SENATE OF MARYLAND

ANNAPOLIS. MARYLAND 214O1-1991

By Sen. Roy Dyson


[ Senator Dyson's Newletter ]


Things are still being worked out here in Annapolis, but based on recent votes in the Maryland Senate it looks like St. Mary's County taxpayers will have extra money in their pockets next year. With an ever-escalating state budget surplus fueled by good economic times, the Senate has passed an accelerated income tax reduction and an earned income credit refund. The two bills will save taxpayers close to $150 million in the next fiscal year.

Another bill which hasn't gotten a lot of publicity will give the counties more flexibility in reducing the local piggyback income tax rate. The bill eliminates for at least one year the requirement of a six-month notice to the Comptroller's Office for the tax-rate change to take effect. That current provision requires the counties to make a call before they have enough fiscal data available.

The proposed bill also allows counties to make smaller reductions under certain cases. Now the St. Mary's County piggy back income tax rate is 58 percent. As the law now stands the commissioners could reduce the rate to 50 percent, but then in only five-percent increments thereafter. They could go to 45 percent but not 48 percent. This bill would allow that to happen, although at the current rate that appears to be unlikely. But I like the idea of giving the counties more flexibility. The bill to accomplish that recently passed the Senate and awaits its ultimate fate in the House of Delegates.

The House and Senate appear to agree on the accelerated income tax cut. This will reduce the top rate from 4.95 percent to 4.9 percent in tax years 1998 and 1999. And, it will increase the personal exemption from $1400 to $1600. According to the fiscal note on the bill this will mean an annual savings in this tax year of $19 for single persons with $25,000 income and $24 for persons with a $60,000 income. A family of four with a $40,000 income would save $51 and with a $100,000 income they would save $56 per year.

The bill also includes a provision for a review at the end of the two-year accelerated period to determine whether it should continue in later years or return to the reduction schedule approved last year. If the economy stays as healthy as it now is there is no reason why that reductions shouldn't be continued.

As you can see these cuts are crafted so that the people who can most use them will receive them. The other cut, in the earned income credit, would accrue to folks in the $1,000 to $16,000 federal adjusted gross income category. The average refund could mean anywhere between $39 and $257 depending on the person's income.

The Senate has also passed a budget which includes these tax cuts, but also includes significant initiatives in k-12 and college education and for the developmentally disabled. The Senate Budget & Taxation Committee is to be lauded for going over the budget with a fine toothed comb, even at one point amending it to remove one dollar from one section of the budget. There was a temptation, with the surplus, to throw money around. They resisted the temptation.

I am concerned that with all of the extra money for education that the committee cut $600,000 in education impact aid to Calvert, Charles and St. Mary's counties. This money was promised by the governor to soften the blow of the influx of people related to the Base Closure and Realignment Commission transfers to Southern Maryland. I believe the committee thinks that there was no impact on the schools from the moves. In fact the area received more than 500 new students in the current year from families directly connected with the federal government. I will be working hard in the final three weeks of the session to get those monies restored.


[ Senator Dyson's Newletter ]