ANNAPOLIS, MD. — Senate and House leadership inched closer to reaching a budget deal Saturday, as lawmakers agreed to set higher income taxes on Maryland residents earning more than $100,000 annually but avoided a millionaire’s tax that had been floated by both chambers.
Residents earning between $125,000 and $500,000 would see the greatest increase in their income taxes, at least a half-percentage point.
A new income bracket would raise taxes on Marylanders earning between $250,000 and $300,000 from 5 percent to 5.75 percent, the largest hike for any earner.
While protecting Maryland’s lowest-earning residents, the budget plan also avoids an unprecedented flat-tax — also known as the half-millionaire’s tax — on households earning more than $500,000 annually. A millionaire’s taxwas also left out of the deal.
The Senate’s initial proposal raised taxes on all residents earning more than $3,000, a measure House lawmakers couldn’t stomach, said Del. Kumar Barve, D-Montgomery.
Lawmakers came to terms on the first year of plans to shift half of the state’s teacher pension costs to the counties — local jurisdictions will be responsible for $136.6 million in pensions in fiscal 2013, and the entirety of the shift will be spread out over four years.
Budget negotiators remain split on minor details of the pension plan, and are still discussing reductions of income exemptions for taxpayers. And House lawmakers want to leave exemptions untouched for residents earning less than $100,000, a move the Senatewarnedwould cost the state roughly $54 million next year.
The latest budget offering increases state revenues and cuts spending to the tune of $415.7 million in fiscal 2013.