House, Senate Both Back Plans To Increase Taxes in Maryland

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Under pressure from Gov. William Donald Schaefer and the education community, the Maryland House last week approved the largest tax increase in the state's history.

The House revenue plan, which could boost state and local taxes by as much as $800 million, was adopted only days after the Senate approved a bill increasing state revenues by about $250 million.

The two chambers were expected to come to an agreement on tax and budget issues by the beginning of this week.

Both the House and the Senate moved to raise taxes in light of projections that show the state is facing a $1.2-billion budget deficit.

In January, Governor Schaefer presented lawmakers with two choices: raise taxes in addition to making cuts in state spending, or accept a "doomsday budget'' that would make unprecedented cuts in state programs, including education. (See Education Week, Feb. 19, 1992.)

Five times in the last two years, Mr. Schaefer has asked lawmakers to prune a total of nearly $1 billion from budgets that had already been adopted. To close the sixth projected shortfall, both chambers have approved at least $50 million in cuts in the fiscal 1992 budget. That latest cut will be considered by the conference committee discussing the 1993 budget.

Under both chambers' spending plans for 1993, the state's main education-finance formula would increase by $184.4 million over the current year, to more than $1 billion. However, both bills would reduce general aid to counties, which traditionally pump substantial sums into education.

Both bills also reduce state funding for school transportation by $55 million and waive the requirement that counties spend as much per pupil as the previous year.

Under the House plan, which is favored by the Governor, the state would gain about $250 million in revenue by increasing the corporate-income-tax rate and by boosting the tax paid by people with incomes of more than $100,000 a year.

The House bill also allows counties to raise their local "piggyback'' income taxes by 20 percent, which could boost local taxes by more than $400 million.

The Senate tax plan would raise about $250 million primarily by expanding the 5-cent sales tax to cover many services not included in the House bill.

Vol. 11, Issue 28, Page 19

Published in Print: April 1, 1992, as House, Senate Both Back Plans To Increase Taxes in Maryland
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