ANNAPOLIS — Sweeping income tax increases for most Maryland residents passed a Senate committee Thursday as lawmakers seek to avoid a “doomsday” budget proposal that would slash public services across the state.
Income tax rates would jump as high as 5.75 percent for the state’s wealthiest taxpayers, but rates would also rise for almost all residents in the state under the Senate’s proposal, even those making as little as $3,001 annually. The wealthiest taxpayers would pay a rate of 5.75 percent on their taxable income, 0.25 percent more than they do currently.
Teacher pension costs would shift to counties at a slower pace than Gov. Martin O’Malley has proposed. The shift would take four years, and apply only to county school boards — not libraries and community colleges as the governor suggests.
| The proposed income tax rates | ||
| Taxable income | Current tax rate | Proposed tax rate |
| $1-$1,000 | 2% | 2% |
| $1,001-$2,000 | 3% | 3% |
| $2,001-$3,000 | 4% | 4% |
| $3,000-$25,000 | 4.75% | 4.9% |
| $25,001-$75,000 | 4.75% | 4.95% |
| $75,001-$150,000 | 4.75% | 5.0% |
| $150,001-$300,000 | 5.0% | 5.25% |
| $300,001-$500,000 | 5.25% | 5.5% |
| $500,001-up | 5.5% | 5.75% |
The Senate Budget Committee adopted several of O’Malley’s tax proposals, including an online sales tax — but not a tax on downloading — an earned income tax credit, and taxes on certain kinds of tobacco, while adding cuts of their own to Medicaid, community colleges and scholarships.
Sen. Roger Manno, D-Montgomery County, said the committee’s income tax increases are more progressive than O’Malley’s.
“We spent a lot of time trying to come up with the fairest and most equitable plan possible,” Manno said. “Folks who can afford to pay a little bit more probably should in these very tough times.”
“We were able to save the programs that are most important to working families in the state of Maryland,” he said.
Senators ignored the pleas of county officials who say shifting millions of dollars in teacher pension payments to local jurisdictions would be devastating at a time when many counties face their own daunting budget deficits.
The pension shift would be reflected in increased per-pupil spending by counties under the state’s “maintenance of effort” law.
Sen. Nancy King, D-Montgomery, said the decision was out of lawmakers’ hands.
“I don’t think we have a choice here,” King said. “What we’ve come up with is as fair as we can be to everyone.”
O’Malley acknowledged similarities in the Senate’s budget and his own, and said there two sides must continue to work together toward a compromise.
“Of course the governor prefers his plan, but he appreciates the Senate’s hard work on this issue,” said spokeswoman Takirra Winfield.
The budget plan now goes to the Senate floor while the threat of the doomsday budget looms over the General Assembly — if the full House and Senate don’t approve the committee’s budget, lawmakers would cut local aid by $284.9 million.
Prince George’s County would lose $71.2 million under the budget passed by the Senate committee, while Montgomery County would be hit with $46.3 million in education spending cuts, loss of police aid, and per-pupil spending reductions.
