A House committee Saturday approved an overhaul of Maryland’s tax structure that would bring in $1.4 billion in fiscal 2009, essentially mirroring the plan put forth by Gov. Martin O’Malley.
The Ways and Means Committee approved a bill late Saturday afternoon and the full House began debating it at 7 p.m., when it faced strong opposition from Republican lawmakers, who said they did not have time to properly review the hurriedly drafted bill.
“This is the biggest income tax increase in the history of the state and we have no idea how it’s going to affect our constituents,” Delegate Susan Krebs, R-Carroll, told the committee.
Republicans came to the floor armed with dozens of amendments to the tax bills, but they were being methodically shot down by the Democratic majority as of late Saturday.
The House rejected a motion to suspend the session until Monday and planned to deliberate late into the night on the budget package, which is needed to close a $1.7 billion shortfall in the current budget.
The House plan would increase Maryland’s sales tax from the current 5 to 6 cents per dollar, a move that would raise an additional $720 million in fiscal 2009. But the House committee opted not to expand the sales tax to services, as proposed by the governor and Senate.
Under the committee’s plan, corporate income tax would increase to 8.75 percent, a higher rate than O’Malley’s plan. The House kept language to close corporate tax loopholes, which the Senate opposed.
The personal income tax for Maryland’s top earners would go up to 5.75 percent, increasing revenues by $165 million.
Other taxes under consideration include a doubling of the tobacco tax from $1 to $2 a pack as well as higher hotel and vehicle excise taxes. The House would set aside money for the Transportation Trust Fund and for Chesapeake Bay restoration.
Saturday’s floor session followed a day of closed-door meetings and negotiations as House leaders tried to craft a plan that could pass, with the full House session pushed back repeatedly, from 1 p.m. to 3 p.m. to 7 p.m., as talks continued.
After a morning of caucus deliberations, in which Gov. Martin O’Malley appeared to urge lawmakers to come to agreement, the Ways and Means Committee presented a dramatically stripped-down “Plan B” that would be voted on if consensus could not be found.
Plan B rejected most of the O’Malley taxes. It would have eliminated increases in the sales tax, hotel tax and titling fees. Instead it only proposed increasing the income tax and requiring combined reporting.
It would have raised about $800 million, requiring the House Appropriations Committee to make an additional $300 million in cuts when it convenes Monday. Appropriations Committee is still scheduled to meet Monday morning to consider budget cuts that would make up the remainder of the shortfall.
“This is an attempt to get to 71 votes” needed to pass a bill, said Majority Leader Kumar Barve, D-Montgomery, after presenting Plan B.
“If we don’t get the revenues, we’ll have to take the cuts. That’s the reality,” Appropriations Chair Norm Conway, D-Wicomico told the committee.
Following more negotiations, including a closed-door meeting of the Democratic caucus and House Speaker Michael Busch, D- Anne Arundel, the committee me