The Maryland General Assembly early Monday morning approved the largest package of tax increases in state history, handing Gov. Martin O?Malley a major victory for his politically risky proposal for tax hikes, slots and budget cuts.
The close to $1.4 billion in sales, income, cigarette and corporate tax hikes will go to help fund a $1.5 billion deficit next year, largely produced by increased aid to education. The hikes will also help fill a depleted transportation fund with $400 million in new money to build long-delayed road and transit projects.
The biggest chunk of new revenues — close to $1 billion — came from increasing the sales tax and expanding it to computer services. The legislature also raised income tax rates for people with incomes over $150,000, but substantially reduced rates for people making less than $100,000 by raising the personal exemption. Because of that, net revenues from the income tax only rose $30 million.
“This was a tough undertaking,” said House Speaker Michael Busch. “You have to give Gov. O?Malley a lot of credit for helping to resolve the issue even though it was something he did not make.”
“The state?s going to be well positioned for the next four years,” said Senate President Thomas Mike Miller. The governor “risked a lot of political capital. His numbers are going to drop briefly. There’s a little bit for everybody, but not everyone is going to be happy.”
Republicans were not happy at all. The Senate repeatedly voted to shut off debate during eight hours of on-and-off action, largely stymieing GOP efforts to talk the tax increases to death.
“We have a credit crunch, we have a housing crunch, we have gas over $3 a gallon, we have oil approaching $100 a barrel, now [taxpayers are] going to have to worry about how they?re going to feed the state government,” said Senate Republican Leader David Brinkley. “This is not the time to be doing this. The state has spending problem, not a revenue problem. This is a very regressive structure that passed.”
