Video + story: Martin O'Malley puts no new taxes in Maryland budget

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Local,Maryland,Andy Brownfield,Taxes

ANNAPOLIS -- Maryland Gov. Martin O'Malley announced a state budget on Wednesday that includes no new taxes or fees, after years of tax increases and a November election in which residents voted to bring in more revenue through expanded gambling.

The Democrat -- who is serving his last term and is considering a 2016 presidential run -- outlined a $37.3 billion budget for fiscal 2014 that increases funding for education and local police while squirreling away millions of dollars to protect against reduced federal funding in case Congress can't come to an agreement on spending cuts.

Legislative leaders, who were briefed by the governor Wednesday morning, were pleased with the budget. House Speaker Michael Busch, D-Anne Arundel County, described the briefing as "upbeat." Fiscal 2014 marks the first time since the recession that Maryland budgeters haven't faced a massive funding shortfall.

Highlights of the budget
• Would increase total spending by almost 5 percent to $37 billion
• Would set aside $153 million for Rainy Day Fund, increasing total to $921 million to lessen any blows to federal funding from "fiscal cliff" negotiations
• Would cap tuition increases at state universities to 3 percent
• Would give public employees a 3 percent cost-of-living raise
• Would support 43,000 new and existing jobs with $3.7 billion in funding for construction projects•
• Would appropriate $67 million in local law enforcement aid
• Would defer a $50 million payment to local governments

O'Malley "wasn't asking us to raise any revenues, and we were fully funding all of our programs," Busch said.

That still leaves the question of how the state will replenish its Transportation Trust Fund, which is scheduled to go bankrupt in 2018.

Proposals to index the gas tax to inflation or raise the sales tax stalled last session but could return this year. O'Malley declined to discuss transportation funding on Wednesday but said he was talking with legislative leaders.

He has raised taxes and fees 24 times since taking office in 2007, to the tune of $2.4 billion.

Last year, O'Malley raised income taxes on residents earning at least $100,000 after a contentious General Assembly special session. Those increases are boosting state revenue, and new gambling revenue -- from voter-approved round-the-clock gambling and table games -- is expected to bring in $199 million for education in fiscal 2014.

Warren Deschenaux, the legislature's fiscal guru, said new gambling revenue is helpful in avoiding tax increases.

While those revenues go toward the Education Trust Fund, clearly that helps offset the need for general fund spending and takes the stress off the general fund budget."

Overall, Maryland increased spending in all of its budgets by nearly 5 percent. Expenditures from the general fund, which pays for many of the day-to-day operations of the state, would increase by 3.3 percent to $16.1 billion.

The largest expense from that account -- 47 percent -- goes toward public education.

The proposed budget also cuts the structural deficit by $318 million. The structural deficit was $1.7 billion in 2007, but the proposal would mean 91 percent of that gap has been closed in the last three years.

Department of Budget and Management Secretary T. Eloise Foster said the gap was not eliminated entirely because of uncertainty on congressional spending cuts.

That gives Maryland an additional $166 million to play with. The governor has allotted $153 million to the state's Rainy Day Fund, increasing it to $921 million. O'Malley said that was done to protect against potential cuts in federal funding.

abrownfield@washingtonexaminer.com

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Andy Brownfield

Examiner Staff Writer
The Washington Examiner