Partisan Gerrymandering Upheld by U.S. Supreme Court

On June 27, 2019, the Supreme Court decided Rucho v. Common Cause, a highly-anticipated case stemming from legal challenges to the purported partisan gerrymandering of congressional districts in Maryland and North Carolina. 

In a 5-4 ruling, the Court held that partisan gerrymandering claims present political questions beyond the reach of the federal courts. Consequently, gerrymandering can only be addressed or resolved through action from Congress or individual states, and the drawing of highly partisan legislative districts, which have increasingly raised political ire in recent years, can no longer be challenged in the courts solely on political grounds.

Gerrymandering is the practice of drawing electoral district boundaries in a way that gives one party a distinct advantage over its rivals. Gerrymandering is by no means a new phenomenon – its roots trace back to the first US congressional elections.  In recent years, however, both political parties have taken advantage of control over various state legislatures to craft electoral maps strengthening their opportunity for political success in future years.  In the Rucho case, the districts at issue were the most recently-drawn congressional boundaries in the states of North Carolina and Maryland.  In North Carolina, litigants challenged the legitimacy of Republican-drawn districts that disadvantaged Democrat prospects in federal elections.  Similarly, in Maryland, litigants objected to the imbalance of congressional lines drawn by state Democrats to the disadvantage of Republicans.

Despite the balanced posture of the case, the Court’s majority leaned on precedent and the inherently political question before it when crafting its opinion. According to the majority, there is longstanding precedent recognizing the power of state legislatures to draw electoral districts – an inherently political task.  As such, in his majority opinion, Chief Justice Roberts argued that partisanship is allowed to play a role in the drawing of congressional districts – indeed this was the Founders’ intent.  In turn, the Court asserted that any attempt by courts to interject themselves into the process of weighing levels of partisanship in gerrymandering cases would inherently mean judges would be arbitrarily deciding how much partisanship is too much rather than resolving such disputes based upon clear, manageable and politically-neutral standards and limited and precise rationales. 

The rulings of the lower courts in North Carolina and Maryland, grounded in rubrics that the Court viewed as non-justiciable, were thus vacated.  It is noteworthy that the majority distinguished partisan gerrymandering from gerrymandering that involves population inequality or racial discrimination – both of which the Court has previously ruled as unconstitutional.  Ultimately, any partisan gerrymandering disputes can only be resolved politically through state legislation, state constitutional amendments, or Congress.

While the Court’s opinion expressed frustration over the excessive partisanship driving redistricting in the current political environment, the majority found that the judiciary is simply not the proper governmental branch to find solutions to the political issue of partisan gerrymandering.  Moving forward, Rucho puts the ball firmly in the courts of the people’s elected legislators to address the question of partisan gerrymandering.  Some states — Florida, Michigan, and Colorado, e.g. –  have passed amendments to their state constitutions limiting the practice. Others like Delaware and Iowa have passed laws through their state legislatures prohibiting favoritism in redistricting. Congress also now has the opportunity to address the issue through legislative means. 

Dentons will continue to monitor these efforts moving forward and provide insight on how such efforts will impact future elections at the federal, state and local levels around the country.  

Sine Die in Maryland: policy, political highlights from this year’s legislative session

The following deep dive comes by way of Dentons 50 partner firm Mannis Canning & Associates.

The 2019 General Assembly Session came to a close at midnight on April 8. This session was the first of a new four year term with a total of 60 legislators out of 188 beginning their role as a new senator or delegate and with several changes in committee chairmanships. The session was also an emotional one as Senate President Thomas V. Mike Miller, Jr. announced he had prostate cancer at the start and House Speaker Michael E. Busch passed away the day prior to Sine Die.

A total of 2,481 pieces of legislation were introduced – 1,051 originating in the Senate1,430 originating in the House, 16 Joint Resolutions, and two simple resolutions.  Of this number, the General Assembly passed 864 pieces of legislation and 2 resolutions.

Legislators focused on balancing the fiscal year 2019 budget, increasing the minimum wage, expanding opportunity zones, laying the ground work for increased funding for K-12 education, banning the use of polystyrene, and moderating the costs of prescription drugs to name a few.

