In special session on Monday, the Senate Budget and Tax Committee wasted no time, less than 45 minutes, to move tax increases and a budget reconciliation bill to a full vote in the Senate–to avert a doomsday budget that would trigger over $500 million in spending cuts beginning July 1.
Eastern Shore Lawmakers strongly objected to a special session to raise taxes. They said the budget passed in regular session in April already has $700 million in spending increases over last year.
“People should be afraid of this session,” said Del. Mike Smigiel, R-Cecil. “We currently have a balanced budget, so we’re here for one reason, and that is to raise taxes..that’s what we should be afraid of. We’ve continued to raise taxes every year by over $1 billion.”
The Budget Reconciliation and Financing Act will allow the administration of Gov. Martin O’Malley to transfer money out of designated funds to the Budget Restoration Fund to the tune of $260 million. The BRFA will also clear the way to move $136.6 million in teacher pension costs onto the counties.
The Maryland General Assembly is in a race to head off the spending cuts that became automatic when the legislature failed to agree on a slew of unpopular tax increases on the last day of the regular session, April 9.
The administration’s budget is $500 million short of the $1.2 billion in additional spending increases O’Malley asked for during the regular session–on a record $35.5 billion budget.
The tax increases under consideration for the two-day special session come to $433.5 million. No sooner does the ink dry, the administration will spend $430.3 million on everything from stem cell research, $33.8 million, to public colleges and universities, $38.5 million, to name a few.
The biggest revenue increases will come from $247 million in taxes hikes on individuals making $100,000 or more–and joint filers making more than $150,000 annually. Nearly $100 million comes from raiding the Program Open Space Fund and $50 million is taken from the Injured Workers’ Insurance Fund. Corporate taxes go up by $7.4 million and new taxes on cigars and smokeless tobacco bring in another $5 million. Lottery revenues of $8.8 million are also diverted to the General Fund under the BRFA.
In a party line vote the Senate rejected an amendment by Senate Minority Leader E.J.Pipkin to cut spending by 2% across the board.
“There is a better way to do this,” Pipkin said. “A 2% cut in spending from where we are today avoids all the tax increases, avoids the teacher pension shift, and closes the deficit.”
“The Democratic majority can’t take away our better ideas,” Pipkin told the Spy after the session. “And this is a better way to deal with budget problem.”
“It’s our job as the minority party to put those ideas on the table, and eventually some of our ideas do get incorporated or passed,” Pipkin said. “It makes for a better process.”
The House will likely take up Senate versions of the two bills because identical bills in the House failed to get out of the Ways and Means Committee and the Appropriations Committee on Monday.
Gren Whitman says
Del. Mike Smigiel says I should be “afraid” because of the special session on Annapolis.
But I’m not, and here’s why: My family income doesn’t come close to $150,000, or even $100,000, so we’re exempted from a tax increase. The majority of Marylanders shouldn’t be “afraid,” either, because their incomes don’t approach $100,000, or $150,000 — most, not even close.
Don’t be fooled by conservative Republicans. The sky is not falling. Higher taxes on six-figure earners (and higher), commercial real-estate deals, tobacco products (15 to 70 percent), and death certificates ($12 to $24) to help pay for teachers, police officers, and other local (i,e., county) employees who will lose their jobs without increased state assistance. (Or necessitate higher county property taxes to keep them employed!)
Sorry, Mr. Smigiel, by your efforts to help your wealthy pals and contributors, it is you and your fellow Republicans — not Democrats — who are out of touch with average working families.
Jamie Williams says
I am “afraid”. Here’s why.. raising taxes on “individuals making $100,000 or more–and joint filers making more than $150,000 annually”, dilutes the incentive to do well and work hard. Because I don’t personally come close to those figures, doesn’t make me less aware of the implication on those individuals and families who do. I am ok with higher taxes on tobacco products because of the amount of money these products cost the taxpayers in medical expenses. Put the burden where it belongs, those who chose to partake. I am also concerned with the “Nearly $100 million comes from raiding the Program Open Space Fund and $50 million is taken from the Injured Workers’ Insurance Fund.” This money was set aside for a specific purpose and now that we can’t control spending we use whatever is fair game.
