ANNAPOLIS – Legislation tying job creation to welfare reform drew praise Wednesday from both business leaders and advocates for the poor during a hearing in the House of Delegates.
A bill called the “Work, Not Welfare, Tax Incentive Act” provides incentives to hire welfare recipients by authorizing two new state income tax credits.
“The message we’re trying to send is that we want Maryland businesses to help welfare recipients go to work,” said Del. James C. Rosapepe, D-Prince George’s. Rosapepe is the bill’s sponsor and vice chairmain of the House Ways and Means Committee, where the legislation was heard.
Rosapepe’s bill gives businesses a credit against individual and corporate income taxes for wages paid to people they take off the welfare rolls. Tax credits would also be given for child care expenses provided or paid for the new employees.
“We think this legislation is an excellent idea,” said Gene L. Burner, executive vice president of the Maryland Chamber of Commerce, which represents 1,600 business statewide. “We believe the central ingredient to welfare reform is job creation.”
The amount of the tax credits would vary over the three-year life of the program:
– Up to $1,800 per employee during the first year.
– A maximum of $1,200 in the second year.
– Up to $600 in the third year.
The child care credit would decline from maximums of $600 to $500 to $400 per employee over the three years.
The act would cost the state $1.3 million the first year, but would increase revenue by $19.8 million the second year, $40.9 million the third, according to an analysis by the Department of Fiscal Services.
If all 31,725 potentially eligible individuals are hired and removed from Aid to Families with Dependent Children rolls, the annual savings to the state would be $71 million, the analysis said.
“This is not an enormous job creation bill, but on the margins, there’s going to be some jobs created,” Burner told legislators. “We don’t believe this is a panacea. We encourage you to coordinate this with other reform bills.”
Rosapepe said his bill, which creates jobs, “goes together like a hand and glove” with a welfare reform bill sponsored by Del. Howard P. Rawlings, D-Baltimore.
Rawling’s bill has been criticized because it mandates job training programs for welfare recipients but doesn’t guarantee future jobs.
J. Kevin Appleby, associate director of the Maryland Catholic Conference, told lawmakers at the hearing, “Welfare reform without job creation is a futile exercise.”
Appleby said he was enthusiastic about the tax incentive bill but concerned about the quality of the jobs that would be created.
“It’s important that the jobs pay a living wage, otherwise the attractiveness to a job or welfare is about the same,” Appleby said.
He noted that a minimum wage job can pay less in a year than some families collect through food stamps, Medicaid and cash benefits.
Most businesses will probably hire people for entry level jobs at around $12,000 a year, said Paul A. Tiburzi, a lawyer who represents the Coalition for Job Opportunities – about 50 businesses that support the bill.
“The concept is – a job is better than welfare,” Tiburzi said. “Any job is a job.”
Rosapepe maintained that even if businesses hire at minimum wage, it would be the first step up the ladder to self- sufficiency for welfare recipients. -30-