Gov. Harry R. Hughes presented today a final budget that disposes of virtually all of the amssive $296 million surplus the state accumulated this year and returns more than two thirds of the money back to Maryland residents in the form of Tax relief.
In his third and final supplement to the 1980 budget, Hughes reduced the surplus to about half a million dollars by redirecting the remaining portion of the excess to various welfare, education, trasnportation and law enforcement programs.
Hughes said his final afjustments to the 1980 budget raise the total tax relief package for next year to $217 million -- "the largest in the history of the state." Of that total, $107.9 million would go to individual taxpayers, $18.1 billion to state businesses and $91 million to local governments.
Most elements of the tax relief package have been moving through the General Assembly with little difficulty this week. But one disagreement between Hughes and the legislative leadership has not been resolved.
In an administration proposal, the standard state income tax deduction would be raised from the present 10 percent to 15 percent of an individual's taxable income. Also, the sales tax on utility bills would be cut from 5 percent to half that amount, 2.5 percent.
House Speaker Benjamin L. Cardin and Sen. Laurence Levitan (D-Montgomery)8 the chairman of the Senate Budget and Taxation Committee, would rather eliminate the utility tax and make up for the resultant loss of revenues by scrappingthe administration-backed increase in the standad deduction.
The Hughes proposal increasing the standard deduction would save state taxpayers an estimated $30 million next year while the legislative plan to eliminate the utility tax would save ratepayers about $17.5 million.
But behind the dollar signs and decimal points is an ideological dispute about just where the tax relief should be directed.
Many legislators claim that the increase in the standard deduction would be of little help to their vocal constituents, the suburban middle class homeowners, who generally itemize their income tax returns rather than take the standard deduction. As Del. Gerard F. Devlin (D-Prince George's), the vice chairman of the House Ways and Means Committee put it: "That plan is lkay for renters and H&R Block, but it doesn't do much for the people I represent."
Hughes disagreed, arguing at a press conference today that his proposal would "provide tax relief for the broadest base of Marylanders." He noted that 56 percent of the state's taxpayers now use the standard deduction and predicteed that his proposed increase in that deduction would prove so appealing that more than 70 percent of the taxpayers would take advantage of it next year.
"I just think this kind of tax relief is more equitable," said Hughes. "It is directed at the people who most need it."
The administration's third and final edition to the 1980 budget, when added in with the two earlier supplements, raises the total state budget from the original $4.4 billion to nearly $4.8 billion.
The $62.6 million budget supplement presented today includes two important programs for the states' low-income residents:
$5 million for the state to assume full support of the nonfederal share of food stamp program, now funded entirely by the local governments.
$4.8 million to increase state support of food stamp program, now funded entirely by the local governments.
$4.8 million to increase state support of the Aid to Families with Dependent Children welfare program. By adding this amount to the 6 million Hughes placed in the original budget to bolster the AFDC program, the administration has raised welfare payments 10 percent from last year, from $267 to $296 per month for a famiily of four. Even with this increase, however, the state still falls short of a "standard of need" of $319 a month established in 1969.