Issue Position: Compact with Maryland Veterans

Issue Position

Through nearly 30 years of military service, whether abroad in Germany or Iraq, or here at home, I've seen first-hand how our servicemen and women are some of the most patriotic, courageous, and inspiring Americans.

I believe that we have a responsibility to honor their service, and that's why in Maryland we've spent the past seven years making Veterans' services a focal point of our administration.

We passed the Veterans Full Employment Act of 2013, making it easier for Veterans to use the skills they've learned in the military to find work or return to college once they return home; supported Veteran Small Business Owners through no-interest loans; and invested close to $7 million in our Veterans' Behavioral Health Initiative.

We've also made tremendous strides in the day-to-day workings of our MDVA Veterans Service Program, through which we've seen an 86% increase in Veterans contacted, a 54% overall increase in claims filed on behalf of Veterans, and the opening of four new offices in Camp Springs, Bel Air, Hagerstown, and Salisbury.

But for all of our progress, there's more work to be done. Through our Compact with Veterans, we're going to make Maryland an even better place to live, work, and raise a family for the 460,000 Veterans who call our state home.

That starts with ensuring that our Veterans are economically secure. We'll do it by exempting Veteran military retirement income from taxation; establishing a VetConnect Challenge Program where we'll encourage the business community to hire Maryland's Veterans; and providing bridge loans to Veterans waiting to receive the benefits they deserve.

We're also going to support Veterans outside the workplace. We'll create a Veterans' Treatment Court, which will help judges connect Veterans who have had difficulty transitioning back to civilian life to the services they need. We will also set aside a portion of the Rental Housing Works program for Veterans housing, improving access to affordable, transitional, and workforce housing to reduce the number of homeless Veterans throughout our state.

Maryland's Veterans have protected our nation through their service -- today, they and their families make our communities stronger with their presence. And while we owe them a debt we can never fully repay, through our Compact with Veterans, we'll help build a better Maryland for the men and women who have sacrificed so much for our state and for our nation.

What We've Achieved

Progress: Over the past seven years, Maryland has:

Passed legislation to help Veterans get jobs by converting their military skills, education, and training into college credits or an equivalent license or certificate;
Opened four new field offices so that our Veterans can access the benefits they deserve;
Passed legislation allowing Veterans to display their status on their driver's licenses;
Created a no-interest loan program to help disabled Veterans start businesses and create jobs;
Provided Veterans with additional support and access to behavioral health services;
Passed legislation creating a trust fund for private donations, which can be distributed to Veterans and family members in need;
Provided scholarships to our Iraq and Afghanistan Veterans who are returning to school.
Mission: Lt. Governor Brown and County Executive Ulman are committed to Maryland's Veterans regardless of the era, theater or branch of service in which they served. Coming home is just the first step -- we as Americans have a sacred obligation to ensure that our Veterans have the resources they need to get a good job, raise a family, strengthen our communities, and join the middle class.

1. Exempt Military Retirement Income from Taxation for the Majority of Veterans
We will eliminate the taxes that Maryland Veterans pay on military pensions for all Veterans earning less than $150,000 a year.

Maryland has already made progress on this front, while 25 other states have eliminated Veterans retirement income from taxation[1]. During his time in the House of Delegates, Lt. Governor Brown voted to expand a $2,500 income subtraction so that military retirees would be exempted from Maryland income tax regardless of income in 2006. In subsequent years, Maryland expanded this effort to make the first $5,000 of income exempt from State and local taxes regardless of income level or date of service.

Taking the next step, we will fully exempt military retirement income from taxation in Maryland for households with income up to $150,000 a year. Because of the cost of this program, it will be phased in over eight years, increasing the percentage of income exempted by 10% a year from current levels, starting in FY 2016.

Cost: Because of the existing exemption, moving to a 20% exemption in FY2016 is estimated to cost $800,000. Each additional 10% step costs between $5 and $6 million a year, for an estimated FY 2019 cost of $17.5 million.[2]

2. Establish the VetConnect Hiring Challenge Program
We will establish the VetConnect Hiring Challenge Program to encourage Maryland businesses and corporations to increase the number of Veterans hired.

Modeled after the White House's "Joining Forces[3]" and Virginia's "Virginia Values Veterans[2]" programs, the VetConnect Hiring Challenge Program will challenge Maryland's business community to hire 10,000 Veterans and military spouses by the end of 2018. To assist Veterans looking for jobs, we'll integrate the Veteran portions of our three existing job portals, the Maryland Workforce Exchange, the Maryland Network of Care and Mil2Feds, which all currently assist and connect Veterans to opportunities in Maryland. Coordinating these portals will make it easier for Veterans to find jobs and streamline their job search process.

The Brown-Ulman Administration will promote the program by recognizing and holding events at businesses and corporations that have met their pledge and encourage other employers to join the effort.

Cost: This program will be funded as a partnership with the private sector at $250,000 a year. The funds will be used to encourage Maryland businesses and corporations to hire Veterans and educate them on the unique skills and experiences that Veterans bring to the workforce.

