The $98.3 billion tax bill passed yesterday by Congress will have a major impact on the governments of the District of Columbia, Maryland and Virginia, with the biggest boons coming in the form of extra unemployment benefits for their residents and the promise of increased tax revenues for their treasuries.
On the down side, however, local officials are concerned that the federal government may have preempted tax opportunities in areas where they generally look for their own revenue needs. They point in particular to the bill's doubling of the current eight-cents-a-pack excise tax on cigarettes.
The states fared better in the final version of the bill than under the administration's original tax proposals, according to state lobbyists and representatives of the National Governors' Association.
The area of greatest gain had nothing to do with taxes, but came in a "sweetener" added to the legislation to attract votes: a new federal unemployment program that provides up to 10 additional weeks of federally funded benefits.
Because the new benefits are tied to each jurisdiction's unemployment rate, the number of weeks will differ in each locale. Maryland will receive 10 extra weeks, Virginia six weeks and the District six or eight weeks, according to officials in each of those jurisdictions.
Maryland early this month approved emergency legislation to give 13 weeks of additional benefits to jobless workers dropped from the federal rolls. More than 10,000 jobless workers are collecting those benefits at a cost to the state trust fund of about $1 million a week, financed by employer contributions, according to F. David Schad, head of the Maryland National Relations Office.
When the new federal benefit program begins on Sept. 12, most of those persons will switch to it, ultimately saving the state trust fund about $7 million, Schad said. Those ineligible for the new federal program will continue to get the extended state benefit, he said.
With the combination of all the benefit programs available to the long-term jobless, Marylanders conceivably could receive up to 48 weeks of unemployment benefits. However, because of varying eligibility requirements, most long-term jobless will receive from 39 to 42 weeks of benefits, state officials estimated.
In Virginia, where the unemployment rate has not been high enough to trigger extended federal benefits that have been available in Maryland, jobless workers can receive the basic 26 weeks of benefits offered in all states, plus six extra weeks under the new program.
In the District, workers will receive the basic 26 weeks, plus either six or eight extra weeks under the new program, according to Matthew Shannon, acting director of the D.C. Employment Services Department.
The number of weeks will depend on what the District's "insured unemployment rate" is on Aug. 28, Shannon said. The insured unemployment rate refers to the proportion of all covered workers who are receiving the initial 26 weeks of benefits. It always is lower than the total unemployment rate.
Along with the salve for the growing unemployment problem, the far-reaching bill, with its rules to reduce tax cheating and its reduction of some business and personal tax breaks, will increase state tax collections from both corporations and individuals.
Requiring businesses and individuals to declare higher taxable income means that they will have to pay more in taxes to the federal and state governments.
Schad estimated that this will bring about $2 million more to Maryland's coffers in fiscal 1983 and $8 million more in fiscal 1984. Virginia tax officials agreed that their collections would increase, but had no projected estimates. District officials were unavailable for comment.
When the bill was being drafted, many states feared it would severely damage their programs for issuing tax-exempt industrial revenue bonds, the financing offered by states to encourage private industrial development. Proposals in the original bill could have "devastated the program," according to Dick Geltman, of the governors' association.
But by the time the bill came to the floor, the changes had been modified and the bonds remained as useful and nearly as attractive as they had been before, Geltman said.
In at least one instance the bill improves on the present bond program, restoring a state's ability to issue "umbrella bonds," according to an official of the Maryland Department of Economic and Community Development.
Those bonds can be used to finance a number of smaller projects, such as relocating or modernizing buildings, under one bond issue, the official said. Although Maryland had been anxious to fund such projects, including many for energy conservation, this had been impossible under the previous program, he said.
Revisions in laws applying to mortgage subsidy bonds will allow states to make broader use of this program that is designed to help moderate-income home buyers obtain mortgages below conventional rates, Maryland officials said.