Dear Friends,
Thank you for contacting my office during the 2011 Legislative Session of the Maryland Assembly. I appreciate the time you took to let me know your views on issues that concerned you. I have taken these opinions into consideration and used them while deliberating.
This year I again served on the Transportation and Environmental Subcommittee of the Appropriations Committee. I continue to serve on the Oversight Committee on Personnel, Oversight Committee on Pensions, Joint Committee for Audits, Joint Committee on Legislative Ethics, Commission to Study Impact of Immigration on Maryland, Maryland Commission on Suicide Prevention, and Deputy Whip for the Republican Caucus.
Capital Budget
The Capital Budget allows the State of Maryland to borrow money by bonding for projects. The State will be authorizing the Treasurer to sell bonds in the amount of $940 million. Included in the Capital Budget is money to repay the Special Funded accounts that were raided such as: Program Open Space, Chesapeake Bay Fund, Helicopter Fund and others. Constitutionally, the debt service is paid by a portion of our property taxes. We are paying over $1 Billion per year in debt service. As I have reported in my Capital Budget power point presentation (see the attachment) the taxes received to pay for the debt we are incurring is not keeping pace to cover the interest cost and will cause the property taxes to increase to an estimated 17.5 cents per one hundred dollars of assessed value by 2016.
I strategized a group of reasonable amendments offered to the Capital Budget that would reduce the borrowing by:
5% – failed –would have reduced the authorization by $47 million
3% – failed – would have reduced the authorizations by $28 million
1% – failed – would have reduced the authorizations by $9 million
Even during these austere times, the legislature was not willing to cut even 1% of borrowing.
An amendment was offered to strike the “earmarks” in the Capital Budget, bond bills that equal $15 million, $7.5 million for the House and $7.5 million for the Senate. The local bond bill earmark process encourages political patronage at its worst. This process needs serious reforming.
I heard you during the campaign – “our government should spend within its means and cut back just like our families have been doing”. Everyone has been affected by this recession; the State should not add any more pressure for tax increases.
Maryland Pension Plan
The Maryland Pension plan has been highly debated this session as a result of reducing the deficit pending in the fund. The following chart outlines the actions taken by the Conference Committee regarding Pension Reform.
1. Average Final Compensation
The calculation of an employee’s final compensation figure will use five consecutive years with the highest average (up from three years), but alter the item so that it applies only to new employees and does not affect non-vested employees. Apply the same method to all systems and not just those in Employee’s and Teacher’s Pension Systems (EPS/TPS).
2. Employee Contributions and Benefits – Current Employees
Alter the benefits for current EPS/TPS employees such that their employee contributions will increase from 5.0% to 7.0% of salary to continue receiving the 1.8% multiplier for each year of service earned, with no election between options. Add a stepped increase for the contribution rates of current Law Enforcement Officers Pension System (LEOPS) employees so that the rate will increase from the current 4.0% of salary to 6.0% in fiscal 2012 and from 6.0% to 7.0% in fiscal 2013, but the 2.0% multiplier is unchanged. Alter the Budget Reconciliation Financing Act (BRFA) to apply an increase in contribution rates from 6.0 % to 8.0% for current judges.
3. Employee Contributions and Benefits – New Employees
Create a new system under which new EPS/TPS employees must contribute 7.0% of salary to earn a 1.5% multiplier in exchange for each year of service and concur with the increase in the contribution rates for new judges from 6.0% to 8.0% of salary. Increase the LEOPS contribution rate for new employees to 6.0% in fiscal 2012 and to 7.0% in fiscal 2013, while retaining the 2.0% multiplier.
4. Vesting Period for Employees
Raise the time requirement from 5 to 10 years for new employees in EPS/TPS. Apply the higher year requirement to all systems (except Judge’s).
5. Early Retirement Allowance EPS/TPS – New Employees
Increase EPS/TPS early retirement so that new employees must be at least age 60 (up from age 55) and have 15 years of service to be eligible for early retirement, with a corresponding reduction to the benefit of 0.5% for every month early the employee retirees before age 65 (up from age 62).
The retirement age changes for new hires. Future employees will have to wait until they are 65 to retire with 10 years on the job or they can leave when their years of work plus their age equals 90. This is called the “Rule of 90”. The vesting period will be 10 years before the employee can draw benefits. This change goes into effect July 1, 2011.
