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Maryland CASH passes suite of asset building/protection policies

Posted by rmckinney on 04/11/2012

Tags: EITC, prize-linked savings

Maryland CASH Campaign advocated for 5 key asset building and asset protection bills this session.

Making Work Pay

Maryland CASH supported a 5% increase in the state Earned Income Credit to offset regressive tax and fee increases. HB 331/SB 943 were both heard in their respective houses. The Senate included a 5% increase in the EITC, spread over 5 years, in their approved budget plan. The House budget did not include the EITC, but did not impact households making less than $100,000. By the last day of the session, the House and Senate could not pass a comprehensive budget and were forced to pass the “doomsday budget.” Since the 2 houses could not agree, the Governor will be calling a special session to stave off the impact of the $500 million of cuts, set to begin on July 1, 2012. Maryland CASH will monitor the special session to make sure that low-moderate income taxpayers are not negatively impacted.

Making Savings Fun

Maryland CASH passed a bill in 2010 to allow credit unions to offer savings promotions raffles, also called prize-linked savings. A last-minute amendment from the banking industry delayed implementation until banks could participate under Federal law. Maryland CASH passed HB 786/SB 1053 to broaden the program to banks and credit unions, while balancing the prohibitions on banks to offer raffles at the federal level. Maryland CASH worked closely with the banking industry to craft a bill that works for both banks and credit unions. The law goes into effect on June 1, 2012.

Protecting Credit and Homeownership

Maryland CASH pushed HB 555/SB 295 to allow parents/guardians to freeze a credit report for minors or other protected persons. This is the first law of its kind in the country. Currently, a credit reporting agency cannot freeze a report for a minor, since they do not knowingly create reports for minors under the age of 18. This bill helps to prevent identity theft and allows minors/protected persons to better manage their own credit.

HB 600/SB 580 prevents cancelled debt due to a mortgage foreclosure from being considered as taxable income. Since 2007, the federal government has exempted this debt from income, but this provision is set to expire on December 31, 2012. These bills will protect homeowners from state tax debt if Congress fails to act. Given the recent Attorney General settlement with mortgage lenders, there is great concern that homeowners may not access the benefits/programs available if they think it could be taxable.

Sustaining the Asset Building Field

Maryland CASH pushed HB 515/SB 476, which creates a new Financial Education and Capability Commission. This standing commission will include various state agencies, non-profits, and funders who will monitor financial education and asset building activities and make policy recommendations. This bill builds off of the work of the Financial Literacy Task Force, which ran from 2008-2010. In order to balance out a costly fiscal note, an amendment passed to have Maryland CASH staff the commission. Maryland CASH will be the first non-governmental agency to staff a legislative commission in the state’s history.

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