When the Maryland legislature convenes tomorrow, the first large order of business probably will involve one of Maryland's largest businesses.
The legislators must decide whether to raise the ceiling on mortgage interest rates or abolish it altogether to buoy the slowly sinking housing industry. Although property tax relief is always an issue, this year legislators may help more Marylanders obtain property, although at higher interest rates.
Other bills affecting Maryland's economy which already have been filed would make it easier to receive compensation for job-related diseases but harder for interior decorators to work, open bars on election days but close down businesses which engage in fraudulent or deceptive practices.
Other bills would eliminate the 2 percent sales tax on business and manufacturing equipment, stop the taxation of dividends from state-based companies' overseas operations, and provide tax credits for installation of antipollution equipment and energy-saving devices.
Then there are the perennial tax relief bills with goals ranging from repealing all property tax assessments to limiting property taxes commensurate with the value of the property to placing ceilings on state spending.
Undoubtedly the most important bills affecting Maryland's economy are the seven senate and three house proposals that would raise the mortgage interest rate ceiling, or abolish it or remove the prohibition against points. A point is a surcharge equal to one percent of the mortgage and is paid to the lender at the time of settlement.
A hearing on the senate bills is scheduled for Friday.
"The home industry is the second largest industry in this area, second only to the federal government," said Democratic Del. Fred Rummage of Prince George's County, who is also chairman of the House Committee on Economic Matters. "If we don't do something, it (the rate ceiling) will jeopardize jobs. We're rapidly coming to a standstill in the housing area. People can't move here and buy homes. This is the sort of thing we want to do right away."
The state's usury ceiling was raised from 8 to 10 percent during the 1974 crunch and subsequently was extended for two years. As one legislative aide put it, "This isn't a new subject. It's as old as when Jesus chased the money lenders from the temple."
Over the summer, the Senate Economic Affairs Committee recommended that the rate be allowed to float indefinitely as it does in Virginia.
According to Robert Brown, director of the Homebuilders Association of Maryland, failure to approve legislation would result in the loss of between 60,000 and 70,000 construction workers, relators and others in the homebuilding industry.
Brown, however, said that the picture isn't as bleak as it was in 1974. "The money wasn't there in 1974," Brown said. "Now it just costs more."
Last week, the Federal Home Loan Bank Board reported that the effective interest rate on new home mortgage loans in the Washington area fell slightly from 10.03 percent in November to 10 percent in December. The board reported that the effective rate on previously occupied homes rose to 10.1 percent from 10.05 percent.
Although many legislators expect the bill easing mortgage money pressures to be passed eventually, they say that legislators in less urban regions may stall because they have not been hit as hard by inflation.
With new members making up more than one-third of the 188-member legislature, some legislators have been cautious with their pre-opening soothsaying. "I don't know how they're going to react to it," one legislator said.
The senate bills proposed so far would remove the 10 percent mortgage interest ceiling; change the ceiling to 5 percent over the Federal Reserve discount rate, which currently is 9.5 percent; and allow points on conventional mortgages. These proposals have been introduced in emergency form to permit immediate implementation if approved.
Emergency bills require approval by three-fifths of the legislature and become effective immediately after the governor signs them rather than the usual effective date of June 1.
The other senate bill removes the ceiling altogether and lifts the prohibition on points.
The three house bills authorize charging points; raise the ceiling on mortgage loans from 10 to 12 percent and repeal the ceiling on home mortgage interest rates altogether.
Del. Frank Conaway of Baltimore introduced all three House bills because "I don't know which one is going to be palatable. If I can't lift it (interest rates) entirely, then raise it to 12 per cent."
Conaway, nowever, doubts that the bills can be passed on an emergency basis. "You need too many votes for that. Emergency legislation is tough to get through."
"Nobody enjoys voting for an interest bill," said William K Weaver, vice president of the Maryland Bankers Association.
There appears to be little or no organized opposition to the mortgage rate bills. For instance, the Maryland Public Interest Research Group spokesman said the consumer organization plans no action against the bills and knows of none.
Another controversial bill was introduced by Democratic Sen. Norman Stone of Baltimore County to make it easier for a worker who is taken ill on the job to collect compensation.
"It provides a presumption that a person who works, for instance, around certain cancer-causing chemicals and... contracts this disease (will) be eligible for compensation," Stone said. Currently, "It's very difficult to prove occupational disease."
Stone said he introduced the bill late last session. The legislators voted to form a task force to study the question, "but it never met," Stone said.
"This is going to be a very important issue this year," said Samuel Christine, lobbyist for the Maryland Chamber of Commerce, who opposes Stone's bill but favors a comprehensive study of the problem by the task force.
With an emphasis on economic development expressed by Governorelect Hughes during his campaign, recommendations by the state Department of Economic and Community Development and a $200 million budget surplus, the Chamber of Commerce is urging passage of a bill to eliminate the 2 percent sales tax on purchases of machinery and equipment.
Although critics of such a measure claim the state will lose between $8 and $9 million a year, the chamber said that the state will benefit through increased economic activity that the tax cut would produce.
A chamber vice president, William F. Holin, said there labor forces may attempt to increase the unemployment insurance tax by $13 a week. Last year, the tax was raised from $89 to $196, Holin said.
Another bill would prohibit using geographic designations to determine rates for motor vehicle insurance.
Leon Doyle of the National Association of Independent Insurers said, however, that eliminating territories -- that usually cause city dwellers to pay higher rates, would mean that, while 53 percent of the insured motorists would have an average rate decrease of 15.3 percent, the other 47 percent would experience a rate increase of 25.3 percent.
A bill being prepared by Democratic Del. Charles Krysiak of Baltimore would exempt small businesses from paying for workmen's compensation. "We're shooting at the familytype corporations," Krysiak said. He said the bill could save small firms from $300 to $400 a year.
Other bills proposed in the senate would authorize the attorney general to close down temporarily any repair shops found to engage in unfair or deceptive practices; prohibit providers of life, health, property, motor vehicle, casualty and surety insurance from discriminating because of physical handicap or disability of the policy holder; give workers the right to refrain from joining labor unions and require certain consumer contracts to be written "in very plain language."