Becoming more of a trend with a Republican Governor and Democratic majority in the General Assembly, a number of bills were passed and presented to the Governor at the end of March/early April to provide sufficient time for the General Assembly to override any potential vetoes. Of the bills presented, the Governor vetoed four bills on March 27 and one bill on April 4, all of which were overridden by the General Assembly. Legislation referred to as the “Federal Shutdown Paycheck Protection Act” had broad support and was passed and signed by the Governor the end of March.

With the early presentment of bills, one bill signing was held prior to the end of session on March 26. The traditional bill signing, which is held the day after session, was canceled this year to appropriately honor Speaker Busch and other bill signings were scheduled following his services. Bill signings have been scheduled for April 18, April 30, and May 13.

Below is a summary of some of the major issues that passed the 2019 General Assembly Session. A more detailed overview of significant legislation that passed and failed can be found in the Department of Legislative Services 90 Day Report.

Fiscal Year 2020 Budget

The fiscal year 2020 budget as enacted by the General Assembly (House Bill 100) totals $46.6 billion, a 4% increase from fiscal year 2019. The general fund budget, the portion supported by tax related revenues such as the income tax, sales tax, and state lottery, accounts for 41.6% of the total budget or $17.9 billion. The general fund budget is subject to volatility as its revenue sources are directly affected by the economy. The term structural deficit or shortfall often refers to the gap between general fund expenditures and general fund revenues.  Significant revenue over attainment mostly eliminated any cash and structural shortfalls for fiscal 2020, but projections for fiscal 2021 indicate a structural deficit returning of more than $1.4 billion.

Following submission of the Governor’s budget, revenues were revised downward by the Board of Revenue Estimates resulting in a larger than expected shortfall. To keep the budget in balance, the Governor introduced a supplemental budget to make some adjustments and House Bill 1407 – the Budget Reconciliation and Financing Act of 2019 was introduced to address the revenue shortfall and fund certain budget priorities.

The budget as enacted by the General Assembly leaves a $118.2 million general fund balance and a structural surplus of $26 million at the end of fiscal year 2020. $1.1 billion is preserved in the State’s Rainy Day fund and state spending was constrained in preparation for fiscal 2021.  State support for public schools is a record $7 billion and total state aid for primary and secondary education will increase by an estimated $435.2 million. The budget dedicates at least $255 million to support the fiscal 2020 recommendations of the Commission on Innovation and Excellence in Education (Kirwan Commission) and funding for school construction, both operating and capital, is $500 million. To achieve these funding levels, the General Assembly repurposed $182.2 million in general funds and $101 million in special funds to provide $104.8 million for Kirwan, $127 million for school construction in the operating budget, and $25 million for housing programs originally funded with taxable bonds in the capital budget. The budget also directs the Governor to process a budget amendment to provide an additional $150.3 million to implement recommendations of the Kirwan Commission.  Additional funding for Kirwan may be provided by Senate Bill 728/House Bill 1301 which requires a marketplace facilitator and a market place seller to collect and remit the State sales tax. Revenues in excess of $100 million are to be distributed to “The Blueprint for Maryland’s Future Fund” created through the Kirwan legislation.

Other budget priorities include Medicaid funding to provide coverage to 1.4 million residents, an additional $80 million targeted at substance use disorder treatment, and funding to moderate tuition increases at Maryland’s public four-year colleges and universities.

Additional information on the fiscal year 2020 budget as enacted by the General Assembly can be found in the Budget and State Aid section of the Department of Legislative Services (DLS) 90 Day Report.

Income and Sales Tax Legislation

Opportunity Zone Enhancement Program

The Federal Tax Cuts and Jobs Act of 2017 established the Qualified Opportunity Zones Program to incentivize private investment in distressed communities. These zones are specified areas designated as a federal opportunity zone under Section 1400Z-1 of the Internal Revenue Code. Senate Bill 581 establishes the Opportunity Zone Enhancement Program which provides qualifying businesses within an opportunity zone enhanced incentives under the following tax credit programs: (1) job creation; (2) One Maryland; (3) enterprise zone; (4) biotechnology investment incentive; (5) cybersecurity investment incentive; and (6) More Jobs for Marylanders.

The bill also extends the More Jobs for Marylanders program by two years and expands the program’s geographic and business eligibility criteria. Additionally, the bill extends the geographic eligibility for a number of other State economic development/tax credit and financing programs available for priority funding areas and/or sustainable communities to include opportunity zones in Allegany, Garrett, Somerset, and Wicomico counties.

