Maryland officials are still calculating what the congressional deal to avert the fiscal cliff will mean to the state.
The agreement raises income tax rates on households making more than $450,000 and individuals earning $400,000. While current income tax rates on the middle class were extended, the payroll tax holiday was not extended, meaning paychecks will be smaller.
With Maryland home to nearly 300,000 federal employees, state officials had worried that the automatic reductions in projected spending increases that would have been triggered without the deal would have meant the loss of more than 15,000 jobs. But sequestration was delayed for two months to give Congress additional time to work out the reductions.
“We don’t know at the moment,” said Steven D. McCulloch, a budget analyst with the Maryland Office of Legislative Services, on the financial impact to the state from the deal to avert the fiscal cliff. State revenue analysts were still reviewing the federal legislation to calculate the impact on Maryland, he said. That work should be finished soon.
At the Board of Public Works meeting Wednesday, state Comptroller Peter V. R. Franchot (D) criticized the partisan wrangling that resulted in the fiscal cliff crisis.
“This has been an object lesson in political dysfunction,” Franchot said. “I hope they’ll grow up and get their acts together.”
A lot of the state’s budget decisions are dependent upon what the federal government does, said Takirra Winfield, press secretary for Gov. Martin O’Malley (D).
The deal to avert the fiscal cliff did not resolve the automatic reductions from sequestration, only delayed them for two months, and those talks will occur at the same time as Congress faces another limit on the federal debt ceiling, Winfield said.
“It’s a very fluid situation and it’s hard to predict but we’re monitoring what happens in D.C.,” she said.
In Maryland, every congressional Democrat voted for the deal while the two Republicans, including outgoing U.S. Rep. Roscoe G. Bartlett (R-Dist. 6) of Buckeystown, opposed it.
U.S. Rep. Andrew P. Harris (R-Dist. 1) of Cockeysville criticized the bipartisan agreement, signed Wednesday by President Barack Obama, because it “increases taxes by $40 for every $1 in spending cuts.”
“This bill is business as usual in Washington and does nothing to deal with the real fiscal cliff — our $16.4 trillion deficit,” Harris said.
U.S. Rep. Christopher Van Hollen Jr. (D-Dist. 8) of Kensington said he voted for the agreement even though he did not like all of the provisions in it, including a compromise on the federal estate tax that he proposed should be higher because it amounts to an average tax break of more than $1 million for the 7,000 richest estates in the country.
“On balance, this legislation will help working families, boost our economy, and ensure that the top 1 percent share greater responsibility for reducing our deficits,” Van Hollen said. “Any agreement required compromise, and I believe this is a fair deal for the American people.”
U.S. Rep. C.A. Dutch Ruppersberger (D-Dist. 2) of Cockeysville praised the Democrats and Republicans who compromised to reach a deal on the fiscal issues.
“The real winners tonight are the American people, who always wanted Congress to work together for the best interest of the nation,” Ruppersberger said. “Finally — in one of our last acts of this session — we showed that we can, in fact, compromise. This bipartisan bill is an important step in preventing what many economists believed would throw our country back into recession. We were able to permanently extend tax cuts to the middle class and avoid the fiscal cliff.”
Federal workers have worried that Congress would seek to reduce spending by targeting the federal work force.
U.S. Rep. Donna F. Edwards (D-Dist. 4) of Fort Washington said the deal provides federal workers with a “long-overdue cost-of-living increase.”
“Compromise is not a four-letter word,” she said. “It is time to continue to compromise, not as Democrats or Republicans but as Americans, to do what our constituents sent us here to do.”
The American Federation of Government Employees, a union that represents federal workers throughout Maryland, said that before the federal government imposes any unpaid furloughs on federal workers, they should first target high salaries paid to the executives with government contractors.
“While we are glad to see a bill that requires the wealthiest Americans begin to pay a fairer share of taxes, AFGE members are very concerned about the use of additional agency funding cuts in order to pay for the delay of the sequester,” said AFGE President J. David Cox Sr.