A controversial anti-boycott Israel bill in Maryland has been amended to remove financial penalties and the prohibition on public funds to groups that support boycotting Israel, according to activists in the state.

The original legislation would have prohibited the spending of public funds–for travel expenses or departmental membership fees-on academic groups that support the boycott of Israel. If schools violated that provision, aid to state universities would be cut by three percent.

But a new, amended version of the bill, published by a coalition of groups fighting against the anti-BDS legislation, removes the threat of financial sanctions and erases the language prohibiting state funds from going to academic groups that boycott Israel. The latest version was announced by the Keep Free Speech in the Free State coalition, which represents an array of civil liberties and Palestine solidarity groups working to defeat the bill targeting the boycott, divestment and sanctions (BDS) movement.

At the same time, the Maryland legislation now condemns the BDS movement as “a discriminatory and racist movement,” paving the way for the state to become the first to go on the record as labeling BDS as prejudiced. The coalition notes that if passed, the bill would effectively “label Archbishop Desmond Tutu”–the South African anti-apartheid activist and current supporter of BDS against Israel–“a racist.”

So while the removal of the financial penalties is a victory for the Palestine solidarity and civil liberties groups that fought against it, the fight is not over. The Keep Free Speech in the Free State coalition in the state calls the language “unacceptable” and continues to mobilize to kill the bill. A resolution condemning the ASA’s boycott of Israel could have a chilling effect on future moves by academic groups to join the boycott, divestment and sanctions (BDS) movement.

The moves come a week after the co-author of the Senate resolution, Mary Conway-Carter, said that she plans on striking the financial penalties from the legislation.

Meanwhile, two Maryland elected officials –Delegates Kumar Barve and Mary Washington–who had originally signed on to the original legislation have reversed positions. But it’s unclear at the moment what their take on the new bills will be.

Barve is the Democratic majority leader of the House of Delegates, while Mary Washington is another Democrat in the House. In an e-mail passed onto me from the Keep Free Speech in the Free State Coalition, a staffer from Barve’s office said, “although the delegate co-sponsored HB 998 (Public Higher Education- Use of Funds- Prohibition), he has decided to vote against it if it reaches the House floor.” And the blog Maryland Juice, run by political consultant David Moon, reports that the office of Washington said that she “is no longer supporting HB 998 and has asked to be removed as a cosponsor.”

The Maryland effort is one of a series of state bills written in reaction to the American Studies Association’s decision late last year to boycott Israeli academic institutions due to their complicity in the abuse of Palestinian rights.