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LEAGUE OF WOMEN VOTERS®of Maryland |
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RSC (2012-5) Budget and Taxation
Both the House and Senate have passed their versions of the Budget bill SB 150, the Budget Reconciliation and Financing Acts (BRFA) SB 152 and SB 523 the State and Local Revenue and Financing Act of 2012 which both houses are now using for tax increases. There are significant differences between the versions which now go to Conference Committee for reconciliation. A budget must be passed by both houses by April 2.
On March 15, the Senate passed SB 150 the budget bill of $35.9 billion which is a reduction of approximately $500 million from the Governor’s proposal. The major provision of BRFA as passed by the Senate is the transfer of a portion of teachers’ pension costs from the state to local governments over four years. The cost to county school boards in FY 2013 would be $68.3 million and by FY 2016 would be $254.8 million. Some state aid is provided to help offset these costs, mostly through closing a loophole in the state recordation tax. Other transfers of balances and/or revenues from special funds to the general fund are also included in SB152. SB 523 makes changes to the Maryland income tax increasing the tax rates on incomes over $3000 with a maximum of 5.75% for those who earn more than $500,000, expands the refundable earned income tax credit, requires out of state sellers to collect the state sales tax on internet sales and increases tax rates on “other tobacco products.”
On March 22, the House passed SB 150 appropriating $35.4 billion, reducing the governors proposed budget by $441.9 billion as well as its versions of SB 152 and SB 523. Both the House and Senate versions meet the Spending Affordability Committee recommendation of a 50% decrease in the structural deficit. The House would spread the transfer of teachers’ pension costs over three years so that the first year cost would be $136.6 million. It would phase out exemptions and deductions in the income tax and change the rate by 0.25% for individuals with incomes greater than $100,000 and joint filers with incomes greater than $150,000 with an additional 0.25% for individuals and joint filers with incomes in excess of $500,000. The House bill does not include applying the sales tax to internet affiliates. The House would impose a significantly higher sales tax on tobacco products. Under both bills, state employees would receive a 2% cost of living adjustment. General funds used for Medicaid would be reduced with additional revenues coming from an increase in the nursing facilities tax from 5.5% to 6%. Public schools will receive a slight increase in funding and small reductions are made from the governors recommendation for community colleges.
Regarding bills previously reported on: SB 269 combined reporting B&T unfavorable; HB 592 Tax Credit for Business that Create New Jobs Extension, second reading passed in the House
:Since RSC #4, LWVMD provided testimony in favor of the following bills: SB 971 and HB 1302 sales tax on gasoline, SB 526 tobacco tax, HB 1388 increase in gasoline tax indexed to construction cost index, HB 1051 sales and use tax on services, SB 734 tax credit evaluation act, HB 941 combined reporting, HB 87 and SB 152 BRFA in favor of increased tax revenues.
Barbara Hankins
