House continuing to try to iron out budget proposal -- Gazette.Net


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House Minority Leader Anthony J. O’Donnell was denied the opportunity to speak in opposition to a $503.5 million tax plan at a House Ways and Means Committee meeting Monday afternoon.

O’Donnell (R-Dist. 29C) of Lusby wanted to oppose the tax plan passed by the Senate, 26-20, last week after receiving a revised fiscal note outlining the costs and revenues associated with the plan. The fiscal note was not available when senators cast their votes on the budget Thursday.

Ways and Means Chairwoman Del. Sheila E. Hixson (D-Dist. 20) of Silver Spring said the committee was considering testimony from the Senate sponsors of the revenue bill only, a rule the committee always follows.

Outside the hearing room, O’Donnell said Hixson could have changed the committee’s rules to allow him to speak. He wanted to urge lawmakers to vote against the proposal because increased taxes are too burdensome for families and small businesses recovering from the recession, O’Donnell said.

“People are down, and this bill kicks them when they’re down,” he said. “It’s outrageous, and opposition should have been heard.”

Sen. Roger Manno (D-Dist. 19) of Silver Spring, the bill’s sponsor, and Sen. Edward J. Kasemeyer (D-Dist. 12) of Columbia, chairman of the Budget & Taxation Committee, said it was necessary to raise the income tax rate for most Marylanders to garner enough revenue to fund sweeteners needed to shift teacher pension costs to counties.

The Senate’s tax plan creates more than $475 million by raising the tax rate starting on earnings above $3,000 and changing how state taxes are calculated for Marylanders with taxable income greater than $500,000. Those making more than $500,000, which also can include small businesses, shoulder about $59 million of the increased revenue.

The state’s Department of Legislative Services estimates that 2.2 million, or 96 percent, of taxpayers will pay more in tax year 2012 under the proposed rate increase. The estimated average tax increase in 2012 is $143, according to the revised fiscal note.

House lawmakers have indicated they will attempt to scale back the tax proposal.

During an eight-hour meeting that went into the night Friday, the Appropriations Committee indicated its tax plan would raise about $250 million less by adding additional cuts to some programs, including higher education and medical care.

Also on Monday, the House Appropriations Committee was scheduled to consider the governor’s proposed budget, which is called the Budget Reconciliation and Financing Act. That bill includes shifting the cost of teacher pensions, estimated at $239 million, to counties. The Senate amended the plan to transfer pension costs to the counties through a four-year phase in, costing county school boards $68.3 million in fiscal 2013 and $254.8 million by fiscal 2016. The costs would be offset, in part, by state aid — including the closing of a loophole in the state’s recordation tax, which is expected to generate $39 million in revenue.

One part of the four-bill budget package already has been resolved. On Friday, the Ways and Means and Appropriations committees passed identical bills to reform the state’s education funding law, called maintenance of effort.

The reformed law will allow counties to raise income and property taxes over current caps during tight budget years, provided the increased funding goes to education. If counties fail to meet education budgets, the state comptroller would be authorized to withhold county tax revenues and distribute the money directly to the local education board rather than the county government.

The bill also gives county school boards more flexibility to obtain state reprieves to decrease funding from year to year if the county has a history of overfunding education or has created efficiencies to save money.

House Speaker Michael E. Busch (D-Dist. 30) of Annapolis said he expects a budget bill to be debated on the floor starting Thursday. Debates could go into the weekend, he said.

dgaines@gazette.net