February 23, 2011

Maryland First plan combines progressive measures for a projected $827m in revenues

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By Barbara Pash
Barbara@MarylandReporter.com

A group of six senators unveiled on Tuesday a package of bills designed to raise an estimated $827 million in new revenues to help take the sting out of budget cuts proposed by Gov. Martin O’Malley.

“The plan is intended to expand the conversation about balancing the budget and  to reduce the pain in the budget cuts,” said Sen.  Paul Pinsky, a Prince George’s County Democrat and one of the senators behind the “Maryland First” plan.

The five bills that are part of the plan include tax increases for alcohol, cigarettes and gasoline, continuing a 6.25% tax rate on incomes more than $1 million, and a bill to close the “combined reporting” loophole for large out of-state corporations. The package also includes measures to improve tax administration.

“The bills have been introduced by different legislators” this General Assembly session, said Pinsky, who is the lead sponsor of the combined reporting bill.

Sen. Jamie Raskin, a Montgomery County Democrat, said that combining bills in a revenue-enhancing plan “is an attempt to create a package” that would enable the state’s  “continuing investment in the social infrastructure.”

Raskin said Maryland has the nation’s best public education system. The state has a solid reputation in public health for its mental health, disabilities and rehabilitation programs. It also ranks high in transportation for its smart growth expansion of mass transit along the Baltimore-Washington D.C. corridor and improvement of local roads..

“We don’t want [these to slip] because of lack of public interest. The package is a proposal to keep Maryland moving forward,” he said.

Besides Pinsky and Raskin, other senators backing the Maryland First plan are Sen. Delores Kelley, a Baltimore County Democrat; Sen. Karen Montgomery, a Montgomery County Democrat; Sen. James Rosapepe, an Anne Arundel-Prince George’s counties Democrat and Deputy Majority Whip; and Sen. Brian Frosh, a Montgomery County Democrat and chairman of the Senate Judicial Proceedings Committee.

In a joint statement, the six senators detailed their Maryland First plan. They propose to:

  • Raise the gasoline tax by 12 cents per gallon, for $360 million in new revenue. The proceeds would go to public transit and local roads
  • Raise the alcohol tax by 10 cents per drink, for $209 million.
  • Raise the cigarette tax by $1 per pack, for $114 million.
  • Close the combined reporting loophole used by big, out-of-state corporations to avoid paying state taxes. This would bring in nothing in fiscal year 2012, but $75 million in fiscal year 2013.
  • Continue the 6.25% tax rate on annual  incomes of more than $1 million, for $70 million.
  • Make changes in the tax administration regarding compliance and other reforms involving out-of-state sellers, prepaid phone cards and vendor discounts, for $74 million.

In the budget process, Pinsky said that “the legislature can cut or remove budget cuts.” The senators’  statement spelled out where they want O’Malley to put the $827 million that would be generated by the plan in his FY 2012 budget. They are:

  • $140 million to restore cuts in education and local government.
  • $100 million to restore cuts and expand investment in health care.
  • $227 million to reduce the state’s unfunded pension and retiree health liability “without breaking the state’s promise to its public servants.”
  • $360 million for transit; $100 million for local governments, and $260 million for state projects.

“By bringing together these proposals, we hope to avoid a lot of injury to the infrastructure,” said Raskin.

  • Bill Bissenas

    Orwellian at best.

  • Taxpayer

    My review of proposed legislation and ideas in the works appears to indicate this Administration is currently, through the assistance of state legislators is proposing:

    A. Passthrough costs to Maryland residents in the form of –

    1. Renewable Energy Surcharges – for Retail Residential Electric Customers
    2 .Increased Health Care Insurance Costs to Make Up for the cut to Medicaid Moneys to hospitals
    3.Combined reporting with out-of-state corporations pay state taxes (result increased customer costs for goods and services)
    4. Continuing and extended prevailing wage provisions

    B. New and Increased Taxes
    1. Nursing Home Taxes
    2. Extension of Millionaires Tax
    3. Alcohol Taxes
    4. Gasoline Taxes – 10 cents per gallon and/or a sales tax based on pricing [at a time retail gasoline prices are rapidly escalating and with EPA lockdowns on ocean drilling and on access to new drilling on U.S. lands.]
    5. Cigarette Tax Increase
    6. Plastic bag and/or Flush tax increases

    C. Increasing Fees
    1. Via directing the MVA on increasing the maximum fee that the Administration may set under the Vehicle Emissions Inspection Program for the inspection and testing of specified vehicles
    2. A Maryland toll hike by an average of 75 cents
    3. Via the Department of Health and Mental Hygiene doubling the price of birth and death certificates from $12 to $24 a piece as a way to raise $7.9 million for fiscal 2012.
    4. Court filing fees

    D. A Special Commission has separately recommended Transportation Funding through:
    » Increase gas tax by 1 to 15 cents
    » Increase vehicle registration fees by $20 to $60
    » Apply sales tax to the net price of gas rather than pretax amounts
    » Increase vehicle titling taxes by 1 to 1.5 percent
    » Increase driver’s license fees by $10
    » Increase transit fees by 25 percent
    » Increase tolls by 25 cents
    » Increase corporate income tax by 1 percent
    » Increase sales and use tax by .25 percent

    E. Along with a substantial reliance on new debt (Bond Issues) to replace this year’s transportation fund receipts, refinance existing debt and fund a long line of discretionary bond issues for elected officials proposed projects.

    These taxations would fall on the shoulders of every taxpayer – the rich, the middle income, the working poor and persons on some form of government welfare!

    I am confident this is Only a Partial Listing. Maryland residents are clearly considered available, no limits ATM machines, to fund the Whims and Political Aspirations of elected officials.

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  • Abigail Adams

    Is there something in the water at the State House? Obiviously the proposals for “Maryland First” must mean that we are to be the state with the highest taxes per resident! Instead of increasing direct and indirect taxes to its citizens, the legislature should be seriously looking at cost cutting measures. Forget gay marriage or renaming mountains, concentrate on cutting the fat accumulated over the past 20 years of rotten, bloated state budgetary practices. Make Maryland the Free State again. Otherwise, legislators will have to cover more budget shortfalls due to loss of taxpayers.

  • Skeptical

    Taxing gas, cigarettes, booze and high-earners all sounds great – but if it actually works as planned and raises the projected revenue (which is always a question), then you’re in a situation where the government has skimmed another $827 MM out of the state economy. That’s money that is going to Annapolis instead of going to local restaurants, local stores, local contractors, etc. How does that help create jobs and spur growth?

  • Big Dog

    So now more people will go to neighboring states to buy tobacco and alcohol…

    http://www.onebigdog.net

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  • Jerry Cave

    The Wall Street Journal did an article exposing how increasing the tax on Millionaires reduced tax revenue to Maryland. it is inconceivable that these 6 could still be in favor of this tax increase. Even more inconceivable is that I explained this in writing to every one of Brian Frosh’s constituents and they still voted for him! They deserve this tax increase however the rest of us don’t.

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