April 8, 2014 Dear Friends, Thank you for your emails, letters and phone calls during the 2014 Legislative Session. We tackled a variety of issues this year and while I am satisfied with most of the legislative bills we passed, I do have some disappointments that I will discuss on the next page. On the brighter side, there were many positive legislative actions during the session. Some of the positive actions included the bills outlined below. I co-sponsored and voted YES on each of these bills. HB 295 – Maryland Minimum Wage Act of 2014 HB 297 – PreKindergarten Expansion Act of 2014 HB 1265 -Fairness for All Marylanders Act of 2014 HB 73 – Civil Actions – Personal Injury or Death Caused by a Dog – Rebuttable Presumption We were able to help low income workers by passing HB 295 – Maryland Minimum Wage Act of 2014. The current rate is $7.25 per hour. The new rate will be $8.00 on January 1, 2015, increases to $8.25 on July 1, 2015, to $8.75 on July 1, 2016, to $9.25 on July 1, 2017 and finally to $10.10 on July 1, 2018. Current law allows a three month training wage of $4.25. The bill allows a six month training wage equal to 85% of the minimum wage. The bill also provides a 3.5% increase for the community providers each year for the next four fiscal years. HB 297 – PreKindergarten Expansion Act of 2014 begins to fund pre-K education for all of Maryland’s children. The $4.3 million approved in the FY 15 budget will provide grants for 1,600 students in a half-day program. Hopefully, we can greatly increase the grants in future budgets. After several years, we passed HB 1265 -Fairness for All Marylanders Act of 2014. HB 1265 simply prohibits discrimination based on gender identity in employment, housing, credit, restaurants and stores. The bill will ensure equal civil rights protections for transgender persons. This bill has been the law in Montgomery County since 2007. HB 1265 is a major step toward equality for all under the law. We were finally able to reach a compromise on “dog bite” legislation. HB 73 – Civil Actions – Personal Injury or Death Caused by a Dog – Rebuttable Presumption makes each owner strictly liable for his/her dog if the dog is running at large. The bill removes landlord liability and removes breed-specific standards. Continuing my work as Chairman of the Alcoholic Beverages Subcommittee, I was fortunate to successfully pass several “alcoholic beverages” bills where I was the Chief Sponsor. They include the following bills: HB 4 – Vaportinis and Similar Device – Prohibited HB 208 – Refillable Containers – Permits and Labels HB 356 – Class 8 Farm Breweries – Festival Licenses HB 359 – Maximum Alcohol Content Of these bills, I am most proud of HB 359 which bans the sale of grain alcohol that is 190 proof or above. 190 proof is 95% alcohol. Grain alcohol has become a growing problem on college campuses. I am glad that Maryland is joining many of our surrounding states by passing this ban. I was also the Chief Sponsor of HB 202 – Clean Energy Loan Programs – Private Lenders – Collection of Loan Payments and HB 679 – Insurance – Title Insurers – Title Insurance Commitment and Binders. Both of these bills were successful and await the Governor’s signature. Now for the negatives. My greatest disappointment is with the Governor taking monies out of promised pension funding. The General Assembly, unfortunately, agreed. In 2011 the Governor and the General Assembly agreed to provide an additional $300 million in pension funding in order to move to full actuarial funding. At the same time employees agreed to match the $300 million in additional funding by raising their contribution rate from 5% to 7% ($200 million) and reducing their benefits ($100 million). During the 2013 session, worried about potential federal cuts due to sequestration, the State withheld $100 million in pension funding to cover these potential cuts. The federal cuts did not happen but the Governor used the money to balance the current budget (FY 2014). When the Governor submitted the FY 2015 budget he recommended providing only $200 million in additional pension funding each year, not $300 million. His plan made it permanent. We broke the promise we made to our employees. To make matters worse, in early March the State was faced with a $238 million writedown in revenues. The Senate and the House decided to make most of this up by taking an additional $200 million out of pension funding. So for the current budget (FY 2014) and for the proposed budget (FY 2015), the State will only provide an additional $100 million in pension funding each year, not the promised $300 million. To the chagrin of House Leadership, I proposed two amendments on the House floor when we discussed the Budget (SB 170) and the Budget Reconciliation and Financing Act (SB 172). Both amendments were to SB 172. The first amendment would have reduced the employee pension contribution from 7% to 5% giving employees the same $200 million reduction that the State is taking out of the pensions. The second amendment would have required the State to return to the planned $300 million in funding in FY 2016 instead of the “phase in” getting us there in FY 2019. Unfortunately, both amendments failed. The final approved budget plan takes $200 million out of pension funding this year and next year. While this plan saves money now, over the next ten years we will need to add an additional $1 billion to our pension funding. We will need even more to obtain full funding by 2039. I am sorry my explanation is so long on pension funding but I truly believe you need to hear the full story from my perspective. While I voted yes on the Budget (SB 170), I could not in good conscience vote yes on SB 172 which is where the money was stolen from the pension funding. My second disappointment for the session was that the House took no action on HB 968 – Earned Sick and Safe Leave Act. HB 968 would have required an employer with at least nine employees to provide one hour sick leave for every thirty hours worked. The maximum that could be earned during the year was capped at seven days. If the employer provided any type of paid leave already that would be counted as meeting the requirement. I thought this was a reasonable bill and hopefully it will be brought back next session. My final disappointment for the session was the recoupling of the estate tax credit to the federal tax credit. Maryland currently exempts $1 million from the estate tax. Under HB 739 – Maryland Estate Tax – Unified Credit this exemption will increase from $1.5 million in calendar year 2015 to $5 million in 2019. While there is no loss of revenue in next year’s budget, by 2019 this credit will cost Maryland over $105 million annually in lost revenues. Since we are taking monies out of pension funding I do not believe this is the time to pass HB 739. I voted NO on HB 739. I hope you appreciate my take on the positives and negatives of the legislative session. Again, many thanks for communicating with my office this year. I look forward to serving you again during the next term. Please keep in touch. Sincerely yours, Charles E. Barkley CB/rw