- The Enterprise
- The Recorder
The Maryland Senate approved a budget plan Tuesday afternoon that would raise income tax rates for high-income Marylanders and undo the so-called “doomsday” cuts that were set to go into place after lawmakers failed to reach a spending plan compromise during the regular session.
The House is expected to give final approval to the budget plan by Wednesday.
Two budget bills introduced by Gov. Martin O’Malley (D) create a $35.5 billion fiscal 2013 spending plan, which represents a 2.7 percent increase over fiscal 2012 spending.
The bills contain provisions to raise taxes on income and tobacco products and apply the indemnity mortgage tax to businesses.
The compromise tax plan would generate $195.6 million in state revenue in fiscal 2013 through income tax hikes and $51.7 million by phasing out personal exemptions. The tax changes would affect single Marylanders making an adjustable gross income of more than $100,000 per year and couples claiming more than $150,000.
About 13.7 percent of Marylanders will pay more under the plan, according to a Department of Legislative Services analysis.
In Calvert, 16.6 percent of taxpayers will pay more, with an average state and local tax payment increase of $367. In Charles and St. Mary’s counties, the change will affect 14.4 and 14.1 percent of filers, respectively.
County governments across the state would see an additional $31.4 million in revenue as a result of the income tax adjustments in fiscal 2013, according to a fiscal analysis.
That revenue will help to offset a provision to shift 50 percent of the “normal cost” of teacher pensions, or $136.6 million, to counties beginning in fiscal 2013. The normal cost of pensions is the amount needed to pay pension liabilities if the system hadn’t been underfunded in the past.
The shift is front-loaded and will increase to 100 percent of the total normal costs in fiscal 2016. The same shift provisions were agreed to by House and Senate budget negotiators before the end of the regular session.
The bills were passed out of the House Appropriations and Ways and Means committees shortly before 2 p.m., and leaders are planning for floor debate on amendments before the full chamber to go into the night Tuesday.
A final vote is expected Wednesday.
In the Senate, seven Democrats voted against the tax plan, including Sen. Roy P. Dyson (D-St. Mary’s, Calvert, Charles).
Senate President Thomas V. Mike Miller Jr. (D-Calvert, Prince George’s) said he will seek a change to the General Assembly’s rules to require lawmakers to pass a budget seven days before the end of future sessions; if lawmakers don’t meet that deadline, additional bills would not be considered until a budget deal is signed, Miller said.
“The last day of session should never have happened,” Miller said.
The special session could cost about $25,000 per day, according to the Department of Legislative Services. Miller has asked lawmakers who live close enough to commute to go home each night to reduce the cost of overnight hotel reimbursements and other stipends, if possible.
Staff writer Daniel Leaderman contributed to this report.