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My Eastern Shore: Franchot: Tax relief will help citizens, businesses

EASTON — On Maryland’s traditional tax day, Comptroller Peter Franchot reminded citizens they have a 90-day, interest-free tax holiday during the coronavirus pandemic that has slammed the economy.

But Franchot also reiterated the controversial advice he gave Marylanders on March 31: Take a bill-paying holiday, as well.

“I have advised people, and I think correctly, to communicate with their creditors and ask them for forbearance in the next 90 days and try to negotiate something that keeps tax reserves for their own use, for their own family or for their own small business,” Franchot said in an exclusive interview with sThe Star Democrat on Wednesday, April 15.

“It’s appealing to me because it’s immediate, it’s speedy, it’s — along with the tax holiday, a payment holiday. It’s $7 to $8 billion in the pockets of folks that are suffering a lot of economic fear and damage right now,” he said.

“I’m not saying the federal relief programs and state relief programs are not good, but they’re very difficult to implement, and it’s a long time generally between applying for federal or state to grant money (and receiving it). This is money that is right now in their accounts. I’m just suggesting they negotiate with their creditors to keep as much of it in their own accounts as possible.”

“I think it all makes sense, and the key here is we need speed, and we need immediacy, and we need to make sure that folks who don’t have a lot of self-confidence (ask) for forbearance,” Franchot stressed. “Very successful people, very rich people do it all the time completely separate from (this) kind of health crisis and economic crisis. They all the time negotiate with their creditors and often get forgiveness and leniency of whatever glitches they’re facing.”

Franchot said he’s “seen nationwide studies that show 91% of all creditors will give a favorable response if you simply ask them.”

“So I’m just suggesting our ordinary people in the state and our small business employ the same methodology,” Franchot said. He said citizens should consider at least some leniency: “Maybe not the whole 90 days, maybe it’s only 60 days, maybe it’s a drop in the interest rate.”

“The state is a priority of me but not the top priority,” Franchot said. “The public budgets are liquid enough, and we can muddle through on that. The employees, etc., are somewhat protected. It is everybody else in the state, and we’re looking at something that could last ... well, it took us years to dig out of the great depression of 2008-2009. This conceivably could take longer.”

“The state’s Rainy Day Fund has $1.2 billion. There are also a considerable number of other accounts scattered throughout the state budget that give me confidence that we have liquidity even if we’re a little bit slow in bringing in some of the tax receipts because of the unemployment rates, and the fact that we’re in such a volatile, tumultuous time that is stressful for people on the health front, but also there’s tremendous anxiety on the fiscal side,” Franchot said.

Franchot is concerned about the state “being $3 billion, or $2.8 billion, under in our revenues in a very short period of time at the end of this fiscal year (on June 30),” he said. “I mean the headline in today’s Washington Post, not that that is definitive, is something to the effect of the IMF describing the global downturn as the 1930s depression.”

“But first, second and third priority are the citizens of the state and the businesses of the state, (and) the budget of the state of Maryland,” he said. “Local jurisdictions are dealing with their budgets; I’m not saying they’re a secondary concern, but they’re less of a concern to me than small businesses and families.”

“Look, I’ve repeatedly said I completely support Gov. (Larry) Hogan in his aggressive health restrictions. I think that’s just obviously a no-brainer that you have to do that,” Franchot said. “Now people are saying, ‘How do we exit the shutdown of the state’s economy?”

“The real question everyone has is, ‘When can we get back to normal, please?’ And I think that’s going to be a long and difficult challenge ... We’re going to have a long road to recovery,” he said.

“(The governor) kidded with me the other day, saying, ‘Did you really have to tell everybody that the state is broke?’ I didn’t do that. We have enough money, but I don’t want to sugarcoat things.

“This is a significant situation and people sitting around kitchen table with their sharp pencils ... on the Shore or anywhere in the state of Maryland,” he said. “We need to be very aware that this is a game-changer as far as the way we have conducted our normal economic activity. And that’s all — I don’t mean to be doom and gloom. I’m kind of optimistic thinking long term. But the storm is coming off the ocean and it’s on land, and we’re seeing the impact of it.”

“So not to be the alarmist, but it’s better to be safe than sorry, and prepared,” he said. “What is the phrase? Prepare for the worst and hope for the best.”

“We have a lot of work to do to as far as reconstructing the state’s economy,” Franchot said. “And in the reconstruction, there’s a lot of opportunity for creating a different image for the state of Maryland as far as entrepreneurship, innovation, welcoming small businesses, trying to put more money not less money into people’s pockets.

“You know the whole drill that Maryland is seen as a high-tax state that’s not particularly friendly to seniors? We can change things as we reconstruct the state’s economy,” he said.

“Even if I weren’t running for higher office, those are issues we need to talk about, and they revolve around some of the business-as-usual approaches that we’ve taken over the years in Maryland,” said Franchot, who has declared his candidacy for governor.

“I think this is an opportunity to change the image of the state and make us much more competitive with our neighboring states, but also to make us a go-to state for millennials and seniors around the country to come and visit and hopefully stay, where they can raise their families in a state that’s got a different reputation, as far as fiscal moderation, than we are right now.

“So there’s lots of room for improvement down the road and experimenting with ideas about how to position the state once we come out of this. But right now, we’re dealing with the unemployment, the drop in revenues, the bad news as opposed to the exciting new things that can happen in Maryland down the road,” Franchot said.

https://www.myeasternshoremd.com/emergency_notice/franchot-tax-relief-will-help-citizens-businesses/article_87e079e7-fc91-5b31-ae6f-122b8f83e76a.html


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