Legislators restore titling tax cut to help boost auto sales
House passes $13.8 billion spending plan for fiscal 2010
ANNAPOLIS – Budget negotiators on Saturday restored a state tax break on new car purchases tied to the federal stimulus package that aims to revive the foundering auto industry.
The about-face came one day after lawmakers declined to include the provision in the final version of the state's roughly $14 billion fiscal 2010 spending plan. The change came at the insistence of U.S. Sen. Barbara A. Mikulski, who championed the federal tax break.
It will reduce the state's fund balance by $10 million to $96 million, well short of the minimum $250 million target that lawmakers sought earlier this year in case the economy continues to dip. But Del. John L. Bohanan Jr. (D-St. Mary's) explained that declining revenue estimates made lawmakers adjust their initial expectations.
"In the end, I think we were hoping to get to $100 million and we got a little over that," he said.
The state tax break would save automobile buyers about $96 on the purchase of a $20,000 car, which is on top of the roughly $350 federal benefit.
"What we're doing is passing a tax reduction," said House Ways & Means Chairwoman Sheila E. Hixson (D-Montgomery).
The House of Delegates gave final approval to the $13.8 billion spending plan Saturday afternoon, voting 106 to 30 on a fiscal plan that includes a $16.4 million fund to freeze in-state tuition for the University System of Maryland and $15.4 million for stem cell research, only $3 million less than proposed by Gov. Martin O'Malley (D).
The budget now awaits final passage in the Senate on Monday, the final day of the legislative session. State law requires the General Assembly to adopt a balanced budget before they adjourn.
Budget writers met several times during the last week to iron out dozens of mostly small differences between the two chambers' spending plans.
"I feel that it was very conciliatory between each of the houses," said Del. Susan L.M. Aumann (R-Dist. 42) of Timonium.
Lawmakers said the tight economy forced them to make more than $800 million in cuts, but noted that an infusion of $1.5 billion in federal stimulus money enabled them to preserve funding for priority areas, such as education and health care, while preventing them from making even more painful reductions.
But counties were not spared, as lawmakers trimmed $162 million from the fund used for local highway projects and slashed additional funds for community colleges and local libraries.
The budget also removed a provision to have the counties pay about $20 million to run state offices of the Department of Assessments and Taxation. And lawmakers deleted a plan to have counties spend $3 million for law clerks.
Budget leaders were particularly satisfied that, even in tight budget times, they left the $651 million "Rainy Day" fund intact.
"It's a heavy shower; it's not raining yet," said House Appropriations Chairman Norman H. Conway (D-Dist. 38B) of Salisbury.
Staff writer Douglas Tallman contributed to this report.