Minimum wage increases, gun control, abortion rights and recreational marijuana will be headline issues for the 2023 session of the Maryland General Assembly. During the 90-day session, lawmakers will also focus on a number of other areas of direct importance to commercial real estate, including building electrification, transportation, green energy, real estate taxes and water quality.
A major restructuring of Senate committees, a paradigm shift of spending authority from the Governor to the General Assembly and election year turnover will help define the agenda and bring new policymakers to important positions.
Power shifts and new people
November’s election results unified the Governor’s office, Comptroller and General Assembly under Democratic leadership, increased the party’s supermajority status in the Senate and maintained it in the House. As a result of the 2022 election, there were 38 new members of the House of Delegates and nine new Senators when the General Assembly reconvened on January 11th.
In December, Senate President Bill Ferguson announced a major restructuring of committee chairs that will move utility, energy and climate legislation into the same committee, making it easier for lawmakers to consider the interrelated nature of climate, energy and utility policy proposals. Senator Paul Pinsky – chair of the Education, Health and Environmental Affairs Committee, and principal architect of the Climate Solutions Now Act of 2022 – left the Senate to lead the Maryland Energy Administration. The Senate President then appointed Senator Brian Feldman of Montgomery County to chair a repurposed Committee on Education, Energy and Environment. In addition to climate related legislation, the restructured committee will now handle energy and utility policy which previously had been the responsibility of the Finance Committee.
Decarbonizing Maryland
The new Senate committee and the House Environment and Transportation and Economic Matters committees will be venues where efforts to close the gap between current and future greenhouse gas emissions are decided. In 2022, the General Assembly set the most aggressive near-term goals for greenhouse gas reductions of any state in the country – a 60% reduction by 2031 compared to 2006 levels. Computer modeling of the most aggressive implementation plans – which included 100 percent clean electricity, retrofitting 50 percent of building shells by 2030, blending biofuels into natural gas and using carbon capture at cement plants – would still fall 13.3 million metric tons per year short of the 2031 targets. Proposals drafted or under consideration include:
- Adopting the California standards for trucks and heavy-duty vehicles
- Accelerated installation of electric vehicle charging infrastructure in commercial and multi-family buildings
- Revisions to EmPower Maryland and other utility-run energy efficiency programs to emphasize carbon emissions reductions
- Expanding locations eligible for rooftop and utility-scale solar development and making the community solar program permanent
- Limitations on expansion of natural gas infrastructure
- Achieving 100% renewable energy generation by 2035
- Reviving the Red Line to provide East-West transit service in Baltimore
- A low carbon standard for motor fuels
- A zero emissions standard for residential heating and hot water appliances
Preserving the bay and land
Another key environmental issue that is likely to be discussed during the assembly is the health of the Chesapeake Bay. Maryland is projected to meet its statewide pollution reduction commitments for 2025. However, there is concern that the gains come primarily from wastewater treatment plant upgrades. The Maryland General Assembly is expected to consider a range
of measures to address agriculture and urban stormwater, including stricter regulations on pollutants and greater investment in programs that help restore the health of the bay.
A long-overdue report ordered by the General Assembly on the Maryland Forest Conservation Act was finally released in November of 2022, setting the stage for revisions to how forest on development
sites are regulated.
One of the most prominent bills to fall short in 2022, the Maryland the Beautiful Act, will be back in 2023. The bill would establish a state-wide land conservation plan implementing a requirement that 40 percent of land in the state be Maryland acres covered by conservation easements by 2040. One of the goals of the bill is to discourage diverting open space money to the general fund by dedicating a portion of the state’s real estate transfer tax to create a fund for land preservation. The fund would be used to purchase and protect priority conservation areas, such as forests, wetlands and farmlands, as well as to provide financial assistance to local governments and non-profit organizations working to preserve open spaces.
Budget and taxes
Budget deliberations will be significantly different now that the General Assembly has sweeping new power to make changes to the Governor’s budget. Until a ballot question was approved by voters in 2020, the state Constitution allowed the General Assembly only to reduce the spending in the Governor’s budget. 2023 is the first session that the General Assembly can increase, decrease or add items to the Governor’s proposed budget. Although, the final budget must be balanced and spend an amount equal to or less than the Governor’s proposed budget.
The new authority coincides with a historic budget surplus and rainy-day fund balance. The budget position remains strong under the baseline economic assumptions, but the state’s recession budget scenario forecasts cash reserves could fall below minimum targets by 2026.
The assembly is expected to take up issues related to tax equity and fairness. One such proposal that is a priority for the Mayor of Baltimore is authority for the city to set different real estate tax rates for different types or classes of property.
The Maryland General Assembly will be in session until midnight on April 10, 2023.