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<<Previous Newsletter Next Newsletter>> February 22, 2010 Legislative Pensions In a previous update, I discussed the need for pension reform for Maryland legislators, highlighting the negative impact the status quo would have on state employees and public school teachers. The current legislative pension plan is significantly more generous than most state employees, so I have introduced HJ 11 and HJ 12, two joint resolutions that would scale back and reform the General Assembly pension plan. The resolutions I have proposed would treat legislators identical to other state employees in regard to our pension benefits, or better yet, move to a defined contribution plan (or a 401k plan, for example). These two resolutions have been assigned to the House Appropriations Committee, where I expect a hearing will be scheduled soon. Either resolution, if implemented, would save between $500,000 and $1 million annually. This is a modest amount of savings, of course, but I believe legislators should lead by example by scaling back our retirement plan. With a total of $32 billion in unfunded liabilities in state employee and teachers pensions and health benefit obligations, we are in a very severe condition. If we continue to put off these problems, their severity will only grow. Failure to act could result in dire consequences, not least of which is a downgrading of our AAA bond rating. My proposal to scale back our overly generous legislative pension plan would enable the elected officials to truly lead by example. I’m hopeful that this will be a bipartisan effort and that we do the right thing this year. Unemployment Insurance Unemployment insurance legislation is a major issue for Maryland’s struggling business community. Currently, Maryland’s jobless rate is 7.5%, the highest recorded rate in 26 years. Despite this, last year Governor O’Malley continued to push for expansion of unemployment benefits to part time workers, completely disregarding the growing burden his actions placed on the Unemployment Insurance Trust Fund. In fact, the unemployment benefit fund already has to borrow $250 million from the U.S. Department of Labor in order to keep making payments. This irresponsible borrowing has led to the tripling of unemployment insurance premiums at a time when businesses are already reducing workforces in order to make ends meet. The Governor intends to tap into $127 million in federal stimulus money in order to lower unemployment tax rates. However, many business groups insist that this legislation sacrifices long-term stability in order to produce short-term profit. These groups cite data from legislative analysts that indicates they will pay $20 million in annual unemployment benefits, quickly offsetting the infusion of stimulus money. HB 91 and SB 107 are the Governor’s two legislative proposals dealing with this issue. Both bills have gone through their first hearing in committee. I will keep you posted with further information in later updates. Budget Proposal Meeting Both the House Appropriations Committee and the Senate Budget and Taxation Committee have invited the entire membership of the Senate as well as House Republicans to a hearing on February 23rd to present proposals regarding Maryland’s continuing budget crisis. House Minority Leader Anthony O’Donnell and House Minority Whip Christopher Shank quickly accepted the challenge and will respond by tomorrow with specific recommendations to cut the budget. It should be an interesting meeting. When considering where and how to cut the operating and capital budgets, my view is that everything should be on the table – and that means everything! There should be no sacred cows. While it is easy to cut the budget in the abstract, it is much more difficult to offer specific cuts to popular programs. One thing I have certainly learned in my 8 years in Annapolis is that every program and spending priority has a dedicated constituency who will fight to the end to keep its spending intact and uninterrupted. In my newsletter next week, I will detail several of the budget cutbacks that I believe we need to make. I will also report on the results of the February 23rd meeting. Home Foreclosures The Governor testified along with Del. Elijah Cummings on Tuesday in favor of HB 472, a bill that would allow struggling homeowners to negotiate better mortgage terms before banks can foreclose on their houses. Governor O’Malley believes this bill puts Maryland homeowners on an equal level with their mortgage companies and is “designed to give borrowers the information they need at an early stage, as well as the right to have access to their lenders when they feel they are being denied a loan modification without reason.” This bill has four major components: First, it requires mortgage companies to provide the essential information indicating the intent to foreclose, timeline of foreclosure, and other possible methods of loan modification and loss mitigation. Second, the bill intends to limit the number of foreclosure cases in court by prohibiting servicers from filing for foreclosure against the borrower until that servicer can file an affidavit asserting that they have offered the borrower all possible loan modification and loss mitigation options before foreclosure. Third, this bill enforces the right of eligible borrowers to mediate before foreclosure takes place. Lastly, the