If history is any indication, officials in Maryland and Virginia are going to attack what could be $1 billion shortfalls from the opposite direction.
The notoriously tax-allergic Virginia legislature in March closed a combined $2 billion budget gap through 2010 by dramatically curbing its spending aspirations.
Among the cuts, the General Assembly yanked about $300 million in capital projects, pared the state’s aid to localities by $50 million in fiscal 2009 and again the next year, and slashed funding for almost all non-state entities and $35 million from state agencies. Lawmakers pulled $350 million from the state’s “rainy day” reserve.
Maryland called a special legislative session last year to close a $1.7 billion budget gap.
After roughly three weeks of deliberations, state legislators voted to raise the sales tax and vehicle excise tax rate from 5 to 6 percent, increase corporate income tax rates from 7 to 8.25 percent, double the cigarette tax from $1 to $2, and levy higher income taxes on the state’s wealthy residents.
Previously, all Maryland residents paid a flat 4.75 percent tax on income over $3,000. Now, individuals making $150,000 a year and joint filers making more than $200,000 together will pay 5 percent, and individuals making more than $300,000 and couples earning more than $350,000 will pay 5.25 percent.
Single and joint filers earning more than $500,000 a year will pay 5.5 percent, and people making more than $1 million a year — about 40 percent of whom live in Montgomery County — face a 6.25 percent income tax.
