Press Coverage of Senate Budget Committee’s Decision Meeting, Pension Shift, Taxes, and Maintenance of Effort

As previously reported on Conduit Street, the Senate Budget and Taxation Committee met yesterday to make its FY 2013 budget decisions. Specific details of the pension shift, pension offsets, and Maintenance of Effort can be found on Conduit Street.

From MarylandReporter’s coverage of the meeting:

The Senate Budget and Tax Committee on Thursday sent a $35 billion budget to the full Senate that includes income tax increases for almost everyone and $600 million in ongoing spending cuts.

This fiscal 2013 spending plan includes a shift of teacher pension costs to county school boards, along with new requirements for county governments to fund public schools, allowing them to even disregard local property tax caps to do so.

As expected, a bill to hike income tax rates by a quarter of a percent offered by Sen. Roger Manno, D-Montgomery, was the vehicle for all the tax hikes. The bill rolls back a 15-year-old tax cut engineered by Gov. Parris Glendening.

After some reworking, taxpayers making less than $75,000 would not pay the full amount, and many lower income workers would get higher tax credits.

Also added to the Manno bill was the governor’s proposed sales tax on Internet sales with some connection to Maryland and a doubling of the tax on cigars and other tobacco products, except for high-priced premium cigars. The committee rejected Gov. Martin O’Malley’s proposed sales tax on digital downloads and purchases of gold coins and bullion.

Also reported by MarylandReporter:

In the Senate’s proposed budget plan, some of the costs of teacher retirement would be shifted to county school boards over the next four years, not to the county governments next year, as Gov. Martin O’Malley had proposed. But the approved proposal would ultimately force counties to give their school boards $500 million more over the next four years.

Except for unusual circumstances in a poor economy and drastically lower revenues, counties will have to give local school boards the same amount per pupil as they did in the prior year, even if it means raising property taxes above limits set in county charters. Any county that did not meet requirements for maintenance of effort could have its local piggyback income tax revenues diverted directly to the school boards to make up the difference.

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