Hogan’s ‘Economic Recovery’ Budget Will Feature Contentious Stimulus, Retiree Provisions

Gov. Lawrence J. Hogan Jr. (R) will introduce his proposed “economic recovery” budget Wednesday morning, which he said will include a state fiscal stimulus, tax breaks for retirees and first responders, and education funding at levels above legislative mandates.

Hogan would not provide specifics about overall state spending at a State House press conference Tuesday ― “I think you’re going to find out tomorrow when we submit the budget,” he said in response to a question from a reporter ― and full details of the spending plan were not available Tuesday.

Nevertheless, Hogan promised “record investments in education, crime prevention, public health, and all of our key priorities.” Hogan will propose K-12 education funding at $7.5 billion ― an increase over the current year’s approved budget of $7.2 billion.

A centerpiece of Hogan’s budget plan will be The Relief Act of 2021, which includes $1 billion in state stimulus funding for low-income Marylanders, small businesses and people receiving unemployment, among others. The governor’s budget will also offer $1 billion in benefits for “all Maryland retirees,” as well as additional tax credits and exemptions for retired first responders and military members.

Those measures set up a disagreement with lawmakers over tax policy: Hogan preferring his package, while condemning Democratic lawmakers’ dedication to overriding his veto of the Blueprint for Maryland’s Future, a statewide education reform plan that would increase total state and local education funding over the next decade.

Last spring, Hogan vetoed all bills passed during the 2020 session that he said raised spending or taxes. He has attacked lawmakers as they contemplate overriding his vetoes of tax revenue bills intended to fund education reform.

“The last thing that should ever be done in the middle of this pandemic, would be to increase taxes on struggling families and small businesses that would cause more suffering. And it would short circuit Maryland’s economic recovery,” Hogan said Tuesday.

Democrats argue that the revenue bills are a targeted package, with the largest revenue increase coming from a digital ad tax that would be levied on the world’s largest technology companies. Republicans and small business advocates worry that tech giants would pass those costs down to mom-and-pop shops.

House Appropriations Chairwoman Maggie L. McIntosh (D-Baltimore City) said Hogan’s reprisal of retiree tax breaks is likely to meet the same fate it did last year, not moving forward in the General Assembly.

“We all want to honor our hometown heroes and we certainly want to honor people who are retired,” McIntosh said. But it would be “absolutely the wrong time” to move forward on retiree tax cuts, she said.

Economic analyses have shown retirees were able to weather the economic downturn with disposable incomes at a higher rate than other families, who lost work or income entirely.

“I think we have to focus like a laser to make sure that the people greatly impacted by the COVID-19 pandemic can have their lives restored, or at least get back onto the road to restoration,” McIntosh said.

Without knowing specifics, McIntosh said it sounded as though federal stimulus funding was doing much to help the state’s bottom line.

Hogan said his administration’s quick action to freeze state agency budgets and hiring, as well as budget cuts, helped to blunt the pandemic’s effect on the state budget.

Late Tuesday, Comptroller Peter V.R. Franchot (D) released a letter he wrote to Senate President Bill Ferguson (D-Baltimore City) and House Speaker Adrienne A. Jones (D-Baltimore County) saying that Hogan’s stimulus proposal “falls woefully short.”

Franchot wrote that Hogan has the power to immediately release state reserve funds for a more robust stimulus plan, but “since the governor has chosen to defer this responsibility to the Maryland General Assembly, we urge you ― our legislative branch of government ― to act, as Dr. Martin Luther King Jr. once said, ‘with the fierce urgency of now.’”

Hogan and the state’s fiscal leaders will continue the tradition of a morning briefing on the day of the budget’s release.

The House and Senate are meeting in pro forma sessions ― a pandemic-era procedure that allows bills to be introduced with a minimal number of lawmakers and staff in attendance ― on Wednesday morning.

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