Several Key Bills in Limbo Awaiting Governor’s Final Action

Now that the Governor’s bill signings are behind us, there are still four pieces of  legislation that have yet to be resolved. These bills were not signed during the final wave of bill signings this week, and have not yet been vetoed by the Governor. Two such bills pertain to funding levels provided in the state budget. One bill, SB 183, would require the Governor to provide additional education funding to 13 jurisdiction in future years through the Geographic Cost of Education Index (GCEI). The Governor announced yesterday that he would let this bill become law automatically without his signature.

The other budget related bill is HB 72, the Budget Reconciliation and Financing Act (BRFA), which makes changes to numerous funding requirements to balance the state spending plan for FY 2016. The other two bills with county effect are HB 552, a bill that could increase health insurance costs for small businesses and small governments that self-insure; and SB 190, a bill that would require online travel companies to pay Maryland state sales taxes on hotel rooms booked online based on the retail rate of the room.

The Governor has until May 21 to determine whether he plans to formally veto these bills or let them take effect without his signature. Should the Governor veto any of this legislation, the General Assembly may override the Governor’s veto at the next regular or special session with a vote of three-fifths of the members of each house.  As mentioned above, the Governor announced yesterday that he would let SB 183 take effect without his signature. Continue to follow Conduit Street for the final outcome of the other pieces of legislation.

Each piece of legislation is further described below.

Geographic Cost of Education Index (GCEI)

SB 183 Education – Geographic Cost of Education – Requirement changes the GCEI formula from discretionary to mandatory, if full funding of GCEI is not provided for in the fiscal 2016 operating budget. GCEI is state aid provided to counties with higher costs of education. The bill takes effect July 1, 2015. The funding was previously discretionary and Governor Hogan’s proposed budget funded GCEI at 50%. SB 183 and the General Assembly budget plan funds GCEI at 100% ($136.2 million) in fiscal 2016. Most of the funding from GCEI is directed towards Baltimore City, Montgomery and Prince George’s counties. Read MACo’s letter requesting full funding for the GCEI formula here. The Governor announced yesterday that he would not fully fund GCEI in fiscal 2016 and that he would let SB 183 take effect without his signature.

Budget Reconciliation and Financing Act of 2015 (BRFA)

HB 72  Budget Reconciliation and Financing Act of 2015 (BRFA), accompanies the budget bill (HB 70) and makes numerous changes to statutory funding formulas and requirements to bring the budget into balance for fiscal 2016.  The funding formula changes to provide additional dollars for health departments, community colleges, local impact grants, disparity grants, and other programs are included in this bill.  HB 72 also includes language to repeal the corridor funding method for the State pension system and provides for a $75 million supplemental payment to the State pension system to address the unfunded liability instead of the formerly required $150 million.

Medical Stop-loss Insurance

HB 552 Health Insurance – Medical Stop-Loss Insurance – Small Employers, makes several changes to laws regulating the medical self-insurance market. In part, the bill increases the minimum attachment point for medical stop-loss insurance policies, creating potential cost increases for small businesses and small local governments who self-insure. MACo opposed the bill’s restriction of local options for county governments providing health insurance for their own employees. For more background, read our article, MACo, MML Request Veto of Bill Restricting Medical Insurance Market.

Imposition of Sales Tax on Hotel Rooms

SB 190 Sales and Use Tax – Taxable Price Accommodations, would require online travel companies to remit the state sales tax based on the retail price of a hotel room, not the wholesale rate the online travel companies pays to a hotel. MACo offered amendments to include local hotel taxes in the scope of the bill, but was unsuccessful. Now, some advocacy groups are urging a veto. Grover G. Norquist, President, Americans for Tax Reform, has sent a letter urging Governor Hogan to veto this legislation. For more background, read our article, Equitable Hotel Tax Passes, May A Veto Loom?

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