Current employees are vested after five years of employment and can retire after 30 years at any age or once they reach 62.
6. Normal EPS/TPS Retirement Eligibility – New Employees
Change the eligibility requirement for new EPS/TPS employees to be 30 years of service regardless of age, or age 65 (up from age 62) with at least 10 years of service (up from 5 years).
7. Normal Retirement Eligibility Other Systems – New Employees
Increase State Police eligibility from age 50 or 22 years of service to age 50 or 25 years of service for new Police employees.
8. Cost-of-living Adjustments – EPS/TPS
Amend the BRFA so that cost-of-living adjustments (COLA) for all service credit earned by current and new employees after July 1, 2011, be capped at 3% in any year the State Retirement and Pension System (SRPS) achieves its assumed rate of return and capped at 1% else wise (instead of this COLA provision being exclusively applied to new employees).
9. Cost-of-living Adjustments – Other Systems
The COLA will be adjusted for all service credits earned in all systems after July 1, 2011, to be capped at 3% in any year the SRPS achieves its assumed rate of return and capped at 1% else wise (instead of only being applicable to EPS/TPS).
10. Deferred Retirement Option Program
The State maintains a Deferred Retirement Option Program benefit, but specify that all new accounts begun after July 1, 2011, will earn 4% compounded annual interest instead of the current 6% compounded monthly interest.
Summary Chart
|
Current Members |
Future Members |
| Employee Contributions |
Increase from 5% to 7% |
7% |
| Law Enforcement Officers Pension System (LEOPS) |
Increase from 4% to 6% for 2012
Increase from 6% to 7% in 2013 |
6% in 2012
7% in 2013 |
| Multiplier-Employee Pension System/Teachers Pension System (EPS/TPS)
|
1.8% |
1.5% |
| Cost of Living Adjustment (COLA) |
For all service credit earned after July 1, 2011
Capped at 2.5 % If investment return of 7.75% is achieved
Capped at 1% if 7.75% is not achieved
|
Capped at 2.5 % If investment return of 7.75% is achieved
Capped at 1% if 7.75% is not achieved |
| Average Final Compensation |
No change – all systems |
Correctional Retirement System (CORS) & State Police 5 highest years of salary (up from 3 years) only new employees
EPS, TPS, LEOPS – 5 highest consecutive years o salary.
|
| Vesting |
No change |
Increase from 5 to 10 years
|
| Early Retirement |
No change |
Must be at least 60 years of age (up from 55) and have 15 years of service – reduction of 0.5% for every month early before age 65 (up from 62)
|
| Normal Retirement Eligibility (EPS/TPS) |
No change |
Rule of 90 (age + service = 90), or age 65 with at least 10 years of service
|
| Normal Retirement Eligibility Other Systems |
No change |
State Police increase to age 50 or 25 years of service(up from 22 years of service) |
| Deferred Retirement Option Program (DROP) |
Continue with 6% interest compounded monthly |
New accounts begun after July 1, 2011 will earn 4% compounded annual interest
|
Retiree Prescription Plan Changes
In regards to health care changes, new employees will have to work for 25 years before they are eligible for full health care benefits. Current workers receive the full benefits after 16 years of work.
Conference Committee
Retiree Prescription Plan Changes
|
Retiree Copays
Mirror Active Plan but Out of Pocket Max is Higher and Share of the Premium Increases |
Co-pays
Generic
Preferred brand
Non-preferred brand
|
$10
$25
$40 |
| Deductible |
$0 |
| Coinsurance |
$0 |
Out-of-pocket cap
for retiree only/ retiree & spouse |
$1,500/$2,000 |
Annual retiree
premium
retiree only
retiree & spouse
Monthly retiree premium
retiree only
retiree & spouse
|
$593
$984
$49.42
$82.00 |
| Retiree share of total premium |
25% |
| General fund savings |
$13.9 million |
SB 167 – Public Institutions of Higher Education – Tuition Rates – Exemptions
The House of Delegates gave approval to SB 167 giving illegal immigrants in-state tuition at community colleges and state universities. During second reading on Thursday April 7, there were over a dozen amendments offered during the almost three hour debate. The Senate passed the bill three weeks ago. The amendments that were offered by the members of the House of Delegates are listed at www.mlis.state.md.us, click on “Bill Information” and type SB 167 or type http://mlis.state.md.us/2011rs/billfile/SB0167.htm. This is crazy. I voted against this bill but it passed the House floor with a vote of 74-66.