Remote Sales Tax Collection

Senate Bill 728/House Bill 1301 requires an online marketplace facilitator and a marketplace seller to collect and remit the State sales and use tax under specified circumstances. The need for this legislation results from the South Dakota v. Wayfair, Inc. decision where the U.S. Supreme Court upheld a South Dakota law requiring remote sellers with sales over $100,000 or with more than 200 different transactions to residents in the state to collect the state’s sales tax. Effective October 1, 2018, regulations promulgated by the Comptroller require a similar threshold for the collection of sales tax by out-of-state vendors who sell tangible personal property or taxable services for delivery in Maryland. However, the regulations did not address the collection of sales tax by online marketplace facilitators that host third-party marketplace sellers.

In addition to requiring the collection and remittance of the State sales tax, the bill establishes tax collection and licensing requirements for marketplace facilitators and marketplace sellers. The first $100.0 million in sales taxes collected from marketplace facilitators and certain out-of-state vendors is to be distributed to the General Fund.  Any revenue in excess of $100.0 million from these sales taxes is required to be distributed to The Blueprint for Maryland’s Future Fund to fund K-12 education.

Business and Labor

Alcohol and Tobacco Commission

Legislation that passed in 2018 established the Task Force to Study State Alcohol Regulation, Enforcement, Safety, and Public Health. The task force was required to examine whether the Comptroller’s Office, the Office that currently regulates the alcoholic beverage industry and enforces the laws, is the most appropriate agency to carry out these activities or if another entity should perform this function. In its final report, the task force recommended establishing a new separate agency in charge of regulating and enforcing alcohol, tobacco, and motor fuel laws in the State.

House Bill 1052 (Ch. 12) implements this recommendation and establishes the Alcohol and Tobacco Commission (ATC). The commission is granted various powers and duties, including (1) educating the public on topics related to using and consuming tobacco products and alcoholic beverages; (2) ensuring that all alcoholic beverages sold in the State with an alcohol content exceeding 4.5% by volume bear a large and conspicuous label stating the percentage of alcohol content; (3) conducting certain studies; and (4) developing best practices for various topics related to alcoholic beverages regulation. The Act also transfers the Field Enforcement Division and the personnel of the division from the Comptroller’s Office to the commission. House Bill 1052 was presented to and vetoed by the Governor in late March.  The General Assembly overrode the veto and the bill became Chapter 12 of the Acts of 2019.

Minimum Wage

One of Democratic Leadership’s legislative priorities, Senate Bill 280/House Bill 166 (Chs. 10 and 11) increase the State minimum wage rate to $15.00 per hour. For employers with 15 or more employees, this will occur in six increments until the full phase-in is reached on January 1, 2025. For employers with 14 or fewer employees, the wage rate reaches full phase-in after eight increments on July 1, 2026. The Board of Public Works (BPW), however, may temporarily suspend one scheduled increase in the State minimum wage for one year between October 1, 2020, and October 1, 2024, if it determines that the seasonally adjusted total employment is negative as compared with the previous six-month period. If total adjusted employment is negative, BPW may also consider the recent performance of State revenues in making its determination.

Senate Bill 280/House Bill 166 were presented to and vetoed by the Governor in late March.  The General Assembly overrode the veto and the bills became Chapter 10 and 11 of the Acts of 2019.

Education

The Blueprint for Maryland’s Future (Commission on Innovation and Excellence in Education – Kirwan Commission)

Senate Bill 1030 extends the term of the Kirwan Commission and establishes The Blueprint for Maryland’s Future as a policy to transform Maryland’s education system and align it with the recommendations in the commission’s January 2019 interim report. The fiscal 2020 budget provides funding for multiple programs and entities established under The Blueprint for Maryland’s Future: (1) $75.0 million for teacher salary incentive grants; (2) $65.5 million for the education of students with disabilities; (3) $54.6 million for concentration of poverty school grants; (4) $31.7 million to expand full-day prekindergarten for four-year-olds; (5) $23.0 million to provide transitional supplemental instruction grants; (6) $2.5 million for teacher collaborative grants; (7) $2.0 million to fund a full-time mental health services coordinator for each local school system; (8) $689,137 for an Office of Inspector General for Education; (9) $500,000 to expand MSDE’s direct certification IT system to include Medicaid data; and (10) $250,000 for outreach and training on The Blueprint for Maryland’s Future.

