Wednesday, January 18, 2012
State FY 13 Budget Released This Morning
Governor O’Malley’s proposed FY 13 state operating budget was introduced into the Senate and House today, along with a Budget Reconciliation and Financing Act (BRFA) that will implement major finance and tax law changes needed to fund the budget. Here are some early observations based on the information currently available:
- The total state budget grows by about 2% to $35.5 billion. Total FTE state positions grow by 123 to 79,244.
- Significant program funding changes and new taxes are proposed to reduce the state’s ongoing $1.1 billion general fund budget gap by $656 million.
- Counties would relieve the state of $239 million of pension costs for teachers, while receiving some offsetting new revenues.
- $311 million in new state revenues are proposed, including $182 million in increased state individual income taxes (and $111 million in local income taxes) resulting from phasing out the personal exemption and deductions above certain income levels. This will increase taxes for Maryland businesses taxed as pass through entities and add to Maryland’s comparatively high effective individual income tax rates.
- The state would attempt to require out of state vendors to collect $21 million in sales tax, despite the Comptroller’s advice that “there is no certainty of a substantial revenue increase” from such legislation.
- Increased revenues are estimated from tax increases on certain tobacco products, Maryland-mined coal, digital downloads of software, and telecommunications companies.
- $40 in increased real estate recordation taxes would be authorized for counties.
Here is the Budget Highlights document. For further information contact Ron Wineholt at .(JavaScript must be enabled to view this email address).
