ANNAPOLIS, MD (September 27, 2007) – Governor O’Malley presented today a comprehensive solution to address the State’s looming $1.7 billion structural deficit, while making Maryland’s tax structure fairer for working families. The Governor was joined by Mayor Ellen Moyer of Annapolis and Lieutenant Governor Anthony Brown as he spoke to business and community groups in the gymnasium at Annapolis Elementary School.
“As we work to get our fiscal house in order, we must also work to protect our middle-class families who have taken it on the chin during these past few years, and protect investments in public education, public safety and public health,” said Governor Martin O’Malley. “Today, we are proposing a comprehensive and reasonable plan to solve our State’s budget deficit – a plan that reduces spending growth by a billion dollars over the next two years – and I look forward to working with members of the House and Senate, Republicans and Democrats alike, to begin making progress again for the people of Maryland.”
During the hour-long presentation, Governor O’Malley outlined plans to reform Maryland’s income tax structure to make it fairer for working families and the need to close corporate tax loopholes so that all businesses pay their fair share. He discussed his proposal to reduce the State property tax for homeowners and expand the sales tax, while keeping Maryland competitive with surrounding states. Under the Governor’s proposed reforms to the State’s income tax, reductions in the state property tax and sales tax proposals, the Maryland Department of Budget and Management estimates that 83 percent of Marylanders will pay less.
“Governor O’Malley has put forth a comprehensive and long-term budget solution that is fair to working families,” Lt. Governor Brown said. “We need to act now so that our children can inherit a future filled with the hope and optimism we all share.”
O’Malley talked about the need to invest in our State’s critical transportation and intellectual infrastructure. The Governor has proposed a 1 percent increase in the State’s corporate income tax which would be invested in the State’s Transportation Trust Fund and be used to make college education more affordable for Maryland families. During the period between 2003 and 2005, college tuition in Maryland rose by 40%.
The Governor also reiterated his proposal to recapture slots revenue from surrounding states to preserve and protect the 600,000 acres of horse-related open space in Maryland, and 18,000 horse-related jobs in our state. Under the framework announced by the Governor, recaptured slots revenue from other states would be invested in public education, school construction and higher education. The Governor’s plan would invest up to $100 million to make Maryland horse-racing competitive with surrounding states that already have slots, $425 million in priorities like education, and $125 million in school construction for education facilities, including community colleges. Currently, Marylanders spend $400 million playing slots in neighboring states such as West Virginia and Delaware.
O’Malley has also proposed plans to make healthcare more affordable by increasing the state’s tobacco tax by $1 to reduce smoking and invest in making healthcare coverage more affordable and accessible for Marylanders – including small businesses. In addition, the Governor’s plan will protect Maryland’s seniors by doubling the senior citizen income tax exemption from $1,000 to $2,000, and creating a new $50 sales tax rebate for seniors and others earning less than $30,000.
During his presentation today, Governor O’Malley announced plans to continue providing historic funding for K-12 education in Maryland by phasing in the Geographic Cost of Education Index between 2009 and 2011 and freezing the national index for the Bridge to Excellence Act in 2009 and 2010, and capping the index at 2.5 percent beginning in 2011. The FY 2009 budget will include an approximately $119 million increase in education attributable to the Geographic Cost of Education Index, teacher retirement, and other formulas.
Under Thornton, State aid to education increased from $2.6 billion in FY 2003 to $4.4 billion in FY 2008, a $1.8 billion increase over 5 years. Governor O’Malley’s FY 2008 budget included a 15%, or $567 million increase in Thornton funding and an additional $120 million for teachers’ retirement. The budget savings in FY 2009 will be $207 million.
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