it’s really going to hurt them the most.”

Biggs and others attending the rally said they were concerned about the lack of media coverage the gas tax bill has received due to other controversial bills that are in the legislature right now. According to Biggs, very few of the people she’s spoken to have even heard about the initiative, and some suspect that the timing of the bill was strategic.

“They know when to put it in,” said Dave Barsotti, manager of a Sunoco in Parkville, MD. “They have the death penalty bill, they have other stuff right now — they know when to sneak stuff in.”

By Becca Heller

Original Story>

Becca@MarylandReporter.com

An initiative to raise minimum wage to $10 an hour in two years promises to be among the most controversial economic issues debated at the Maryland General Assembly this year.

Sponsored by Sen. Rob Garagiola, D-Montgomery, and Del. Aisha Braveboy, D-Prince George’s, the initiative would reshape the state’s job market for low-income workers.

“This is an anti-poverty bill,” said Garagiola at Thursday’s Senate hearing. “If we raise working families’ wages, we’re going to improve their quality of life, and there will be less reliance on state government.”

Burden falls on business; proponents tout increased consumer spending

Though the government would take credit for raising wages, the financial burden would fall to state businesses.

“It’s not like this money comes from the government,” said Kathy Snyder, president of the Maryland Chamber of Commerce. “The money comes from our businesses. And if [the businesses] don’t have increased sales, where’s the money going to come from?”

Proponents for the bill believe that the burden will be balanced out by newly empowered consumers who will be spending more money locally.

“When you increase wages for more than 500,000 Marylanders, we’re putting cash in their pockets,” said Garagiola. “Some studies show that it can help inject nearly half a billion dollars into the Maryland economy.”

Small business vs. large corporations

Many small business owners are not ready to gamble their livelihood on conjectures that consumers will spend their money locally, however. Family-owned grocery stores, especially, would take a hit due to the number of employees that are paid minimum wage.

“Our average annual profit is $70,000,” said Lou Santoni, owner of Santoni’s Catering and Marketplace. “This bill alone will cost us $163,000 a year. And that’s not even including the sick leave bill that’s down the road as well.”

Reports have shown, however, that 70% of all low-wage and minimum-wage employers are large employers including Walmart, Pizza Hut, Taco Bell, and other corporations.

“Corporate profits are up and wages are staying stagnant,” said Matthew Hanson, a spokesman for the Raise Maryland campaign. “So it’s not like these large employers can’t afford to pay more, it’s that they are making a choice not to pay more.”

Some argue that the bill abandons the concepts of free market enterprise and competition that have been such essential elements of the U.S. economy.

Competition will set wages

“Free market and competition has driven our industry to where we are in our average hourly wage,” said Rob Santoni, owner of the Santoni Super Market in Baltimore, MD. “To keep the best workers and keep them happy, you will pay what your competition pays. We should not have to be mandated by the state.”

Others feel that it’s simply fixing a problem that doesn’t exist. Bernie Saleanik, owner of All Sports Photo, relays a conversation he had with people seeking employment at his local photography business.

“I tell them I can’t pay you what the union paid you; I can only pay you a certain wage,” Saleanik said. “And you know what they say to me? They say: ‘Are you kidding? If I don’t work at all, I can get subsidized housing, I can get food stamps, I can get life insurance and medical insurance, daycare, you name it. I got about 9 or ten things I can get if I don’t work at all. Why should I work? I don’t need a minimum wage.’”

“That’s what you got going on right now. That’s reality,” said Saleanik.

Low-wage workers appeal to legislators

Several low-wage workers came in to represent themselves and pledge support for the bill. The picture they painted of low-wage work and welfare-living was distinctly different from the cushy life that Saleanik described.

“I live with my daughter and my two grandsons. I help take care of them,” said Lana Stuart, an associate at WalMart who explained that she struggled to raise her family on her $8.80 hourly wage. “My oldest grandson would like to be a doctor someday. And I want to help him to reach his dream. I urge you to vote to raise the minimum wage to help build a better future for people like me to build a better future for our families.“

Many small business owners argue that this bill, rather than helping workers like Stuart, could actually lead to fewer jobs and force businesses to fire employees just to be able to pay the proposed $10 wage.

“Dramatically raising the cost to hire and train entry-level employees will reduce job opportunities in Maryland—it’s simple economics,” said Michael Saltsman, research director for the Employment Policies Institute. “Maryland’s entry-level job seekers need more opportunities, not the empty promises of policies like minimum wage hikes.”

Still, proponents of the bill remain steadfast in their belief that this hike in wages would not only be the fair thing to do for low-income workers, but also act as a stimulant to Maryland’s still struggling economy.

“Raising the minimum wage will help small businesses like my members by putting more money in the pockets of Maryland’s workers, which will boost spending and job creation on Main Street,” said a statement by Margot Dorfman, chief executive officer of the U.S. Women’s Chamber of Commerce, which represents 500,000 business owners nationally and 7,500 members in Maryland. “While some try to portray a minimum wage increase as a fight between business and workers, raising the minimum wage is in reality good for both.”

By Becca Heller
Becca@MarylandReporter.com

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