The State will be in violation of Federal Law. Our taxpayers will have to foot the bill to pay the cost of defending this. We have obligations to our legal citizen in providing them with access to our States quality schools. If anyone in Maryland graduates or has enough credits from one of our community colleges, they have automatic acceptance to our Public University. This means if an illegal alien graduates from Baltimore Community College, they get a priority over our legal student graduating from a Maryland High School.
Senate Bill 172/House Bill 302 – Inmates – Life Imprisonment – Parole Approval
Originally the Governor was required to grant the parole or commutations to criminals serving life sentences who have served 25 years without application of diminution of confinement credits if recommended by the Parole Review Board.
The current bill indicates that the decision by the Parole Review Board shall be transmitted to the Governor; authorizing the Governor to disapprove the decision by written transmittal to the Board, providing if the Governor does not disapprove the decision within 180 days after receipt, the decision becomes effective. Meaning, if the Governor does not take action in that time frame, the bill would automatically grant the inmate parole.
This decreases accountability by the Governor for public safety. If the Governor does not have time to review the submission by the Parole Review Board, the criminal will be paroled. We are talking about murderers and rapists. Getting tough on crime is diluted with this bill. “We need to stand for justice for the victims and their families.”
The bill passed the House with a vote of 75-65. I voted against this bill because it is bad public policy.
Offshore Wind Energy
Governor O’Malley’s Offshore Wind Energy Bill will allow national exposure to this initiative. He may be touted as the “Green Governor”. This title will leave Maryland’s consumers paying more for energy.
The Sage Policy Group, Inc. with economist Anirban Basu, issued a report that did not recommend offshore wind energy for our Marylanders because it would cost two to two and one-half times the cost of the renewable energy options. The off shore wind power could cost $1 billion at a minimum of a 20-year commitment that will be imposed on virtually every Maryland household and businesses.
Our Marylanders pay 28-33% above the national average for their electricity needs. Remember the year 2002, when Baltimore Gas and Electric was charging the Baltimore area approximately 72% more. I live in that area and my bills have gone up dramatically, as I am sure yours have. Economist Basu notes that increasing the cost to ratepayers could hurt Maryland’s overall business climate and become a comparative disadvantage with respect to retaining and attracting business and investment.
The offshore wind initiatives will offer 20 year contracts with guaranteed price increases. The Governor has suggested that this would be a job creation enterprise. Basu concludes that the economic impacts of constructing an offshore wind facility would largely inure to the benefits of non-Marylanders: “The Specialty labor that would be required to build these marine structures is not likely to be found primarily in Maryland.” The major suppliers of marine wind turbines are foreign manufacturer (Siemans of Germany and Vestas of Denmark). The specialized construction is modeled off of the already existing offshore oil and gas industries which are based out of Texas and Louisiana.
Basu concludes that: forced purchases of very expensive energy are not the answer. An extremely long-term contract with built-in and thus guaranteed price increases simply removes the basic incentives that have benefited A Maryland’s electricity customers to date. The Maryland taxpayer will pay the tab for the next 20 years. Because there needs to be more time to study the impact on the state’s ratepayers, this bill is shelved for this year.
For more information on wind energy please see The Wall Street Journal entitled “Wind Power Hits a Trough” dated April 5th regarding wind power: http://online.wsj.com/article_email/SB10001424052748704629104576190812458488694-lMyQjAxMTAxMDAwNjEwNDYyWj.html
Maryland Lawmakers Pass Direct Wine Shipping
On the evening of April 4th the Senate passed SB248 and House Bill 234 allowing state wineries to ship wine to customers. Maryland will become the 38th state along with DC to allow wine shipping. I have been in the General Assembly for nine years and each year we have tried to get this passed. I am very pleased. The wineries may purchase a permit for $200.00 to ship wine. The bill does not allow retailers to participate in the Wine of the Month Club to ship wine to customers from Maryland. After it is signed by the Governor it will be effective on July 1, 2011, my birthday. Let’s raise a glass together.
HB 1213 sales and Use Tax-Alcoholic Beverages-Supplement Appropriation
Retailers and restaurants will have to implement a 50% increase in the alcohol tax by July 1, 2011. It will require that retailers and restaurants to reprogram their computer systems to install a two tier taxation system and re-train the staff that serves food and alcohol.
