Agenda Item 5A
March 19,2013
Introduction
MEMORANDUM
March 15,2013
TO:
FROM:
SUBJECT:
County Council
Robert H. Drummer, Senior Legislative Attorney
M
Introduction:
Expedited Bill 8-13, Working Families Income Supplement­
Amount
Expedited Bill 8-13, Working Families Income Supplement Amount, sponsored by
Councilmembers Reimer, Eirich, and Leventhal, is scheduled to be introduced on March 19. A
public hearing will be scheduled at a later date.
Background
The County Working Families Income Supplement (WFIS) is derived from the Federal
earned income tax credit (EITC). The EITC is a refundable tax credit for lower income working
families and individuals. To qualify for the EITC in Tax Year 2013, a taxpayer must earn less
than:
$46,227 ($51,567 married filing jointly) with three or more qualifying children
$43,038 ($48.378 married filing jointly) with two qualifying children
$37,870 ($43,210 married filing jointly) with one qualifying child
$14,340 ($19,680 married filing jointly) with no qualifying children
The Tax Year 2013 maximum credit is:
• $6,044 with three or more qualifying children
• $5,372 with two qualifying children
• $3,250 with one qualifying child
• $487 with no qualifying children
Twenty-two states (including Maryland), the District of Columbia, New York City, and
Montgomery County offer their residents a WFIS based upon the EITC. Maryland permits
residents to claim a credit of one-half of the Federal EITC. In 2000, the County began matching
100% of the Maryland credit to help working County residents meet the high costs of living in
Montgomery County. In May 2010, the Council enacted Expedited Bill 33-10, which permitted
the Council to set the WFIS at less than 100% of the Maryland credit by resolution each year.
Accordingly, the Council set the WFIS at 72.5% for FY2011, 68.9% for FY2012, and 75.5% for
FY2013.
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Expedited Bill 8-13 would increase the WFIS to 80% of the Maryland credit beginning in
FY2014, 90% in FY2015, and 100% in FY2016 and beyond. The Bill would also permit the
Council, upon request of the Executive, to approve a lower amount in the annual operating
budget by a vote of at least 6 Councilmembers. This limited waiver provision would apply
during the transition years and after the WFIS reaches 100% of the Maryland credit in FY2016.
A
memorandum from Councilmember Hans Riemer describing the purpose of the Bill and
outlining some of the occupations of County residents who are likely to qualify for the WFIS is
at©4.
This packet contains:
Expedited Bill 8-13
Legislative Request Report
Councilmember Riemer Memo dated January 31
Circle
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F:\LA W,BILLS\1308 Working Families Income Supplementllntro Memo.Doc
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Expedited Bill No.
8-13
Concerning: Working Families Income
Supplement - Amount
Revised: March 13, 2013 Draft No. _2_
Introduced:
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Expires:
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Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: -!..!N.=.:on'-!.::e=--_ _ _ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Councilmembers Reimer, EIrich, and Leventhal
AN EXPEOrrEO ACT
to:
(1)
(2)
amend the amount paid to recipients under the Working Families Income Supplement
Program; and
generally amend the Working Families Income Supplement Program.
By amending
Montgomery County Code
Chapter 20, Finance
Article XIV, Working Families Income Supplement
Section 20-79
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law
by
original
bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill
The County Council for Montgomery County, Maryland approves the following Act:
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EXPEDITED BILL
No. 8-13
1
Sec.
1.
Section 20-79 is amended as follows:
20-79. Amount of Supplement.
2
3
4
5
ill
Subject to subsection
{Q1
[The] the amount of the Working Families
Income Supplement paid to each recipient must equal the amount of
any refund the recipient receives from the State earned income credit
program [[or another amount approved in the annual operating budget
or a Council resolution]].
~
6
7
8
(hl
At the request of the Executive, the Council may approve
lower
9
10
amount in the annual operating budget
by
an affirmative vote of at
least six Councilmembers.
Sec. 2.
Transition.
Notwithstanding Section 20-79( a), as amended in
11
12
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14
15
Section 1, the amount of the Working Families Income Supplement paid to each
recipient:
(a)
must equal 80% of any refund the recipient receives from the State
earned income credit program in Fiscal Year 2014; and
(b)
must equal 90% of any refund the recipient receives from the State
earned income credit program in Fiscal Year 2015.
Sec. 3. Expedited Effective Date.
The Council declares that this legislation is necessary for the immediate
protection of the public interest. This Act takes effect on July 1,2013.
Approved:
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19
20
21
Nancy Navarro, President, County Council
Date
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LEGISLArlVE REQUEST REPORT
Expedited Bill 8-13
Working Families Income Supplement
-
Amount
DESCRIPTION:
Expedited Bill 6-13 would increase the WFIS to 80% of the
Maryland credit beginning in FY 2014, 90% in FY 2015, and 100%
in FY2016 and beyond. The Bill would permit the Council, at the
request of the Executive, to approve a lower amount in the annual
operating budget by a vote of at least 6 Councilmembers.
