Md. Senate approves tax hike, pension shift

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ANNAPOLIS — The House of Delegates is expected to give final approval Wednesday to a set of tax hikes and revenue increases to balance the state’s $35.5 billion budget.

The Senate approved the package earlier Tuesday, despite complaints from Republicans and a handful of Democrats that tax hikes are the last thing residents need in uncertain economic times.

Following several hours of debate, House lawmakers gave their preliminary approval to the two-bill revenue package Tuesday night. Most notably, it would raise income-tax rates on single residents making more than $100,000 and couples making more than $150,000 in an effort to add to revenues and trim the state’s structural deficit, which estimates expected shortfalls in future years.

‘This entire exercise here is about making sure we maintain funding for things that matter to us,’ said House Majority Leader Kumar P. Barve, Montgomery Democrat. “I fully support the notion of funding things in this state budget that make Maryland competitive.”

The revenue package includes one bill that would raise taxes and fees, increasing income tax rates and decreasing personal exemption values for the top 13 percent of earners, according to state budget analysts.

It would also raise taxes on smokeless tobacco and non-premium cigars, and increase some fees for state services.

A second financial policy bill would shift more than $130 million in teacher pension costs next year to local jurisdictions, phasing in a cost-sharing program over the next four years that will eventually require the state’s 23 counties and Baltimore to pay more than $250 million.

The bill would also undo more than $400 million in cuts that stood to go into effect after the assembly adjourned last month without passing enough revenues to pay for the budget.

The Senate passed the tax bill with a vote of 29-17, and approved the policy bill, voting 33-13.

“If we don’t pass this bill, the services that the people in the state of Maryland need get to be very difficult to find,” said Sen. Richard S. Madaleno Jr., Montgomery Democrat. “This is a responsible and prudent budget.”

On Tuesday evening, House Republicans provided most of the resistance to the bills, but some Democrats raised concerns about tax increases.

The House voted by a relatively narrow 76-57 margin to reject an amendment that would have kept personal exemptions at their current value.

Delegate Charles E. Barkley, Montgomery Democrat, proposed a change that would have raised the state’s sales tax by one cent rather than raising income taxes, but it was rejected by a voice vote.

While most Democrats said tax hikes will prevent cuts to education and tuition increases, House Minority Leader Anthony J. O’Donnell accused the party of being out of touch with taxpayers.

“There are some folks who don’t seem to care about the impact on the people who are paying the taxes,” said Mr. O’Donnell, Calvert Republican. “Those people are struggling and we don’t care about that.”

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