bill mandates mortgage companies pay a $100 filing fee in the event of foreclosure in order to cover court costs. While I believe this bill can be beneficial in more efficiently mitigating mortgage terms and preventing foreclosure, it is important to maintain a balance between safeguarding consumers who have fallen on difficult economic circumstances, and maintaining a viable, flexible and profitable banking system and mortgage industry. That should be the goal. It is crucial that we prevent this bill from becoming a crutch that people utilize to ensure lower mortgage rates. Medicinal Marijuana The legalization of medicinal marijuana is a controversial issue for which many of us have strong views on both sides of the issue. Delegate Dan Morhaim has introduced HB 712, which would enable people with debilitating medical conditions, as recorded by a physician with whom the patient has an extensive treatment period, to obtain marijuana from dispensing centers registered with the Department of Health and Mental Hygiene. This bill would be an improvement on medicinal marijuana legislation passed in other states such as California by assuring that Maryland exerts strict control and oversight. The current Maryland law involving marijuana use for medicinal purposes was passed six years ago, and although it does not explicitly exempt medicinal marijuana users from criminal prosecution, it does permit people accused of possession of small amounts of the drug to claim “medical necessity” and, if the Judge agrees with this claim, they are given a fine not exceeding $100. The problem with the current implementation of this law is that it allows judges to be the ultimate arbiters of medical necessity instead of doctors. One beneficial aspect of this bill is the amount of security required in order for a patient to obtain the drug, as the legislation requires severe pain, nausea, or another severe condition that is resistant to traditional medication as well as an ongoing documentation of the condition from doctor-patient interaction. This would be a vast improvement compared with the legalization of medicinal marijuana in Los Angeles, which resulted in storefront dispensaries and on-site doctors and, subsequently, widespread circulation of marijuana. Also, this legislation would call for medicinal marijuana to be produced in registered centers in Maryland. This way, the state could regulate potency of the drug and thereby ensure that patients do not illegally purchase an altered form of the drug. Upcoming Legislation and Announcements Three bills for which I am the primary sponsor have received public committee hearings. First, HB 207, the “Castle Doctrine,” which would provide civil immunity from lawsuits to citizens who protect their homes and places of business, was heard in the Judiciary Committee on February 3rd and received a favorable vote from the House Judiciary Committee last week. The bill is needed because under a loophole in Maryland law, an armed intruder can sue for damages if the homeowner uses force to defend his property or place of business, and in so doing, injures the intruder. HB 310, which requires a special election in the event of a U.S. Senate vacancy in Maryland, was heard in the Ways and Means Committee on February 16. I don’t expect this bill to pass but holding a special election for U.S. Senate vacancies is the right thing to do, and furthers the democratic process. Currently, the Governor fills these vacancies, which has proved to be highly problematic in other states. Can anyone say Rod Blagojevich? HB 543, which prohibits persons convicted of 16 different felonies from receiving awards issued by the Criminal Injuries Compensation Board, was heard on February 16 in the Judiciary Committee. HB 543, which would require specified sex offenders to register with a local police officer if they are homeless or a temporary resident, will be heard in the Judiciary Committee on February 23. I will continue to provide updates on the progression of this legislation. Along with HJ 11 and HJ 12, the joint resolutions I previously discussed regarding pension reform, I have drafted three pieces of legislation which have yet to be scheduled for a hearing date. The first is HB 1243, which would provide workers compensation benefits for Baltimore County deputy sheriffs for permanent partial disability equal to benefits being offered by county police officers. Another bill I am sponsoring is HB 1359, which would end military pension payments to a spouse of a military officer in the event of absolute divorce or annulment following remarriage of the former spouse. This is a very important bill, and there are some real horror stories regarding abuses of military income. Lastly, I have drafted HB 1367, which would permanently revoke the driver’s license and automobile registration of a person convicted of three or more alcohol- or drug-related driving offenses. All of these bills are posted on the general assembly website (http://mlis.state.md.us), specifically under http://mlis.state.md.us/2010rs/sponsors/frank.htm. I always invite you to share your views on these and other issues where you have a particular interest. Please send an e-mail to William.Frank@house.state.md.us or call my office at 410-841-3793 and share your thoughts. Sincerely, Delegate Bill Frank
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Copyright 2010 * George Towle, Treasurer