March 22, 2012

House moves $35B budget with few cuts and a tax hike to a final vote in marathon session

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By Justin Snow and Megan Poinski
Justin@MarylandReporter.com
Megan@MarylandReporter.com

House of Delegates chamber

House of Delegates chamber

In a nearly 11-hour session, the House of Delegates fended off proposals to level fund the fiscal 2013 budget, block shifting teacher pension costs, and eliminate an income tax hike.

Scores of amendments were attempted on the controversial bills, but none passed. All of the bills will go for final votes Friday or Saturday exactly as they came from their committees.

Initially, the House was supposed to have two sessions on Thursday: one in the morning and one in the late afternoon. But debate and amendment attempts on the main budget bill and Budget Reconciliation and Financing Act stretched through the afternoon and into the evening with no break.

At about 5:30 p.m., Speaker Michael Busch — sounding hoarse from calling for amendments for nearly eight hours — announced food was being ordered for the delegates.

“We’ll go all night if we have to,” he said.

Right before Busch adjourned the body at close to 9 p.m., he thanked them all for a hard day’s work.

“The only bad thing is we have to come back to work tomorrow,” he said, as the end of the 90-day session loomed two weeks from Monday.

Level funding rejected

Del. Tony O'Donnell

Del. Tony O'Donnell

Minority Leader Anthony O’Donnell proposed a budget amendment that would enact a level funded budget, which was defeated 47-90. The Calvert County Republican pleaded with his colleagues to live on the same funds they did last year just as many families they represent do, rather than approve a budget with $1 billion in additional spending.

Among the provisions, O’Donnell’s amendment would have eliminated a proposed income tax increase and a shift of teacher pension costs to the counties. Several Republicans said they would vote for the budget if the amendment was adopted.

“We cannot tax ourselves into prosperity,” said Del. Ron George, R-Anne Arundel, defending the amendment.

Opponents admitted that O’Donnell’s amendment was attractive on its surface, but would come at a severe cost to education, transportation, and other services during a recession when families are relying on government assistance.

“When the good times return we will be able to restore so many of the budget reductions, level fundings, and outright cuts that we’ve implemented [in the past] and will be able to spread that benefit to everybody,” said House Majority Leader Kumar Barve, D-Montgomery.

Committee amendments challenged

Several provisions of the proposed House budget were challenged. A committee amendment that would allow for online sale of lottery tickets cleared the chamber with a 72-62 vote, despite some objections.

Republicans failed to halt a House committee amendment to strip Senate language requiring the law school of the University of Maryland, Baltimore to establish an agricultural law clinic dedicated to assisting farmers by diverting $250,000 from the university president’s office.

The provision comes after the law school’s environmental law clinic opted to represent an environmental group suing a local chicken farm. The lawsuit, which has placed a financial burden on the local farmer, has rankled Eastern Shore Republicans and Gov. Martin O’Malley.

Although Republicans defended the Senate language, arguing that the funds were minor and would bring fairness to environmental and agricultural issues, supporters of the House version stated that the legislature was not in the business of micromanaging institutions’ budgets.

Pension shift moves forward

The Budget Reconciliation and Financing Act —  known as “BuRFA” — changes laws that affect state spending.

The most controversial shifts the employer cost of teacher pensions from state government to local boards of education over the next three years. Six of the 21 amendments proposed to the bill would have changed the amounts, methods and penalties dealing with the pension shift.

O’Donnell proposed an amendment taking the entire pension shift out of the bill. He said that counties cannot afford to spend so much money on pension contributions, and delegates will be remembered for making the shift — something that no local government supports.

“We’re shifting burdens to the local governments so we can spend more money,” O’Donnell said.

His amendment failed 53-79. Montgomery County government officials are strongly opposed to the shift, and Montgomery Democrats Sam Arora, Charles Barkley, Benjamin Kramer, William Frick and Luiz Simmons supported the amendment to stop it.

“I don’t believe that balancing our budget on the back of our local government is a responsible action,” said Kramer.

Del. Michael Smigiel, R-Cecil, said that the General Assembly is looking at numbers, but does not know what would actually happen to local governments if the pension shift becomes law.

“What are we going to do when the first county stands up and says, ‘Guess what? We’re facing bankruptcy?’” Smigiel asked. “How irresponsible is it of us to pass this burden on and not even know the effects of it?”

Higher percentage of state spending goes to schools

Del. John Bohanan, D-St. Mary’s, pointed out that when the Thornton formula for education funding first passed, 47% of the state’s money was spent on state government and 33% went to local governments. Now, he said, as pension costs have grown, the two funding categories are equal — both state government and local government taking 40% of the total state budget.

“Local government grants are getting ready to surpass,” Bohanan said. “If we continue to let it do that, it will eclipse what we spend on state government.”

The floor leader for the debate, Del. Melony Griffith, D-Prince George’s, said that the shift should be looked at as an opportunity for the state and local governments to share pension costs for mutual benefits.

“We’re not passing the buck,” she said. “We’re asking for partnership and we’re asking our locals to share.”

Tax hikes remain

Despite a protest earlier in the day where cars circled the State House honking their horns in opposition to tax increases, a bill to raise the income tax .25% for those making more than $100,000 a year moved forward in the House.

Del. Andrew Serafini, R-Washington, proposed two amendments that would replace the proposed income tax hike with a flat tax. Although Serafini said the House version of the income tax bill was an improvement to the version passed by the Senate, he said his amendments were a fair, simple, and revenue neutral option. Both were defeated.

