MARYLAND MATTERS: Peter Franchot: Why Hogan’s COVID Relief Proposal Isn’t Enough
FEB 2, 2021
Avid Maryland Matters readers — particularly my colleagues in the legislature — know that for several months I’ve advocated for a Maryland stimulus package that helps Marylanders, small businesses, and communities most impacted by the COVID-19 crisis.
For months, I’ve urged Gov. Larry Hogan to tap into the more than $1.5 billion in reserves in the state’s treasury — our $586 million surplus from Fiscal Year 2020 and the almost $1 billion in our Rainy Day Fund — to provide immediate cash assistance to low-income families and struggling small businesses who are barely keeping their heads above water.
Unfortunately, the RELIEF Act doesn’t go far enough to help those of us hardest hit by the pandemic. On the surface, given its hefty price tag of $1.1 billion, the governor’s proposal seems sufficient to meet the economic calamity that millions of Marylanders are facing.
But it is not. The devil, as they say, is in the details.
Let’s look at the governor’s direct stimulus proposal. The recipients of the stimulus payments would be those who qualify for the Earned Income Tax Credit (EITC). He proposes two separate payments: immediate payments to those who claimed the EITC in Tax Year 2019 and a separate payment to those who will qualify for an EITC in Tax Year 2020. For the Tax Year 2019 recipients, individuals receive $300 and families receive $500. For Tax Year 2020 recipients, individuals will receive $150 and families will receive $250.
Can anyone seriously argue these figures go far enough for Marylanders who have been unemployed or underemployed because of this pandemic, at no fault of their own?
What’s more, tax-paying immigrants without Social Security numbers — filers using Individual Taxpayer Identification Numbers (ITIN) — would not receive stimulus payments under Gov. Hogan’s proposal since ITIN filers are not eligible for EITC due to discriminatory federal rules. Last year, more than 86,000 ITIN filers filed state tax returns, paying more than $100 million in state and local taxes. Not even one of our hard-working neighbors would receive a penny under the governor’s proposal.
Next, let’s discuss the governor’s proposal to forgive four months’ worth of sales tax payments — not to exceed $12,000 — for small businesses. When considered at face value, that sounds like an impressive proposal that will help a lot of small businesses, right? Wrong.
During the second quarter of 2019, when our economy was roaring and unaffected by a global pandemic, 50% of Maryland Sales Tax accounts, totaling more than 36,000 businesses, averaged $122 per month in sales tax. The bottom 25%, or 18,212 businesses, only paid $27 per month in sales tax on average. So essentially, 50% of all small businesses in Maryland would get $500 or less under the governor’s Small Business Relief Package in this bill.
The governor’s relief package is a paper tiger that turns a blind eye to hundreds of thousands of deserving Maryland families in their time of need, returns pennies on the tax dollars they’ve paid to state government, and will hardly put a dent in the debt many families have accrued from trying to keep food on the table and a roof over their heads amid a pandemic.
Worse still, instead of using cash the state has on hand in order to deliver immediate relief, the governor is funding it via revenue losses that will impact the state’s ability to spend on other vital priorities like its schools and transportation systems.
It is public policy that lacks judgment and compassion.
To my colleagues in the legislature, we owe our constituents more.
The Senate, under President Bill Ferguson’s leadership, has put forward a series of amendments to strengthen the governor’s proposal. I applaud them for their work in filling the gaps.
But we must do more to help the most vulnerable among us who are suffering.
I’ve proposed $2,000 survival checks to low-income families and $250 million in direct grants to small businesses that have been impacted the most by COVID-related closures.
Under my proposal, individuals making $50,000 or less with at least one child and joint filers making $100,000 or less with at least one child would be eligible for a $2,000 survival check. Nearly 463,000 Maryland families, including ALL eligible EITC claimants and ITIN filers, would receive payments. Nearly 42,000 more families would be covered under my proposal.
In addition, our restaurants and bars, retailers, and other hospitality businesses would receive $250 million in direct grants, without unnecessary and burdensome red tape that stands in the way of small businesses’ ability to keep employees on the payroll, pay their rent and utility bills, and prevent them from shutting their doors for good.
At the end of the day, this isn’t about me, or the governor, or the legislature. Those of us in elected office still have our jobs and our paychecks. The communities we answer to are the ones whose well-being is at stake. And I believe a once-in-a-lifetime threat to their well-being deserves more than a meager solution.
We’re the richest state in the richest country in the world and we’re fortunate enough to have ample reserves to help those suffering the most. I strongly urge the General Assembly to enact an assistance package that is bold, adequate, and inclusive to meet the monumental challenge that our residents, small businesses, and communities face.
— PETER FRANCHOT