While provisions in the fiscal 2020 State operating budget, and in the Budget Reconciliation and Financing Act, House Bill 1407 (Ch. 16), restrict and direct funds to cover the $251.6 million increase in State aid (as well as other provisions), funding of these fiscal 2020 enhancements is at the discretion of the Governor. In total, approximately $255.0 million is made available through separate legislation to implement The Blueprint for Maryland’s Future in fiscal 2020, contingent on enactment of Senate Bill 1030. Section 47 of the fiscal 2020 budget bill restricts $100.8 million in Education Trust Fund (ETF) lockbox funds to specific purposes. It also expresses legislative intent that the Governor process a budget amendment to appropriate $134.5 million in special funds set aside in fiscal 2019 to implement the Commission’s recommendations.

Public School Calendar

On August 31, 2016, the Governor issued Executive Order 01.01.2016.09 (later amended by Executive Order 01.01.2016.13) requiring the local boards of education to open schools following the Labor Day holiday and conclude the school year by June 15, beginning in the 2017-2018 school year. During the 2018 session, legislation was introduced and passed to authorize a local board of education to extend the school year for up to five school days beyond June 15 without approval from the State Board of Education. Senate Bill 128, the Community Control of School Calendars Act, repeals the 2018 legislation and instead requires each local board of education to set start and end dates each year for public schools in the county. This again provides flexibility to the local boards of education to determine the start and end dates for the school year no longer complying with the Executive Order. Senate Bill 128 was presented to and vetoed by the Governor in late March.  The General Assembly overrode the veto prior to the end of session and the bill became Chapter 13 Acts of 2019.

Environment and Natural Resources

Polystyrene Ban

Expanded polystyrene foam is often used in food product packaging. Senate Bill 285/House Bill 109 prohibit (1) a person from selling or offering for sale in the State an “expanded polystyrene food service product” and (2) a “food service business,” which includes specified businesses, institutional cafeterias, or schools from selling or providing food or beverages in an expanded polystyrene food service product. To ease the financial burden placed on business entities, MDE may grant to a food service business or school a waiver from the bills’ prohibition for up to one year if MDE determines that compliance would present an undue hardship or a practical difficulty that is not generally applicable to other food service businesses or schools in similar circumstances.

Maryland is the first state to impose a statewide ban on these products.

Renewable Energy

Senate Bill 516 increases the Renewable Energy Portfolio Standard (RPS) from 25% by 2020 to 50% by 2030. Effective October 1, 2019, the bill reestablishes the expired Tier 2 of the RPS as an additional requirement to include electricity from large hydroelectric sources for two years, in 2019 and 2020. New offshore wind capacity is required beginning with at least 400 megawatts in 2026, increasing to at least a cumulative 800 megawatts in 2028, and to at least a cumulative 1,200 megawatts in 2030, along with goals and reporting requirements for minority business enterprise and minority workforce participation. The carve-out for solar increases to 5.5% in 2019, with further annual increases until the solar carve-out reaches 14.5% in 2028. Electric cooperatives are exempt from any solar carve-out increase beyond 2.5%. To control ratepayer impacts, the bill reduces Tier 1 Alternative Compliance Payments (ACP) beginning in 2019; by 2029, solar and nonsolar Tier 1 ACPs reach parity. ACP revenue remains dedicated to supporting new renewable energy sources in the State, but under the bill, those new renewable energy sources also must be owned by or must directly benefit low-income residents.

Oyster Sanctuaries

House Bill 298 establishes in statute a network of five oyster sanctuaries (in Harris Creek, the Little Choptank River, the Tred Avon River, the St. Mary’s River, and the Manokin River) and prohibits catching oysters in or removing oyster seed from the five sanctuaries or those established in regulation by the Department of Natural Resources (DNR). The bill also establishes requirements and deadlines relating to restoration plans for the five identified sanctuaries.

House Bill 298 was presented to and vetoed by the Governor in early April. The General Assembly overrode the veto prior to the end of session and the bill became Chapter 17 Acts of 2019.

Health

Prescription Drug Transparency and Affordability

House Bill 768 establishes a Prescription Drug Affordability Board to address issues of transparency and affordability.  The board must conduct a study on the entire pharmaceutical distribution and payment system and policy options being used in other states and countries. The board must also collect publicly available information and data and enter into memoranda of understanding with other states to collect data in order to identify prescription drug products that may cause affordability issues. The board may conduct a cost review of each identified drug product. If the board determines that it is in the best interest of Maryland to implement a process for setting upper payment limits on prescription drug products, the board must draft a plan of action to implement the process and submit the plan to the Legislative Policy Committee (LPC) for approval. If LPC does not approve the plan within 45 days, the board must submit the plan to the Governor and the Attorney General for their approval. The board may not set upper payment limits before getting approval of the plan.

