Going to bat for one of his first major legislative priorities, Gov. Wes Moore told a state House committee Thursday that his bill to reduce taxes for retired veterans would help keep working veterans in Maryland when other surrounding states already offer better benefits.
“They’re building their lives here in the state of Maryland and we cannot continue to lose them to other states,” said the Democratic governor, testifying in support of one of four of his bills heard by the committee. “As I’ve said before, I refuse to let this state be a farm team for other states.”
The Keep Our Heroes Home Act would exempt up to $40,000 of military retirement income from state taxes. Current law allows the same individuals who are age 55 or older to exempt up to $15,000, and those who are younger to exempt $5,000.
With several veterans sitting behind him in the audience, Moore’s appearance before lawmakers marked the first time in more than eight years that a governor publicly lobbied in the General Assembly for the passage of his policies. Former Republican Gov. Larry Hogan never accepted Democratic legislative leaders’ invitations to testify in support of his bills during his eight years in office — a break from his predecessors of both parties.
House Ways and Means Committee Chair Vanessa Atterbeary, a Howard County Democrat, opened the meeting by saying Moore’s appearance indicated his willingness to work with the General Assembly.
“It means a lot because, quite frankly, those of us that have been here didn’t realize that governors came down to testify,” said Atterbeary, eliciting laughs from Moore and members of the committee.
Moore, the first veteran elected governor in Maryland in 36 years, had not held elected office or worked in state government before becoming governor just over four weeks ago, though he was no stranger to testifying before lawmakers. Earlier appearances in Annapolis included testifying on behalf of the state’s long-term education plan, the Blueprint for Maryland’s Future.
His testimony Thursday followed events and public statements over the last month that indicated the veterans bill is one of his priorities for his first legislative session.
The $63 billion budget he proposed last month would dedicate $33 million for the expanded tax cuts. A fiscal analysis shows it would cost nearly $31 million in its first year and roughly $50 million annually afterward.
Moore told reporters after his testimony that he believes the bill would pay for itself in the long run.
“Part of the revenue stream is going to be from the individuals and the families who end up staying,” Moore said. “How many tax dollars are we losing when you have a person who puts in 20 years of military service or 25 years of military service and then they’re on the next thing, leaving to Virginia or Pennsylvania or another state?”
During his testimony, he noted those neighboring states in particular among 36 that exempt military retirement income from state taxes.
While the governor’s bills are expected to garner support in the Democratic-controlled House and Senate, they could be amended moving forward.
Senate President Bill Ferguson, a Baltimore Democrat, said Tuesday that he was positive the military retirement bill would pass, but it may need to be “more narrow” to focus specifically on military retirees who continue to earn taxable income. He said it also will need to be considered in the context of other retirees who already earn “enhanced benefits for retirement income,” such as first responders.
“If we expand it further, we just don’t have the resources to sustain it,” Ferguson said.
Three other Moore bills also had their first public hearings in the House committee. If passed, they would expand the state’s Child Tax Credit, increase access to broadband and establish a pilot program to fund advancements in various technology fields.
Five other bills he’s proposed — from expediting an increase in the minimum wage to implementing a year of service option for high school graduates — will be considered by legislators in the coming weeks.
The expanded tax credit for families with children is aimed at addressing Moore’s signature pledge to end childhood poverty in Maryland.
Lt. Gov. Aruna Miller, testifying before a committee she once served on as a delegate from Montgomery County, said the administration’s proposed Family Prosperity Act would be “one of the most impactful ways in which to address child poverty.”
The bill would permanently extend the Earned Income Tax Credit that was expanded during the pandemic for low-income Marylanders. It also would expand a $500 Child Tax Credit for each child under age 6 in families who make $15,000 or less. It currently applies only to those who make $6,000 or less. The governor’s proposed budget calls for $171 million to support both measures.
Miller said only 87 families claimed the Child Tax Credit last year. Under the proposed bill, 40,000 families would be eligible.
The administration’s push to expand broadband, meanwhile, would allow companies to collect reimbursements for sales taxes they pay when they buy broadband network equipment. It also would alleviate a federal tax burden for broadband-related grants, said Brad Fallon, a deputy legislative officer in the governor’s office.
The upcoming state budget would provide $10 million for the sales tax rebate program, allowing companies to collect up to $2 million on a first-come, first-served basis, Fallon said.
Proponents of the bill who testified Thursday included Kelly Schulz, a former secretary of the Commerce and Labor departments under Hogan. She sought the Republican nomination for governor last year, but lost in the primary.
Schulz, now CEO of the Maryland Tech Council, said her group represents 700 companies with a combined 150,000 employees.
“Affordable and reliable high-speed internet has become a necessity, as you’ve heard, of modern life, and unfortunately there remains too many underserved locations, populations around the state that lack this type of access,” Schulz said. “Closing this digital divide not only makes Maryland more equitable, but it also helps to grow our digital economy.”
Another $10 million in Moore’s proposed budget would be dedicated to his other bill in committee Thursday, one that would establish a pilot program to fund technology infrastructure. Private companies, local governments, colleges and universities would be allowed to apply for funding to build out laboratories, manufacturing centers or other kinds of “research-related spaces,” according to the proposed Innovation Economy Infrastructure Act.
Moore is expected to testify in the coming weeks before additional committees on other legislation he’s proposed.
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