Maryland lawmakers are scheduled to meet Monday in a rare special session to boost taxes on residents making more than $100,000 to prevent school-funding cuts, layoffs and other austerity measures that would take effect July 1.
The Democratic controlled legislature was expected to pass the tax package last month, but the plan fell apart on the final night of the General Assembly session amid a heated debate over whether to allow a full-fledged casino in Prince George’s County.
The legislature adjourned having passed a spending plan, but not an accompanying revenue bill.
Democratic leaders say they have agreed to resolve the budget this week, and likely return to Annapolis again this summer to tackle the remaining issue of expanding gambling.
If they succeed this week, income tax rates for the 16 percent of Marylanders who make $100,000 or more would rise a quarter percentage. That would amount to hundreds of extra dollars annually for a couple reporting a combined income above $175,000, and thousands of extra dollars yearly for those reporting more than $1 million.
The tax increases would be retroactive to Jan. 1, meaning payroll deductions to date may not be enough to cover the tax bills affluent Marylanders would face next spring.
The legislature’s tax plan would also raise levies on little cigars increasingly sought after by adolescents from 15 percent to 70 percent, and increase taxes on smokeless tobacco products from 15 percent to 30 percent.
Under accompanying budget language, Maryland would also end a practice of being one of the most charitable states in covering local teacher pension costs. The state would proceed with a plan to shift about half the costs to counties to partially alleviate the growing burden on the state’s retirement system.
While an air of inevitability surrounds the tax package and pension shift, Republicans and some conservative Democrats argue there is no need for the revenue measures.
The budget lawmakers passed last month increased overall spending by roughly $700 million. With the tax increases, total spending would jump about $1.2 billion.
Republicans and Tea Party groups have planned protests Monday outside the State House. Groups that advocate for low income residents are planning counter protests in favor of the tax increases.
Schools in Prince George’s County stand to lose among the most from discretionary spending that would be cut off if the revenue package is not approved.
Lawmakers are expected to hold hearings on the revenue bills today, with an initial vote coming as early as tonight in the Senate. Democratic leaders in both chambers say the tax package could receive final approval by Wednesday.