Emphasizing that its top priority is increasing revenue to Maryland’s Transportation Trust Fund, the Greater Baltimore Committee has issued policy positions on other elements of Governor Martin O’Malley’s fiscal plan now before the special session of the Maryland General Assembly.
The GBC supports most of the governor’s proposals to increase transportation revenue by almost $400 million. But it is opposing enactment of a “combined reporting” requirement for corporate taxes, which the governor estimates would channel an estimated $5 million portion of new revenue to the transportation fund.
The $25 – $30 million overall estimated revenue to be gained from the combined reporting measure “does not justify the potential negative impact this tax law change would have on major corporations in our state,” GBC president and CEO Donald C. Fry wrote in a letter to GBC members.
The GBC supports O’Malley’s proposed 7 percent to 8 percent increase in the corporate income tax rate, with half of the increased revenue dedicated to the transportation fund and half to higher education – two top GBC priorities.
“Although raising the corporate income tax is an additional cost to the corporate sector, it would be a direct investment in two of the components of a strong, vibrant business environment,” Fry wrote.
The GBC is also urging lawmakers to increase transportation funding by an additional $200 million because, the GBC contends, the state transportation fund needs at least $600 million in new revenue to begin to address a growing backlog of highway, transit, port and airport projects that are planned but not yet funded for construction.
Addressing the deficit
Regarding the governor’s deficit reduction plan, the GBC, is voicing support for three elements of it that, combined, would fund slightly less than half of the state’s estimated $1.7 billion deficit.
Specifically, the GBC supports:
• a sales tax increase from 5 percent to 6 percent and expansion to include health clubs, tanning and massage services, but not real estate management
• a $1 per pack increase in the tobacco tax to fund increasing access to health care
• slots legislation with state-owned slots at four to six locations and operated so that the greatest financial return accrues to the State of Maryland.
The GBC is urging the governor and lawmakers to conduct a “vigorous examination” of state programs and departments to eliminate waste and ineffective programs, prioritize spending, and identify savings that will close the rest of the deficit gap.
The GBC is not supporting the governor’s proposed increase in the personal income tax rates for high wage earners. While recognizing flaws in the state’s current personal income tax rate system, the GBC is “not comfortable” with the proposed rates in O’Malley’s plan, wrote Fry.
Including local “piggy back” taxes, the proposal would subject higher-bracket taxpayers to rates as high as 9.5 percent – which would give Maryland the second worst personal income tax rates in the U.S., according to Fry.