In addition the bill contains an unfair distribution in the tax proceeds to the rural counties for school construction dollars. It was a sponsor only bill, taken up late on Saturday evening which did not allow the citizens to vet their concerns on how the changes would affect their businesses. The Crack Pot Restaurant and Ridgley Liquors had contacted me and raised points that it will cost jobs and the implication of the reprogramming of computer systems during the busiest weekend would be extremely damaging.
Many of businesses have said they are just hanging on. Our family business closed after 107 years in business. Our people are hurting. This is a painful abuse of power by not allowing the full vetting of the bill again leaving the weary citizens in a struggling economy.
House Bill 1012/Senate Bill 803- Drunk Driving Elimination Act
This bill requires, rather than authorizes, the Motor Vehicle Administration (MVA) to establish an Ignition Interlock System Program, with a fee to cover program costs, and to establish minimum standards for all service providers. The bill requires, rather than permits, participation from persons who have been convicted of specified alcohol-related driving offenses. A person who is required to participate in the program must successfully complete it or that person is subject to suspension of the driver’s license. MVA must require the person to complete the program successfully. If the person required to participate fails to successfully complete the program, MVA is required to suspend the driver’s license for a period of six months for a first violation of driving while under the influence of alcohol, under the influence per se, or impaired by alcohol, and one year for a second or subsequent violation. I voted for this bill and it passed the House floor on April 8, 2011.
Other Bills of Interest
House Bill 1034 – Clean the Streams and Beautify the Bay Act of 2011 – Requiring a store to charge and collect a fee for each disposable carryout bag the store provides to a customer. This bill did not make it out of the Environmental Matters Committee.
House Bill 870 – Maryland Stem Cell Research Fund – Requiring the Maryland Technology Development Corporation and the Stem Cell Research Commission to report to the public on the progress of State-funded stem cell research by holding a public symposium on or before January 1 each year. This bill received an unfavorable in the Health and Government Operations Committee.
House Bill 674 – Human Trafficking – Awareness – Requiring the State Department of Education, in collaboration with the Department of Health and Mental Hygiene, to provide awareness and training for Directors of Student Services in local education agencies on human trafficking; and requiring the Department of Health and Mental Hygiene, in consultation with experts in the field of human trafficking prevention, to provide to the State Department of Education specified information and materials on human trafficking. This bill passed the House and Senate and awaits the Governor’s signature. I was a co-sponsor of this bill.
House Bill 291 – Public Health – Maryland Medical Marijuana Model Program Work Group – Requiring the Secretary of Health and Mental Hygiene to convene a Work Group to develop a model program, including draft legislation, to facilitate patient access to marijuana for medical purposes. This bill, now a model program, passed the House and Senate and awaits the Governor’s signature. I was a co-sponsor of this bill.
House of Delegates Scholarship
After much deliberation Delegate Bill Frank and I have decided to allow the Maryland Higher Education Commission process our District 42 Delegate Scholarship. To be eligible for the scholarship you must fill out a Free Application for Federal Student Aid (FAFSA) Form by March 1st to be considered for the scholarship as well as all State need-based grants. The scholarship will be distributed to District 42 students.
Visits to Annapolis
During the 2011 Legislative Session Towson High School’s Law and Policy Class, Towson University’s Women’s Swim and Diving Team, Calvert Hall’s football team, students from St. Pius and Immaculate Conception, Girl Scouts, Boy Scouts, and residents from District 42 visited the General Assembly. If you or your group would like to visit our state government in action please contact our office and we can set up a tour of the State House and government buildings.
Lowe House Office Building Renovation
Please note that my Annapolis office will be closed from May through September due to the replacement of the asbestos ceilings in the Lowe House Office Building. My legislative assistant, Myra will be telecommuting during this timeframe. If you need to contact me please call 410-841-3258 and we will continue to provide prompt attention to your concerns and issues.
Again, I want to thank you for the privilege of allowing me to represent you. The experience has been rewarding and humbling and I look forward to serving you in the interim. During the legislative session I send, via email, an update to keep you informed of pending legislation and highlights of the General Assembly’s agenda. If you would like to be included in next year’s legislative updates, please call my office at 410-841-3258 or send me an email at susan.aumann@house.state.md.us.