Opioid Treatment Services

House Bill 116 establishes programs for opioid use disorder screening, evaluation, and treatment (specifically medication-assisted treatment) in local correctional facilities and in the Baltimore Pre-trial Complex. The program begins in four counties and phases in to include all counties and the Baltimore Pre-trial Complex by January 2023. The State must fund the programs of opioid use disorder screening, examination, and treatment of inmates, and the bill establishes requirements for screening and treatment. By November 1, 2020, and annually thereafter, GOCCP must report specified data to the General Assembly from local correctional facilities.

Everything that passed (and didn’t) this year in Maryland’s General Assembly

The following legislative speed read comes by way of Dentons50 partner Manis, Canning–editorThe 2018 General Assembly Session came to a close at midnight on April 9. A total of 3,127 pieces of legislation were introduced – 1,269 originating in the Senate, 1,832 originating in the House, and 26 Joint Resolutions.  Of this number, the General Assembly passed 890 pieces of legislation.

Legislators focused on a number of important matters ranging from balancing the fiscal year 2019 budget, the impacts of federal tax reform, funding for K-12 education and school safety, expanding medical cannabis licenses, prescription drug pricing, and initiatives to prevent gun violence to name a few.

Again this session, a number of bills were passed and presented to the Governor at the end of March to provide sufficient time for the General Assembly to override any potential vetoes. Of the bills presented, the Governor vetoed two billswhich were overridden by the General Assembly, let several take effect without his signature, and signed others. Legislation referred to as the “Rape Survivor Family Protection Act” had broad support and was passed and signed by the Governor in mid-February.

With the early presentment of bills, two bill signings were held prior to the end of session on February 13 and April 5. The traditional bill signing was held the day after session ended on April 10.  Three additional bill signings will be held.

Below is a summary of some of the major issues and final outcomes from the 2018 General Assembly Session. A more detailed overview of significant legislation that passed or failed can be found in the Department of Legislative Services 90 Day Report.

Fiscal Year 2019 Budget

The fiscal year 2019 budget as enacted by the General Assembly (Senate Bill 185) totals $44.6 billion, a 2.3% increase from fiscal year 2018. The general fund budget, the portion supported by tax related revenues such as the income tax, sales tax, and state lottery, accounts for 40.1% of the total budget or $17.9 billion. The general fund budget is subject to volatility as its revenue sources are directly affected by the economy. The term structural deficit or shortfall often refers to the gap between general fund expenditures and general fund revenues.  Prior to the beginning of the 2018 session, a general fund shortfall of $298 million was projected.  Senate Bill 187 – the Budget Reconciliation and Financing Act of 2018 accompanied the budget to address the structural deficit and fund certain budget priorities.

Federal tax changes enacted at the end of December 2017 resulted in additional general fund revenue of almost $550 million. However, legislation passed to credit $200 million of this additional income tax revenue to a special fund to be used in the future to implement recommendations of the Commission on Innovation and Excellence in Education (Kirwan Commission) and additional legislation passed to provide limited tax relief to those who would be affected by the recent federal tax law changes.

The budget as enacted by the General Assembly leaves a $106.9 million general fund balance at the end of fiscal year 2019 and preserves $882.5 million in the State’s Rainy Day fund. State support for public education and libraries is approximately $6.6 billion and total state aid for primary and secondary education will increase by approximately $170.6 million. In addition to the $200 million being set aside to implement future recommendations of the Kirwan Commission, the General Assembly restricted $11.4 million to implement preliminary recommendations of the Commission and provided a total of $40.6 million in operating and capital funds to improve safety and security in Maryland’s public schools. Other legislative funding initiatives included providing an additional $33.6 million in aid for local governments, and $57.4 million for providers of health care services to vulnerable populations.  Additional information on the fiscal year 2019 budget as enacted by the General Assembly can be found in the Budget and State Aid section of the Department of Legislative Services (DLS) 90 Day Report.

