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.
The Senate cleared both bills for final passage on Tuesday–after an amendment offered by Senate Minority Leader E.J.Pipkin to cut spending by 2% across-the-board failed in a party-line vote.
“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.”
Senate passage is likely early Tuesday.
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.
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