Due to the economic recession, the County reduced the WFIS to less
than 100% of the Maryland credit. The high cost of living in the
County has made
it
difficult for lower income working families and
individuals to meet expenses.
To mandate in law that the WFIS must be 100% of the Maryland
credit.
HHS, OMB, Finance
To be requested.
To be requested.
To be requested.
To be researched.
Robert H. Drummer, 240-777-7895
Not applicable.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENAL TIES:
None.
f:\law\bills\ 1308 working families income supplement\legislative request rep
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Memorandum
Date:
To:
From:
Re:
January 31, 2013
Council Colleagues
Councilmember Hans Riemer
Legislation to restore the Working Families Income Supplement
I am writing to ask for your co-sponsorship of the attached bill, which would restore the county's
Working Families Income Supplement (WFIS) to 100% of the level of the state's Earned Income
Credit.
The impact of this bill is to provide badly needed income for our county's poorest residents,
money that may be used to buy groceries or make a rent payment or repair a car.
The county's WFIS is derived from the federal Earned Income Tax Credit (EITC). Started in 1975,
the EITC allows households earning income to apply tax credits to their returns. The credits are
available to those with earned income ranging from $13,980 (for single people with no children)
to $50,270 (for married couples with three or more children). The maximum federal credit is
$5,891.
The State of Maryland allows residents to claim half the federal credit on their state income tax
returns. In 2000, Montgomery County began matching the state's credit to help working people
meet the high costs of living here. But in 2010, the recession forced the county to reduce its tax
credit at the very moment that working residents needed it the most. At the County Executive's
request, the council passed Bill 33-10, which abolished the requirement in county law that the
county match the state's credit dollar for dollar.
In FY11, the county cut its credit to 72.5% of the state's level. In the following year, the county
cut its credit to 68.9% of the state's level. At the same time, the number of households who
received the credit rose from less than 20,000 to more than 30,000.
In last year's recommended budget, the County Executive proposed to keep the county's tax
credit at 68.9% of the state's credit, the same record-low level as last year. The council raised
the county's match to 75.5%. But there is no assurance that the credit will ever return to the
100% match that the county was able to sustain for ten years. This bill will provide that
assurance.
Recipients of the WFIS include some of the lowest-paid residents of the county. Following is a
sample of occupations in the Bethesda-Rockville-Frederick metro area with annual wage payments
that might qualify for the WFIS.
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Occupation
Fast Food Cooks
Dishwashers
Cashiers
Child care Workers
Retail Salespersons
Janitors
Construction Laborers
Office CLerks
Source: U.S. Bureau
0/
Labor Statistics.
Annual Wages. 2011
19,600
19,700
22,320
22,890
25,680
26,640
28,360
$31,190
WFIS recipients aLso reflect the county's diversity:
%of County Households
with Less than $50.000 income
43%
19
27
11
Demographic
White (Non-Hispanic)
Hispanic
BLack
Asian
%of County HousehoLds
57%
12
17
13
Source: U.S. Census Bureau, American Community Survey, 2011.
Due to our exceptionally high cost of living, these workers are barely able to make it in our
county. The Maryland Community Action Partnership estimates that a singLe adult with a
pre-schooLer needs $64,060 to be economically self-sufficient in Montgomery County.
1
What does the county's tax credit mean for working families? In FY11, the county had 33,840
WFIS recipients who received· an average amount of $381.81 each. A restoration of the county
match to 100% would put an extra $124 into the pocket of each recipient, for a total of $505.81.
For workers on the edge, that could mean making a car payment or paying an overdue utility bill,
meeting rent or a car payment. Or consider that, as we participate in Councilmember Ervin's
SNAP challenge, it would provide $5 per day for 101 days.
The attached bill would raise the county's WFIS match to 80% in FY14, 90% in FY15 and 100% in
FY16 and thereafter. Last year's committee staff packet estimated that each percentage point
increase would cost the county $187,500. Based on that estimate, I expect the county to pay an
additionaL $843,750 in FY14, $2.7 million in FY15 and $4.6 million in FY16 and thereafter. Now
that the worst of our fiscal crisis is hopefuLLy behind us, I believe that these are manageable
expenditures for us as weLL as critical income to our county's working class.
I appreciate your consideration of this legislation and ask for your support and co-sponsorship.
The SelfSUfficiency Standardfor Maryland, 2012.
Diana F. Pearce, University of Washington School of
Social Work. Prepared for the Maryland Community Action Partnership, 2012.
J