Individual and Corporate Income tax

State Income Tax Modifications Resulting From Federal Tax Changes

As mentioned above, legislation passed to provide limited tax relief to those who would be affected by the recent federal tax law changes. Senate Bill 318/House Bill 570 will increase the standard deduction for State income tax purposes beginning in tax year 2018 and then index the standard deduction based on the annual change in the cost of living beginning in tax year 2019.  Senate Bill 184/House Bill 365, both bills passed, clarify the number of personal exemptions a taxpayer can deduct for State income tax purposes.

Single Sales Factor Apportionment

After being proposed a few years ago by a Commission examining Maryland’s business climate and tax structure, Senate Bill 1090/House Bill 1794 passed to phase-in a single e sales factor formula to be used to calculate  a corporation’s corporate income tax. This will be phased-in over a five-year time frame beginning in tax year 2018. By tax year 2022, all corporations, with limited exceptions, must allocate to the State the part of the corporation’s Maryland modified income derived from or attributed to being carried on in the State using an apportionment formula in which Maryland modified income is multiplied by 100% of the sales factor.  Under current law, unless engaged primarily in manufacturing activities, corporations must use a three factor formula that incorporates property, payroll, and a double-weighted sales factor.

Firearms/Gun Violence

Recent mass shootings at schools and concert venues, and gun violence against oneself or others, led to the introduction and passage of the several bills below to prohibit access to rapid fire trigger activators (bump stocks) and limit access to firearms under certain circumstances.

Bump Stocks

Senate Bill 707/House Bill 888 prohibits a person (1) from transporting a device defined as a “rapid fire trigger activator” into the State or (2) manufacturing, possessing, selling, offering to sell, transferring, purchasing, or receiving a rapid fire trigger activator. A bump stock device was used in the mass shooting in Las Vegas where a gunman opened fire into a crowd during a concert.

Domestic Violence – Transfer/Surrender of Firearm

House Bill 1646 establishes a process by which an individual convicted or who pleads guilty of a crime involving domestic violence must transfer his or her firearms to law enforcement or a federally licensed firearms dealer. The bill requires the State’s Attorney to provide notice relating to prohibitions on possession of a firearm to a defendant, defendant’s counsel, and the court if the defendant is charged with a disqualifying crime and the facts support a finding that the crime was domestically related. On conviction or a plea of guilty, a court must order the defendant to transfer, either personally or through a representative, all regulated firearms, rifles, and shotguns as specified in the bill. The transfer must occur within two business days after conviction and written proof of the transfer is to be provided to the individual or representative. The court is authorized to issue a search warrant if there is probable cause to believe the individual did not surrender all firearms, rifles, or shotguns.

Extreme Risk Protective Order

House Bill 1302 establishes a process by which certain medical professionals, law enforcement, and family or household members may seek an interim, temporary, or final court order to prevent a respondent from possessing or purchasing a firearm or ammunition for a limited time frame if the respondent is found to be in danger of causing personal injury to himself or others.   A petition for an extreme risk protective order can be filed with the District Court, or a District Court Commissioner if the Court is closed. The bill also establishes a process for the surrender of the firearms and ammunition and a process for the return.        

Business and Regulatory Issues

Breweries and Alcohol Regulation

In response to legislation that passed during the 2017 session (Ch. 813, Acts of 2017) making changes to laws regulating Class 5 breweries, several bills were introduced to either expand or limit the privileges of breweries in the state. Ch. 813, which applies to small craft breweries and a Guinness brewery that recently opened in Baltimore County, (1) increased the number of barrels a brewery may sell for on-premises consumption; (2) authorized a brewery to contract to brew and bottle beer with and on behalf of other classes of breweries; and (3) changed the hours of operation for sales and serving privileges of an on-site consumption permit.

Legislation introduced this session, all of which failed, would have modified these changes. House Bill 1052 would have partially repealed the bill from last year to just apply to the Guinness brewery. House Bill 518, the Reform on Tap Act of 2018, the product of a workgroup led by the State Comptroller, would have significantly expanded the production limits, onsite sale and sampling, and distribution for any type of brewery. Other bills, Senate Bill 839/House Bill 1015 would have removed limits on the number barrels for a brewery that obtained a limited wholesaler’s license; and several other bills (Senate Bill 1044/House Bill 1176Senate Bill 1017/House Bill 1148Senate Bill 609, and Senate Bill 406) would have expanded Class 5 brewery privileges related to the onsite sampling and sale of beer.