3. Extend Bridge Loans for Disability Claims
We will establish bridge loans to relieve the financial hardship that Veterans face while waiting for their disability claims to be processed so that they can begin receiving the benefits they've earned.

The United States Department of Veterans Affairs (VA) is currently unable to process Veterans' disability claims in a timely manner. In fact, as of November 2, 2013, the VA had over 700,000 pending claims, more than half of which have been pending for more than 125 days.[5] As a result, these Veterans, injured while serving their country, aren't getting the benefits they were promised.

To help relieve the financial hardship Veterans face because of the VA claims backlog, Maryland will provide bridge loans to Veterans waiting for their claims to be processed. Veterans would receive up to 75% of the claim filed. Once the VA approves a claim, the candidate would pay back the principle at zero interest. The Veteran would not be forced to pay interest or penalties, unless the claim was deemed fraudulent

We will also increase the number of State Veterans Claims Officers by a third to make sure every Veteran has access to the disability claims process. Before claims go to the VA, Veterans may go to one of ten state claims officers who will assist them in preparing their documents and provide further information regarding available benefits.

Cost: This program will be funded at $2.5 million the first year to cover startup costs, and then at $1 million a year to cover overhead and write-offs. Nearly 5,000 Veterans apply for disability claims each year through the State of Maryland, receiving an average monthly payment of $400. Given that the bridge loans are only funded at up to 75% of the initial claim, most of the loans will be completely paid back even if the VA grants only a partial disability claim. $1 million a year would cover up to 5% of all claims being completely rejected, and allow for $150,000 a year to be spent on program administration.

4. Create a Maryland Veterans' Treatment Court
We will establish a series of Veterans' Treatment Courts across Maryland so that judges can work with Veterans individually and connect them to the services they need rather than incarcerate them.

Similar to drug courts, Veterans' Treatment Courts bring together all parties to seek resolutions outside of the traditional corrections system, whenever possible, and make sure that Veterans get the treatment they need for mental health and addiction-related problems.

The program will help prevent homelessness, facilitate recovery and sobriety, and connect Veterans with other programs about which they may not be aware. In addition, these courts reduce costs to the judicial and public health systems by helping Veterans before problems escalate. These courts have worked in a variety of other states, and we should bring them to Maryland.[6]

In 2012, the Maryland General Assembly created a task force on Military Service Members, Veterans, and the Courts to study this and similar issues. The task force released its final study on November 7, 2013. This study will be used to guide our implementation.

Ultimately, these programs will likely save more money than they cost, but there will be startup costs associated with this program. We should establish one program in FY 2016, expand to two in FY 2017, and to four in FY 2019, so that Veterans throughout the State have access to a judge who is knowledgeable in working with Veterans.

Cost: This program will be funded at $300,000 a year in FY 2016, and will increase to $450,000 a year by FY 2019, as additional courts are added around the state.

5. Expand Rental Housing Works for Our Veterans
We will expand the Rental Housing Works program and allocate 20% of the funding for Veterans housing.

The Obama Administration and the State of Maryland have worked to reduce the number of homeless Veterans, yet estimates indicate that on any given night, more than 60,000 Veterans are homeless nationally.[7] HUD also notes that homeless Veterans are disproportionately minorities.[8]

To help reduce the number of homeless Veterans and provide those Veterans in need of transitional and permanent housing with a safe place to live, we will increase funding to the Rental Housing Works[9] program by $5 million a year and ensure that at least 20% of the funding goes towards Veterans housing.

Cost: This program will be funded at $5 million a year.

Funding Source

Several studies have suggested that exempting Veterans' military pension income could actually pay for itself because most Veterans work for many years in civilian jobs following retirement from the military. If more Veterans and their spouses moved to Maryland to take advantage of this benefit, the new civilian income could expand Maryland's tax base to significantly offset any cost of the exemption on military retirement income. Even if this additional civilian income does not fully offset the program costs, it is the right thing to do. In a budget of more than $35 billion, we can find $17.5 million to honor the service of our Veterans. In addition, the Veterans' Treatment Court will yield significant long term savings by keeping Veterans in treatment and out of the correctional system. As part of the VetConnect program, Brown will call on responsible corporate partners in the state of Maryland to help pay for the cost of these programs.

[1] "Joining Forces, Taking Action to Serve America's Military Families," The White House

[2] "Virginia Values Veterans" virginiavaluesvets.com

[3] "Veterans Benefits Administration Reports," U.S. Department of Veterans Affairs, 11/4/2013

[4] "State Retirement Income Tax," Military.com

[5] "Legislative Analysis." HB 439, 2013

[6] "Donovan: Numbers for homeless vets not improving fast enough." Steve Vogel, Washington Post, 5/29/13

[7] "HUD REPORTS SLIGHT DECLINE IN HOMELESSNESS IN 2012," U.S. Department of Housing and Urban Development, 12/10/2012

[8] "Background & Statistics," National Coalition for Homeless Veterans

[9] "Multifamily Housing Development -- Rental Housing Works (RHW)," Department of Housing & Community Development

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