If all goes as expected, the Maryland General Assembly will pass two bills Wednesday during the special legislative session in Annapolis that will increase income taxes for some and shift teacher pension costs to the counties.
For Harford County, this could mean a $4.8 million hit in state aid and taking on the responsibility of more than $5 million for teacher pensions next year.
The income tax hike for individuals who earn $100,000 or more per year and households that make $150,000, as well as counties taking on millions per year in pension costs, was passed by the state Senate Tuesday and the House of Delegates is expected to take a final vote on the measures today.
These bills passed during the special session will keep the state from making $500 million in budget cuts, including in education, that would have otherwise taken effect on July 1.
"Harford took the second worst hit of any jurisdiction in the state," Sen. Barry Glassman said. According to Glassman, Baltimore County will be affected the worst with a $6.7 million reduction in aid from the state and Howard the third worst with $4.7 million.
"The thing that's so frustrating is," Glassman said, "on the flip side Baltimore City andPrince George's Countymake about $33 million on this deal."
The senator doesn't expect the House to make any amendments to the measures.
Supplemental grants and lower income tax brackets are partly the reason why Baltimore and Prince George's won't be affected by actions taken during the special session, Glassman said.
"Poorer jurisdictions get more money," he explained. "I think it's, quite bluntly, [Baltimore andPrince George's County] are bought off for their votes."
The income tax increase is part of a $264 million tax package that would affect roughly 14 percent of Maryland residents.
Special session necessary?
On Monday afternoon, Del. Pat McDonough said the only reason legislators were called to the special session was to move about $167 million from designated funds, such as the Chesapeake Bay fund and transportation fund, into the general fund to balance the budget.
The governor, treasurer and state comptroller, McDonough said, have the authority to move 10 percent of the state's operating budget, which would equal about $1.5 billion.
"They have the right to move that money around on their own without the legislature," McDonough said. If this were to take place, he continued, "Peter Franchot would raise hell and the state would point the finger at [Gov.Martin] O'Malleyif that happened."
McDonough feels that to get around this, a budget restoration fund was added to the Budget Reconciliation and Financing Act (BRFA) segment of the budget, which was not a part of the original bill during the regular session.
"[The state] is using the legislature as co-conspirators to get this money from the taxpayers and the legislators [Monday] that voted for it didn't realize they were also voting for a special fund," McDonough said. "They could've taken out the language in the BRFA bill and made it an individual vote and had a hearing right on the floor."
Teacher pension shift
While Harford County will pay about $5.5 million in teacher pensions costs next year, Glassman said this will go up to $8.8 million in 2016.
All Harford County senators voted against the measures.
On the county level, Glassman feels the Harford County Council will need to seriously consider not only the teacher pension shift when finalizing the fiscal year 2013 budget, but also all the yearly maintenance of effort for public schools and environmental measures that were passed during the regular legislative session, such as the "flush" tax.
"Although there are signs of coming out of this recession to some degree," the senator said, "the fact that we're fiscally tight for at least five to eight years is still on the horizon."