However, legislation did passHouse Bill 1316, to establish a 21-member Task Force to Study State Alcohol Regulation. The Task Force, whose report with findings and recommendations is due to the General Assembly by December 1, 2018, is charged with examining whether the Comptroller’s Office is the most appropriate agency to ensure the safety and welfare of Maryland residents, or whether those tasks should be assigned to another State agency or to one created specifically to carry out those tasks.

Internet Privacy and Net Neutrality

In response to Congress approving and the President signing a resolution nullifying Federal Communications Commission rules on internet privacy and net neutrality, House Bill 1654 was introduced to establish requirements at the State level.  This bill, which did not pass, would have established privacy requirements for (1) the use, disclosure, sale, or provision of consumer data; (2) the protection of consumer data; and (3) enforcement provisions by the Consumer Protection Division in the Office of the Attorney General. The bill also would have prohibited the use of state funds to procure services from an ISP that engaged in certain activities.

Medical Cannabis Licensing

Following the failure of legislation during the 2017 General Assembly session and increasing support from the Legislative Black Caucus, legislation was again introduced this session to enhance diversity in the medical cannabis industry.  House Bill 2, which passed, (1) requires outreach to encourage industry participation by small, minority, and women owned businesses; (2) the promulgation of regulations based on a recent disparity study; (3) raises the cap on the number of licensed growers up to 22, subject to certain reductions; (4) requires the issuance of licenses to two growers that were initially ranked, but not awarded; (5) establishes a cap of up to 28 processors, subject to certain reductions; (6) establishes a compassionate care fund to provide free or discounted medical cannabis to individuals enrolled in Medicaid or the Veterans Administration Health Care System; and (7) makes changes to the membership of the Natalie M. LaPrade Medical Cannabis Commission.

Paid Sick and Safe Leave

During the 2017 session, the General Assembly passed, House Bill 1, Maryland Healthy Working Families Act, to require an employer with 15 or more employees to have a sick and safe leave policy under which an employee earns at least 1 hour of paid sick and safe leave, at the same rate as the employee normally earns, for every 30 hours an employee works. An employer with 14 or fewer employees must have a sick and safe leave policy that provides an employee with at least unpaid sick and safe leave based on the same conditions. The Governor vetoed this bill and the General Assembly overrode the veto during the 2018 session. The bill became law in February 2018.

To assist small businesses with providing paid sick and safe leave as specified in the bill, the General Assembly passed Senate Bill 134 to provide a refundable credit against the State income tax for a small business that employs 14 or fewer employees.  The tax credit applies to an employee who earns 250% or less of the annual federal poverty guidelines for a single person household.

Drug Cost Review Commission

Legislation to address concerns with the cost of prescription drugs was introduced again this session. As introduced, Senate Bill 1023/House Bill 1194 would have (1) established a Commission to review prescription drug costs and value with the goal of setting price controls for the drug supply system; (2) mandated a 30-day advance price notification of wholesale acquisition cost (WAC) for branded, generic sole, source off-patent drugs in certain circumstances; and (3) required the disclosure of pricing information.  As amended by the House, the bill established a Drug Cost Commission to determine how to make prescription drugs more affordable after reviewing, evaluating, and assessing the pharmaceutical distribution and payment system, among other requirements.  Although the bill was heard and voted favorable in the Senate Finance Committee on the last day of the session, the bill was not reported out of Committee and failed on Sine Die.

Health Insurance

Affordable Care Act and Market Stabilization

In response to concerns that the repeal of the federal mandate for health coverage under the Affordable Care Act (ACA) would cause premium rates to increase significantly, result in healthier individuals discontinuing benefits, and jeopardize the viability of the individual market, several bills were introduced and passed to stabilize the market. This was a bi-partisan effort and all bills have already been signed into law by the Governor.

Senate Bill 1267/House Bill 1795 (Chs. 7 and 6, Acts of 2018) requires the Maryland Health Benefit Exchange, in consultation with the Insurance Commissioner, to submit a State Innovation Waiver application for a Federal Section 1332 waiver to establish a program for reinsurance and seek federal pass-through funding. The program authorized under this bill must provide reinsurance to carriers that offer individual health benefit plans and meet the requirements of the waiver. The program must also mitigate the effects of high-risk individuals on the rates in the individual market.

