Gov. Hogan promises tax relief in State of the State
Gov. Larry Hogan proposed four types of tax relief Wednesday as he delivered the first State of the State address of his administration. The new Republican governor said he will introduce legislation seeking the changes, which are likely to face stiff questions from Democrats in the General Assembly.
repeal ‘rain tax’
...taxing struggling and already overtaxed Marylanders for the rain that falls on the roof of their homes was a mistake that needs to be corrected.
Hogan proposes repealing the law that requires Baltimore and large counties to levy a fee to pay for projects to keep polluted storm-water out of the Chesapeake Bay. The federal government requires Maryland to fund such projects. There is wide variation on how much local governments charge property owners, from levying nothing in some counties to several hundreds dollars in others. Repealing the fee would not directly impact the state’s budget, but the state would have to come up with a new way to pay for storm-water mitigation.
The Chesapeake Bay Foundation, the Maryland League of Conservation Voters and Democratic leaders have promised to work to keep the fee in place. Some business groups, rural counties, the Maryland Public Policy Institute, and many Republican lawmakers are expected to join Hogan in trying to repeal the law.
Chesapeake Bay Foundation
League of Conservation Voters
Tax Relief for Retired Military, Police, Fire
These brave men and women have put their lives on the line for us...and they have earned these tax breaks.
Hogan proposed eliminating the income tax on pensions for retired military, police and firefighters. Military retirees already get a reprieve on the first $5,000 of their income, and Hogan’s proposal would gradually increase that amount over four years until their pensions were completely exempt. A separate proposal would grant a $5,000 exemption to volunteer first responders, and a third plan would allow police officers, emergency workers and firefighters to eventually forgo income tax on any pensions connected to their service.
Police and firefighter unions, as well as veterans advocates, are likely to be vocal supporters of the plan. Since the changes would reduce the amount of tax money available to the state, the proposal may face opposition from budget hawks or interest groups likely to see their funding cut to pay for the tax break.
small business tax breaks
Burdensome tax and bureaucratic paperwork discourages the creation of new businesses, and drives small businesses and jobs elsewhere.
Hogan has proposed a tax break for small businesses, allowing them to avoid personal property taxes on the first $10,000 of their assets. Every year, businesses have to pay taxes to local governments on inventory and equipment. Hogan said his proposal would help 70,000 small businesses, both through tax relief and by saving money on having to tally up their assets each year.
The administration proposes to provide additional state money to local governments who see their revenue decline.
Small business advocates, the National Federation of Independent Businesses and lawmakers from both sides of the aisle are likely to support the break, depending on how Hogan comes up with the money to repay local governments. The Maryland Association of Counties and local governments may be wary of supporting a cut that directly reduces a reliable revenue stream and replaces it with a promise of state help.
National Federation of Independent Businesses
Maryland Association of Counties
Repealing Automatic Gas Tax Increases
Marylanders deserve the transparency to know how their elected leaders vote every time the state takes a bigger share of their hard-earned tax dollars.
Hogan proposed an end to an automatic increases to the state’s gas tax, calling the current system regressive and unfair. Hogan’s plan would erase one of the main provisions of the gas tax plan lawmakers passed in 2013, which automatically increases the flat per-gallon tax each year based on inflation. Hogan also proposed eliminating other automatic bumps in Maryland gas taxes. While Hogan’s staff could not say how much revenue would be lost, it’s clear his proposal would significantly reduce the amount of money available for transportation projects in the future.
Raising the gas tax was a fiercely fought battle, and Hogan’s proposal could revive it. The business community largely supported finding new revenue to pay for road and transit projects. Republicans, by and large, voted against the tax but celebrated at ribbon-cuttings for projects built with its revenue.
Greater Baltimore Committee