Senate Budget Committee Discusses “Doomsday” Budget

The Senate Budget and Taxation Committee met this morning to discuss what is being called a “doomsday” budget, or budget options that could take effect if the General Assembly does not enact several measures (including the pension shift and certain revenue enhancements) to cut the State’s structural deficit in half as recommended in the fall by the Spending Affordability Committee.  To meet this recommendation, the Governor’s budget proposed shifting teacher pension costs to counties and capping income tax deductions and exemptions for higher income earners.  These changes have been met with resistance, therefore another revenue plan must be adopted in its place or cuts need to be made to the budget.  As reported by the Washington Post:

A game of chicken is developing between Democrats in the Maryland Senate and House over competing proposals to raise taxes. Senate Democrats want an across-the-board increase to income taxes to help close the state’s shortfall, while House members want to stick closer to Gov. Martin O’Malley’s proposal to cap exemptions and deductions for high-income earners.

With both sides waiting for the other to blink, Senate Democrats on Tuesday sought to make sure no one questions whether higher state taxes, in fact, are needed.

When presenting the “Doomsday” budget, the Department of Legislative Services also provided scenarios for bundling certain reductions should the General Assembly reject a shift of teacher pension costs, fail to increase General Fund revenues, or reject certain special fund transfers.

A number of items in the “Doomsday” budget would, if enacted, have a direct effect on local governments and school boards.  These include:

  • Education
    • Reduce per pupil foundation amount from $6,694 to $6,650 – $70.9 million
    • Eliminate Geographic Cost of Education Index -$128.8 million
    • Eliminate Teacher Quality Incentives and National Board Certification fees – $ 5.2 million
  • Other Local Aid
    • Reduce disparity grant by 10% – $12.0 million
    • Eliminate supplemental disparity grant – $19.6 million
    • Eliminate Police Aid grants – $45.4 million
    • Reduce library and State library network funding by 10% – $5.0 million
    • Eliminate local law enforcement grants – $20.8 million

The last page of the “Doomsday” handout shows the local aid impact by county.

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