The tax increases would be retroactive to Jan. 1, meaning current payroll deductions for affluent Marylanders may not cover the tax bills residents will face next year.
The Senate appeared poised to give final approval to the tax package Tuesday. Democratic leaders in the House expressed confidence they could send the plan to Gov. Martin O’Malley (D) on Wednesday, despite discontent from some Montgomery County lawmakers, who argued the income tax increase hits their affluent jurisdiction too hard.
The quick action stood in stark contrast to the end of the legislature’s regular session last month, when movement on the revenue measures ground to a halt amid brinkmanship over whether to allow a full-fledged casino in Prince George’s County.
When the General Assembly adjourned April 9, it had approved a spending plan but not an accompanying revenue package sought by O’Malley.
The governor criticized lawmakers for the breakdown but then helped negotiate a compromise under which Democratic leaders agreed to reconvene to vote on tax increases but to put off the unresolved gambling issue, perhaps dealing with it in another special session over the summer.
With no Maryland state lawmaker facing reelection this fall, O’Malley has led Democrats in arguing that the tax increases — the first major increases since 2007 — are crucial to the state emerging strongly from the economic downturn. They would allow his administration to continue record funding for schools and other Democratic party priorities.
“It’s a small price to pay to live in this great state,” said Senate President Thomas V. Mike Miller Jr. (D-Calvert), who added that it was regrettable the legislature had to return to Annapolis at an estimated daily cost of $25,000 but that it was the right thing to do. County officials have warned that without higher taxes, teachers, police officers and other county employees could begin receiving pink slips as local governments adopt spending plans based on expected lower state aid.
In a highly orchestrated return to Annapolis on Monday, both chambers took up tax bills and completed hearings on the measures, and the Senate on Monday night voted to advance the more than $260 million package.
The Senate also gave initial approval Monday to another budget bill that had died last month. That legislation includes a negotiated deal to shift a share of Maryland’s growing teacher pension costs to counties. In exchange, the state will increase grant funding to local governments and allow counties to collect a form of recordation tax related to commercial real estate deals.