Md. Governor O'Malley Proposals Move Forward in Special Session

What was approved yesterday in the Maryland Senate Budget and Taxation Committee as reported in todays Metro section of the Washington Post http://www.washingtonpost.com / contained some significant changes to the Governor's proposed plan to reduce the state's 1.7 billion budget deficit.

Although none of the legislation submitted by Governor O'Malley was eliminated for consideration, every piece had amendments. The State Senate may vote as early as today on the changes proposed by the Committee.

The proposed one dollar tax increase tax on cigarettes to help fund health care initiatives was changed to read up to one dollar based on the size of the federal tax increase also set to be enacted soon.

The amendments to the Governor's proposed changes in income tax to make them more progressive were also significant, reducing the the top bracket for earners of $500,000 from a tax rate of 6.5% to 5.5%.

As to Corporate income tax, the proposed O'Malley change to shift to "combined reporting" was deleted by the Senate committee and a the creation of a group to study the change recommended.

The recommendation by the Governor to reduce the property tax rate by 3 cents per dollar was changed by the Senate Committee to maintain the current tax rate.

As I suspected the one cent in increase in sales tax was recommended for approval but adding property management, health clubs, and tanning salons as taxable services were eliminated and in their place was inserted landscaping services and computer services.

The Governor had proposed an innovative method to fund transportation construction costs by raising the gas tax by county based on the need. The Senate Committee struck that proposal and replaced it with setting aside 8.3% of the state sales tax for transportation projects.

The only changes to the proposed referendum on Slots was an increase to the amount of proceeds operators could keep from 30 to 33%.

The Maryland special session is certainly moving at a rapid rate. If the Senate votes today and approves these recommended changes, the House of Delegates would act next in voting on the Governor's proposals. Reconciliation will most likely be necessary between the two prior to final approval by the general assembly.

Governor O'Malley called for consensus at the opening of this special session of the General Assembly. He has repeatedly signaled his willingness to compromise and his actions have aided in building consensus among the elected representatives. Although significant changes are likely in the legislation proposed by the Governor, his proposals have laid the framework for a successful solution to Maryland's 1.7 Billion budget deficit.