Archives for March 2011

The House of Delegates on Thursday overwhelmingly passed a $14.6 billion operating budget that reforms pensions, restores a chunk of education cuts and raises several fees to generate tens of millions in new revenue.

The House spending plan closes the state’s estimated $1.6 billion budget shortfall for fiscal 2012 without raising taxes but would require Marylanders to pony up twice as much to title a car, purchase a vanity plate and transfer property tax records.

The House voted 97 to 42 to send the budget to the Senate, which is expected to start debate on the bill next week. The vote split largely along party lines, with Delegate Wendell Beitzel, R-Garrett, casting the sole vote from the minority party in favor of the spending plan.

Democratic budget writers described the spending plan as fiscally prudent and socially responsible. But Republican leaders said cuts didn’t go deep enough to address long-term debt and spending, saying the plan is full of “gimmicks and magician tricks.”

Under the House budget, spending in fiscal 2012 would increase year-over-year by roughly $1.4 billion. Republicans also noted the House budget only trims a total of $6.5 million from Gov. Martin O’Malley’s proposal.

“We have a continually increasing appetite to spend the citizens’ money even in the worst of times,” said House Minority Leader Anthony O’Donnell, who waved a chart in front of the full House showing how the state’s operating budget has grown since 1979. “This budget goes up by $1 billion. When does it stop?”

Democrats said the increase is required to make up for federal funds the state used in past years to balance the budget and to restore roughly $58 million in education cuts O’Malley proposed in his budget.

The House budget, Democratic leaders said, will reduce the state’s structural deficit by 40 percent, an amount that equals about $800 million O’Malley’s plan reduced the future budget deficits by 37 percent.

“None of us believe this is a perfect product. It is the best effort given the resources we have,” said Delegate John Bohanan, a St. Mary’s Democrat and a key member of the House committee that handles the budget. “This budget is progress for our state that is emerging from a very difficult time.”

The House budget received preliminary approval late Wednesday evening after roughly five hours of debate, securing a smooth ride for Thursday’s final passage.

At times during Wednesday’s debate, Republicans used the budget as a platform to launch to into other issues, ranging from abortion to stem cell research to illegal immigration.

In the end, the House Appropriations Committee’s version of the budget moved forward unscathed after Democrats battled back a series of amendments designed to reduce spending, including one that sought to cap executive branch salaries at $1 below the governor’s $150,000 paycheck. Another failed amendment would have stripped state employees of a recently negotiated $750 bonus.

The House budget does not raise any of the four major taxes — sales, gas, income and corporate — but does propose a series of fee increases. They include an increase to the titling fee for vehicle purchases, which would double from $50 to $100, and an increase to the fee for vanity license plates, which is slated to double from $25 to $50.

Combined, the two fees are expected to generate about $52 million that will go in the depleted Transportation Trust Fund.

Marylanders also would pay twice as much — from $20 to $40 — for the fee associated with filing property tax records. The fee for filing birth certificates also jumps from $12 to $24 under the House plan.

Democratic budget writers rejected O’Malley’s bad-driver proposal, which sought to assess fines of $100 for each point over five that drivers receive on their licenses within five years.

The House had the first shot at the budget this year. Delegate Norman Conway, chairman of the House Appropriations Committee, said it was the toughest budget he’s had to balance in the 20 years since he’s been on the panel that handles state spending.

Conway said the House and Senate versions of the budget are not “that far apart,” but the two chambers will have to reconcile differences on at least two issues.

Among them is a proposed alcohol tax. The Senate is moving swiftly with a plan to gradually increase the state’s alcohol tax from 6 percent to 9 percent over three years. A Senate panel approved the bill Thursday, just days after it was introduced.

In its budget discussions, the House rejected assessing new taxes.

Pension reform also is poised to take center stage when the two chambers reconcile budget differences.

The House is proposing to change O’Malley’s pension reform plan by requiring state employees to pay 7 percent of their salaries instead of 5 percent into their pension plans. O’Malley’s proposal would have given state employees the option to choose between 7 percent and 5 percent contributions.

The House also shifted $17 million of the administrative costs for pensions to local school boards.

The Senate, on the other hand, could move toward shifting more of the cost of pensions to local governments, House leaders said. The House last year rejected a pension shift and wants to reform the system this year before moving forward with a shift.

Gov. Martin O’Malley rallied about 40 supporters of offshore wind energy on Wednesday, urging them to join him in one last chant that they hope will reach the ears of key committee legislators in Annapolis – “Pass the Bill!”

Environmentalists, steelworkers, lobbyists and others stood on the City Dock to make their final plea for passage of the offshore wind energy bill. The bill would contractually obligate utility companies to purchase some energy from offshore wind production companies for 25 years, once wind turbines are built. The turbines would be located about 12 miles offshore of Ocean City.

But the bill has been held up in Senate and House committees because of concerns over potential costs to the state and consumers.

” As drafted, it would be very tough to get that bill passed, but hopefully we can bring stakeholders together, work on amendments and so forth and see what we can do,” said Delegate Dereck Davis, D-Prince George’s.

Davis chairs the House Economic Matters Committee and hopes to schedule a public utilities subcommittee meeting for the bill next week. That leaves less than two weeks before the end of the legislative session to get the bill through the House and Senate.

O’Malley addressed the cost to consumers concern by announcing an amendment that would cap rate increases at $2 per month. Another amendment would require wind energy developers to pass along savings from federal tax incentives to ratepayers, according to an O’Malley press release.

Sen. Paul Pinsky, one of the bill’s sponsors, believes the next 72 hours will be critical to determining whether it will pass this year or be deferred and studied this summer instead.

“I’m optimistic but I think it could go either way,” said Pinsky, a Prince George’s Democrat.

But some opponents believe the bill is too cumbersome to pass this session.

“I’m surprised by how expensive it is and how little it actually does to help the environment,” said Delegate Herbert McMillian, R-Anne Arundel.

Even supporters are cautious.

“I think there are a whole lot of obstacles to the passage of it,” said Sen. Thomas Middleton, D-Charles, and chair of the Senate Finance Committee. “The lobbyists are really lining up, there’s a lot of money being spent in Annapolis because they have some real concerns and every time you put a rate increase on the rate payers, then the rate payers get angry.”

If the wind energy bill isn’t passed, environmentalists hope that it, like others on O’Malley’s green agenda, will return next year.
“There’s a couple different ways to look at a big bill like this because they often do take multiple years,” said Kim Coble, executive director for the Chesapeake Bay Foundation. “In some ways that’s common practice and that could be what’s happened.”

— KERRY DAVIS