Updates on the Budget, Veto Overrides, and Revenue Proposals

THIS WEEK IN ANNAPOLIS

Updates on the Governor’s FY2021 Budget

Last week, we shared initial toplines from Gov. Hogan’s FY2021 budget proposal. The Department of Legislative Services (DLS) presented its fiscal briefing to lawmakers this week and we learned a few new details:

· Despite Gov. Hogan’s claims last week, it appears his budget proposal is not structurally balanced. DLS analysis reveals the administration’s budget reduces but fails to eliminate the structural gap for fiscal 2021, leaving a structural deficit of about $37 million.

· The capital construction budget is funded at the Spending Affordability Committee-recommended level of $1.1 billion and includes $333.1 million for school facility needs.

· The General Assembly will need to act to address the failure of the governor in resolving the Historically Black Colleges and Universities settlement in the FY21 budget.

· The budget cuts the FY21 use of a budgetary sweeper provision that would add $50 million to the state pension system to help pay down the unfunded liability of the system. The budget does include the full actuarially required contribution of $750.3 million for educator retirement.

· You can find the FY2021 allowance for each school district on page 25 of this report.

Hogan Introduces 2020 Legislative Priorities

Amid an agenda of nearly 20 bills to address crime-related initiatives, redistricting reform, and tax cuts, Governor Hogan introduced three education bills:

· Building Opportunity Act of 2020 (HB 338 and SB 276) is similar to the school construction initiative led by Speaker Jones in the introduction of the Built to Learn Act (HB 1 and SB 1) and would help add $2+ billion to address new school construction and renovation programs.

· AP Opportunities Act of 2020 (HB 348 and SB 267) aims to cover the cost of advancement placement exams for high school students in poverty. Many school districts across the state already cover the cost of AP exams for certain students or reimburse the cost for students based on performance. It is unclear if this legislation will fill a void for the districts that do not already cover this expense or if it will supplant local dollars already used for this purpose.

· Community and Local Accountability for Struggling Schools (CLASS) Act of 2020 (HB 347 and SB 275) creates something called innovation schools that would act a lot like a county board charter takeover of one-star schools based on the state’s school accountability system. The types of community input proposed in this legislation is actually less and to a far narrower group of schools than the state’s current accountability system requires based on the Every Student Succeeds Act and the Protect Our Schools Act.

NEWS AND NOTES

Overriding Vetoes — And Breaking News in Legislative District 11

The House of Delegates delayed action this week on overriding several vetoes from Governor Hogan from the 2019 legislative session. MSEA helped to pass the expansion of the Maryland Dream Act last year (HB 262 from 2019) and is encouraging the General Assembly to override the governor’s veto so that Dreamers can attend a four-year university and pay in-state tuition rates. Other issues related to gun safety, working conditions, labor rights, transit, and the environment are also subject to override actions.

The full House is expected to take up the issues on January 30 with action in the Senate to follow once the upper chamber has its full slate of members following an appointment to fill the vacancy left by the retirement of Senator Bobby Zirkin (D, District 11, Baltimore County). In breaking news on Thursday night, the Democratic Central Committee in District 11 voted to nominate Delegate Shelly Hettleman to the governor for an appointment to fill the remainder of Senator Zirkin’s term.

Revenue Proposals Scheduled for Hearings

On Wednesday, January 29, the Senate Budget and Taxation Committee will have a full day of hearings on several revenue-related bills that would raise significant revenue to specifically support the Blueprint for Maryland’s Future Fund or the state’s general fund — both critical sources necessary to fund a new school finance formula and realize the benefits of the Kirwan Commission recommendations. Here are some of the key bills that will be debated:

· Digital Advertising Gross Revenues (SB 2) is a creative proposal to modernize the state’s tax code to allow for the collection of tax revenue for corporations that advertise online and through platforms like Google and Facebook. MSEA supports this legislation.

· Tobacco and Vaping Tax Increase (SB 3) would increase the state’s tobacco tax from $2 per carton to $4 per carton and would apply this tax rate to electronic cigarettes and other vaping materials. While $11 million of this new revenue would be dedicated to programs to help reduce tobacco use, the balance would benefit the state’s general fund. MSEA supports this legislation.

· Sports Betting and Gaming Expansion (SB 4 and SB 58) will be debated in two bill hearings on the same subject. The U.S. Supreme Court allowed states to offer sports betting based on a ruling in 2019 and many states have already moved to take advantage of it. Maryland has moved more deliberately and even if one of these bills passed, voters would have a say in the form of a Constitutional Amendment vote in November 2020. MSEA is monitoring this legislation.

· Closing Corporate Loopholes (SB 311 and SB 275) is the goal of two different bills to ensure corporations are paying their fair share in taxes. Implementing combined reporting and applying a tax related to investment management services could generate as much as $150 million if both are enacted. MSEA joins with the Fair Funding Coalition in support of these bills.

Former Delegate Pleads Guilty

Former Delegate Cheryl Glenn pleaded guilty this week for taking nearly $34,000 in bribes related to the licenses and expansion of the state’s medical marijuana program, something she championed while in the House of Delegates. Her crimes carry fines of up to $250,000 for each count and a maximum sentence of 25 years in prison. The sentencing date is set for May 8.

IT’S TIME FOR ACTION

Contact Your Legislators Today and throughout the Legislative Session

It’s been nearly 20 years since Maryland last updated how we fund our schools. In recent years, funding has become woefully inadequate and inequitable — and it shows:

· Half of educators are working second jobs to make ends meet.

· Every school in the state is annually underfunded by, on average, $2 million.

· Maryland spends 5% less on schools serving students in poverty.

The General Assembly can change that by revising Maryland’s school funding formula. And to demonstrate the broad-based support and ensure voices of educators and pro-public education allies are reflected in the final proposal, we must make our voices are heard.

Our kids can’t wait any longer for the funding and support that they deserve! Click here to email your legislators and urge them to pass a new funding formula that will be a game-changer for our students and schools.