Del. Kathy Szeliga, R-Baltimore County, proposed a “marriage protection” amendment.  She said the House bill was “discriminatory” and penalized marriage because it taxes single individuals making $100,000 a year as well as married couples with a combined income of $150,000. Szeliga said $150,000 as a combined income did not compare to earning such an income as an individual. The amendment was defeated 41-69.

Flush tax would double

An additional tax bill not part of the House budget package that moved toward a final vote was the so-called “flush tax,” which would double water bills from $30 to $60 a year. The additional revenue would go toward the Chesapeake Bay Restoration Fund.

  • abby_adams

    The cadre of out of touch legislators in Annapolis continue the shakedown. They consistently demand MD taxpayers continue to empty our pockets for the glory of O’Malley & the Democrats without question or debate. Remember Annapolis, you work for us & not the reverse. We will feel the pain of your largess with each paycheck. Passing the buck to the locals changes nothing but headlines.Remember your political ad from the last election “A fee is a tax if it comes out of my pocket.” It got you elected. Now explain, how these higher FEES, INCOME TAXES, TOLLS & SALES TAXES are not a result of the legislature’s gross mishandling of the state budget? Who will take the blame?

  • Brich

    I do not know what Democrats are thinking or, for that matter, the voters that put them in office. Do they actually think that constantly raising taxes and fees is good for the economy of Maryland? With the fourth highest tax rate in the country why would anyone move to Maryland? Why would anyone start a business in Maryland when the state is surrounded by states with lower tax rates and more attractive business climates? I, for one, will be looking for another place to live.

    • glassmoon

      My wife and I are looking to move out of MD too.

  • Enough_is_enough

    All of this is crap.  They don’t listen, they don’t understand what it is to live within your means. Yes, things will be cut, how about who picked up the tab for ordering in food?, parking in Annapolis, and any other little perk you get from working for 90 days. ( I can’t imagine what they really do the rest of the time, maybe some a other jobs but I’m thinking not too many.) They sure are not out there talking to the people who are struggling to make ends meet.  Who is being held accountable for all of the accounting errors that have been reported on over the last couple of years, funny how they get reported on, people puff up and bang on their chests about “who did this, how could it happen, someone is going to be accountable”  Well, where are these people and what happened to the money, and if they can’t find who did what and where it goes, then who ever was in charge of that area should NOT get any additional funding until they can account for the loss. ( like normal business people need to do)  Also, anyone who takes “Peter to pay Paul” (taking from one fund to pay for another funding project) should be dismissed.  That is wrong on so many levels, just look at the MDOT problems.   Sorry Martin, I haven’t had any bridges falling on me lately, tho’ there are some serious issues with roads in the city and some of the counties.  Perhaps they could have been fixed if we didn’t need such a huge monstrosity of 95/659 exchange in White Marsh.  
    Oh, here is another idea, OPEN the weight stations.  Stop the trucks (we are a shipping state) think of the $$ that could be had there.

    Bob E. didn’t get elected because of “FEES are TAXES” bull, well MO’M and his cronies down there will tell you taxes are taxes, and we hate to do it, but if we don’t we have to cut school, fire and police services and things of the older citizens.  Give just about any successful business man/woman NOT in politics and I bet they can have a budget that lives within the means of the state with no problem.  Tighten up your belts fat cats, just like everyone else has done or you will lose what you have here now. ( I can see them leaving as I type this on that new stretch of 95N.)

  • DaveHatfield

    Who exactly do they think they’re “sharing” with by shifting teacher pensions to the local governments? The same taxpayers are just going to have to pay higher taxes to the local governments now to pay for the pension funds, or cut more teachers, fire, or police, or other local services, which we’ve just about cut to the bone already. County government has been living within our means with property tax caps, but the State government is out of control – they’re just keep spending OPM (Other People’s Money) as if it were a big bottomless pile of Monopoly cash.

    I’m outta here as soon as possible with my income, my taxes, and my small business. It’s just too expensive to live here and most of the services from the State don’t support any benefits for my family and me – at least not for the price I pay for them.

    • libsarebraindead

      If you have 6 kids out of wed lock and baby daddy in jail you can get all benefits you want.

    • abby_adams

      Dave, can’t agree with you more. Living in MD has become a luxury with the costs far outweighing the benefits. FYI-the $$ SAVED by passing along teacher’s pensions to the locals has already found another use.  Annapolis will purchase NEW SLOT MACHINES for MD casinos with the money “saved”.  So they haven’t cut a single penny just passed the buck as usual. Somehow these brain dead legislators ignore the issue of who exactly pays the price for their largess..we do!

  • Dan

    Moving to Virginia and taking my company and its 175 local jobs with me. 

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  • Michael Crawford

    Just as we have in Washington, we have an elitist class of Democrats in control of our state.  They lack common sense and don’t understand the incredible burden they put upon the people of Maryland when they spend tax dollars frivolously and then raise taxes to spend even more.  The term “budget” is beyond their comprehension.  It’s time to clean house from top to bottom and vote in some fiscal conservatives to run things in Annapolis.

  • Whcampbell

    Tony O’Donnell is absolutely correct.  If the State would just freeze spending (at the present ridiculous rate) the “deficit” would disappear through current revenue growth rates in two years.  The Kleptocrats in power are out of touch with the average Maryland resident.  Most Marylanders are not “rich”.  They are struggling and these tax and fee increases will push them further into financial distress.  The Governor, President of the Senate, and Speaker of the House of Delegates should be ashamed of their behavior.  However, they have no shame!

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