Maryland lawmakers want to spend billions more on schools. Where will they find the money?

Maryland lawmakers are trying to pull off an improbable feat: Find a way to raise billions of dollars for public education without most residents noticing a hit to their wallets.

Democratic leaders of the state’s legislature have promised to fund an array of improvements to public schools — including expanded prekindergarten, increased teacher pay and other programs — without a broad-based tax increase.


Leading lawmakers haven’t unveiled their plan yet of how to make it work, even as Republican Gov. Larry Hogan continues to hammer a message that they’re being irresponsible by pushing reforms without a way to pay for it.

Revenue-raising proposals are starting to trickle in to the state legislature, from lawmakers and special interest groups alike. Some are new ideas, like putting a new tax on online ads, while others are recycled ideas that supporters hope will get a new look, given the need for more money for education.


William “Brit” Kirwan, a longtime educator who chaired an independent commission that recommended the school reforms, is optimistic lawmakers will figure things out. If they want to improve the quality of public education, they’re going to have to, Kirwan said.

“There is no question that there are the resources in the state to make this happen if it is the kind of priority I think it ought to be,” said Kirwan, former chancellor of the University System of Maryland.

Kirwan, a former math professor, has spent more than three years leading what’s become known as the “Kirwan Commission,” which laid out a series of recommendations aimed at boosting student performance. They include expanded prekindergarten, tougher standards and higher salaries for teachers, improved college and career-prep programs, and more support for high-poverty schools.

The recommendations would be phased in over 10 years and will carry a $4 billion annual pricetag when fully implemented. That cost would be shared between the state government and local governments — $2.8 billion more from the state and $1.2 billion from local governments at year 10.

In the 2019 General Assembly session, lawmakers passed legislation with funding for the first few years of the Kirwan-recommended programs. Now lawmakers are figuring out how to pay for the rest of it.

The General Assembly’s leaders — House of Delegates Speaker Adrienne A. Jones and Senate President Bill Ferguson — have talked generally about ideas for raising money, but haven’t endorsed a plan to pay for all of the Kirwan programs. They’ve pledged not to pass an across-the-board increase in the state’s income, sales or property taxes.

Raising the money without hitting most taxpayers will be a challenge, said Warren Deschenaux, who spent decades as the legislature’s top nonpartisan budget and policy adviser before retiring in 2017.

“I think it will be quite a trick,” he said.


Deschenaux said lawmakers will need to juggle not only the spending requirements of the Kirwan recommendations, but also the threat of a possible recession and budget forecasts that show the state going into a deficit if spending and taxing patterns aren’t changed.

“The difficulty here is nobody wants to be taxed,” Deschenaux said. “People want stuff, but they’d prefer that someone else pay for it. That’s perfectly human, but it’s not always possible.”

Deschenaux has joined calls for a series of tax changes, including ending some corporate tax subsidies, disallowing certain accounting maneuvers that allow some companies to avoid paying state income taxes and raising income taxes on Maryland’s highest earners.

A group called the Maryland Fair Funding Coalition is pushing for those and other changes to “clean up” the tax code to raise money for education. The coalition includes unions and largely progressive advocacy groups, and works with staff of the nonprofit Maryland Center on Economic Policy.

All told, the Maryland Fair Funding Coalition estimates that its ideas, if implemented, may raise $2 billion per year.

“Right now, our tax system is rife with corporate tax loopholes and with tax breaks for special interests,” said Del. Julie Palakovich Carr, a Montgomery County Democrat who is sponsoring some of the Fair Funding tax bills.


Another proposal lawmakers are considering drew immediate attention: A new tax on online advertising put forth by Senate President Emeritus Thomas V. Mike Miller. It’s cosponsored by Ferguson.

The proposal is believed to be the first of its kind in the nation, and one that has been blasted by advertising companies as a “punitive tax.”

Matthew McDermott, president of the American Advertising Federation of Baltimore, wrote lawmakers soon after the bill was introduced to argue that the tax could violate federal law and harm Maryland businesses. McDermott said the advertising industry would be open to ways to help the state “without crippling our competitive and economic prospects.”

The online advertising tax fits with general statements that Ferguson has made about needing to align the state’s tax structure with the modern economy. He also has suggested taxing digital downloads of material — such as songs, movies and books — because those items are taxed when physical copies are purchased. No bill to tax digital downloads has been introduced.

But even as Ferguson mentions these ideas, he also has indicated a broader update to the tax structure could be a discussion not for this session, but for further down the road.

Some see legalizing sports betting as another option for raising money, and lawmakers will start discussing options for sports betting in the coming days. But according to some estimates, sports betting might only bring in tens of millions of dollars each year, far short of what lawmakers are seeking for schools.


Meanwhile, groups that are working to fight climate change are linking their proposed tax on carbon dioxide emissions to the need for money for education.

The proposal includes a tax levied on carbon dioxide pollution from power plants and other industrial sources, as well as an additional tax on gasoline.

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Versions of a carbon tax have been introduced before, and the concept is widely discussed globally as a way to incentivize reductions in carbon emissions to limit climate change. But this year’s selling point is that it can not only preserve the planet for future generations but also help pay for their education.

Promoters of the carbon tax say it could raise $350 million per year for public schools.

“We are in great need of finding a solid funding source to move the Kirwan initiatives forward,” said Sen. Ben Kramer, a Montgomery County Democrat and supporter of the carbon tax. “This is a solid funding source for doing that.”

Harford County Executive Barry Glassman is watching the legislature’s moves closely, as whatever the state does will undoubtedly have an affect on his county and others.


Many local governments already are struggling with how to pay for their increased share of the Kirwan programs, and Glassman, a Republican, is hoping to fend off any changes in Annapolis that will cost the counties more money, whether for education or elsewhere.

The question of coming up with so much funding is so difficult, Glassman said, that he expects lawmakers may only end up funding the first few years of the Kirwan programs — leaving tough decisions to the next governor and the next set of state lawmakers.

“Maybe they just patch it together with revenue for the next three years,” Glassman said. “The pinch will come later.”