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Employment and Barriers to Independence Poverty and Economic |
Budget News By Neil Bergsman Revenues Continue to Erode For the entire fiscal year to date, revenues are down 4.9% from last year. The General Assembly based the budget on estimates calling for ‘only’ a 2.3% decline (Followed by another 1.6% drop next year). So, these results will likely lead to a budget gap of hundreds of millions of dollars.
Governor Martin O’Malley is sifting through budget reduction proposals submitted by heads of state agencies. We expect that in July, he will put forward a package of about $200 million in budget cuts for the consideration of the Board of Public Works. The bulk of state general funds go for education, health care and public safety. The Governor and legislature have cut $2.7 billion in general funds from the budget since 2007. Each round of cuts becomes increasingly difficult because the remaining budgets represent critical services with widespread public support. Business Tax Study 2007 Special Session legislation set up a commission to study business taxes in Maryland. Governor O’Malley appointed Raymond Wacks of Howard County to chair the group, and it has started to take testimony from experts. At its June meeting, the Commission heard from Michael Mazerov of the Center on Budget and Policy Priorities (and MB&TPI’s national affiliate), Douglas Lindbloom, of the Council on State Taxation (a trade association of 600 major multistate corporations) and Jim Eads, of the Federation of Tax Administrators. The presenters agreed that Maryland’s overall level of business taxation is not high by national standards.
Mazerov outlined the recent history of corporations’ efforts to minimize state taxes and states’ efforts to protect their tax bases. Mazerov indicated that states have four basic strategies;
Lindbloom urges the panel to avoid tax changes that require corporation profits to be figured including their close affiliates and subsidiaries operating nationally, and also argued against single business taxes and sales taxes on services used as inputs by businesses. The Commission is slated to deliver an interim report in December of 2010 and a final report one year after that.
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