S Pennington says
People who make big money spend big money, and that big spending makes jobs for people all around you. You have fallen into the trap of loving employees but hating employers. It’s a contradiction which ultimately hurts your neighbors if not yourself. If you have compassion for your unemployed neighbors, you will welcome, not scorn, financially successful people in our area, for they create the jobs with which others feed their families.
I urge you to reconsider your position.
Keith Thompson says
Most Maryland residents do not make $100,000 a year, but it’s a good bet that if they’re employed that their employer makes more than $100,000 a year.
Steve Payne says
It’s not as simple as that:
https://www.youtube.com/watch?v=bBx2Y5HhplI&feature=player_embedded
rds1955 says
I agree, it’s not that simple, however, this man throws a lot of smoke and mirrors into the discussion, confusing the debate. He talks a great deal about consumers being the actual Job creators…In a sense, this is somewhat correct, however, it is also misleading… a product has to be created, manufactured/produced and distributed 1st before consumers even have a 1st look. How can a consumer be a job creator without know what a product or service is or does? He believes High Earners aren’t job creators, but believes that High earners need to pay “More” than a fair share…He’s a Gazillioniare …But he also believes those earning over $250 K a year need to be in the same bracket and the super filthy rich and pay more than their fair share to help Government fund Job Creation and “Lift” the lower classes….Hmmmm…Wasn’t that what Lyndon B. Johnson wanted when he created “the Great Society” and we’ve pumped trillions of dollars into since then?…
This guy could be a Lawyer…He’s a Wordsmith, a Manipulator of imagery, ideas and thought, a Philosophical activist…He’s good…But I believe he’s also very unrealistic in his presentation…
Steve Payne says
I agree with most of what you said. The people that create truly new products are exactly what capitalism is about and thats a good thing. However I don’t think that people like this will stop doing what they do because of a small tax increase. Like the speaker said, if that was true we would be awash in jobs. The current tax structure is close to the lowest in history. History just doesn’t support that low taxes are the engine of the economy. The Clinton era structure was both good for the economy and we had a surplus too.
Most businesses grow and hire based actual or anticipated demand.
https://economix.blogs.nytimes.com/2011/07/29/ranking-the-presidents-by-g-d-p/
rds1955 says
So… What Happens to the High earners who leave the state? I know of a couple who moved when the so called
Millionaires Tax” was put into effect a couple of years ago…Companies have been leaving Maryland, not coming to it…Where will the money’s come from then?….What happens when the Tax on Tobacco products becomes so high, that it actually accomplishes a good thing, by helping people quit smoking?…When the revenue drops because people either get their “Smokes” out of state or quit smoking, what will then be Tax to recover those lost and diminishing revenues? I agree with idea of taxes on Tobacco to help with Health issues but, the more something costs, the less people can or want to afford it….
Why is it that there are those who admittedly say they will not be affected by an increase in fee’s and taxes, yet are so quick to take control of other peoples money, property and success?
I agree fully..Don’t be fooled by Conservative Republicans, Liberal Democrats, Liberal Republicans, or Conservative Democrats…But even more so, don’t be fooled by those who want to stick their hands in your pockets and take what they did not earn, does not rightfully belong to them and especially those who want to legislate it…. That’s called Theft…It’s not an issue that needs to be addressed by increasing Taxes, and Fee’s…It’s an issue that requires Living within our Means…
Keith Thompson says
It was interesting to hear recent news stories about the Maryland Attorney General’s office going after the tax revenue from people smuggling in cigarettes from out of state and then selling them in Maryland. My thought was that if cigarette smuggling is now becoming that significant of a problem for the citizens of the state, then perhaps the best solution is to simply cut the cigarette taxes.
Lainey Harrison says
Oh I like this line about the lottery revenues of $8.8 coming to the general fund. I never understood why all the lottery money went to the Stadium Authority anyway. I hope it was a typo too though. $8.80 wont do squat for our general fund. Im hoping there is a million or billion that got left out of the story. But really, can someone send a memo to all our “esteemed” lawmakers that SHIFTING TEACHER PENSIONS is an accounting gimmick, not a savings. SHIFTING is the key word. Shift is defined as to move, to cause to go from one place to another. Maybe our lawmakers should be less SHIFTY (defined as given to or marked by deliberate concealment or misrepresentation of the truth) in thier discussions about “saving taxpayer dollars” by SHIFTING teacher pensions and raiding trust funds such as the Injured Worker Fund and the Program Open Space funds.