Senate Bill 387/House Bill 1782 (Chs. 38 and 37, Acts of 2018), a companion bill, identifies revenue streams to fund the reinsurance program authorized under SB1267/HB1795, upon receipt of the 1332 waiver. This bill establishes a 2.75% state health insurance provider fee assessment on health insurers, including nonprofit health service plans, health maintenance organizations, managed care organizations, and others  for calendar year 2019. This fee is in place of the fee that would have been assessed under the ACA, but was temporarily suspended for that year due to federal action. This bill also establishes limitations for association health plans, as well as short term limited duration insurance.

More specifics on each of these bills can be found by clicking on links above or in the Health and Human Services section of the DLS 90 Day Report.

Education

A broad range of legislation passed affecting funding levels for K-12 education and education policy.  An overview of all education policy and funding initiatives, including State Aid to Public Schools, Nonpublic Schools, and school construction, is summarized in the Education Section of DLS 90 Day Report.  A summary of several education policy and funding initiatives that passed are listed below.

Constitutional Amendment to Supplement State Funding for Education

Senate Bill 1122 proposes a constitutional amendment to be placed on the ballot for the 2018 general election to require after a four-year phase-in period, 100% of the gaming revenues dedicated to public education be used as supplemental funding.  If approved, general fund expenditures for education will increase by $125 million in fiscal 2020 and increase to $522 million in fiscal 2023.

Commission on Innovation and Excellence in Education (Kirwan Commission)

House Bill 1415 extends the deadline of the Commission and implements and mandates funding for several preliminary policy recommendations.  Policy initiatives include: (1) a comprehensive teacher recruitment and outreach program; (2) the Maryland Early Literacy Initiative; (3) the Learning in Extended Academic Programs (LEAP) grant program; (4) Public School Opportunities Enhancement Program; (5) the Teaching Fellows for Maryland scholarship program; and (6) the Career and Technology Education (CTE) Innovation grant program.

21st Century School Facilities Commission

House Bill 1783, as introduced, made several comprehensive changes to the school construction process as proposed by the 21st Century School Facilities Commission.  As amended and passed by the General Assembly, among other changes, the bill expands the membership and changes the name of the Interagency Commission (Committee) on School Construction (IAC) and transfers the authority to grant final approval for school construction projects from the Board of Public Works (composed of the Governor, Comptroller, and Treasurer) to the IAC.  This transfer of authority led the Governor to veto the bill, but the General Assembly overrode the veto during the 2018 session and the bill became law.

Healthy School Facility Fund

In response to a lack of heat and closures of Baltimore City schools due to extremely cold weather, Senate Bill 611 was introduced to establish the Healthy School Facility Fund within the IAC to provide grants for facility improvements. Priority for awarding is given to schools based on the severity of issues including air conditioning, heating, mold remediation, temperature regulation, plumbing, and windows. The Governor is required to appropriate $30 million to the fund in fiscal 2020 and 2021 and no jurisdiction may receive more than $15 million in a fiscal year.

Maryland Safe to Learn Act of 2018

Following recent school shootings in Maryland and other parts of the country, several pieces of legislation were introduced that took a comprehensive approach to ensuring Maryland’s schools are safe. These bills ranged from requiring threat assessment teams and school resource officers (SRO) located at all schools, to enhancing the security of school buildings and providing school safety drills. All of these bills were consolidated into one piece of legislation, Senate Bill 1265 – Maryland Safe to Learn Act of 2018. This bill, among other requirements  (1) establishes a School Safety Subcabinet; (2) requires the Maryland Center for School Safety to develop training, gather data, and review and comment on school safety plans; (3) requires school safety evaluations of all  public schools; (4) requires school resource officers to complete a specialized training; and (5) requires local school systems, working with local law enforcement, to identify which public schools have an SRO and for those schools without, the adequate law enforcement coverage that is provided to the school. This requirement applies to high schools for the 2018-2019 school year and to all public schools for the 2019-2020 school year. A total of $40.6 million is being provided in the fiscal 2019 budget to provide grants to local school systems and law enforcement agencies. Of this amount, $2.5 million will be used to staff the Maryland Center for School Safety. Beginning in fiscal 2020, the bill mandates $10 million in annual grants to assist with providing SRO/ law enforcement coverage.

A more detailed overview of the legislation listed above and other legislation that passed or failed during the 2018 General Assembly session can be found in the Department of Legislative Services 90 Day Report.