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Gov. Hogan pitches rainy day savings and tax cuts with Maryland’s $2.5 billion budget surplus.

Gov. Larry Hogan pitched a five-point outline for how he would use Maryland’s roughly $2.5 billion budget surplus, suggesting plowing much of the money into the state’s rainy day fund and spending the rest on tax cuts, aid for some struggling residents and a boost of some sort for state employees.

The Republican governor’s proposal, sketched only in broad terms at a news conference Thursday in Annapolis, comes after Maryland closed its latest budget year with a substantial amount of leftover cash thanks largely to the waves of federal pandemic relief that have flowed into the coffers of Maryland and other states.

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State revenues are projected to continue rising next year, painting a relatively rosy fiscal picture for Maryland. Earlier this week, the Maryland Board of Revenue Estimates, which sets official projections for tax collections and other revenue streams, raised its forecasts for next year by nearly $1 billion and hiked early estimates for the following year as well.

“My message is pretty simple,” Hogan said Thursday. “As long as I am governor, I will continue to fight for fiscal discipline; I will continue working hard every single day to make it easier for Maryland families, small businesses and retirees to stay in our state; and I will continue fighting to allow Marylanders to keep more of their hard-earned money in their own pockets.”

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Hogan’s plan would add roughly $500 million into the state’s emergency savings fund, for a total of $1.67 billion. The governor also proposed “major” tax cuts for retirees, an idea Hogan has pushed repeatedly without luck, as well as tax breaks for “working families across the state.”

The governor said he also would like to spend some of the money on “targeted relief” for Marylanders who are “struggling to make ends meet.” Hogan offered few specifics of that proposal Thursday but described the idea as building off the bipartisan state RELIEF Act package of pandemic aid passed into law in February, which supplemented existing tax credits for the state’s lowest earners, made direct cash payments to the unemployed and temporarily eliminated state taxes on unemployment benefits.

Hogan also proposed setting aside some of the surplus to benefit state workers. The state began collective bargaining talks with labor unions representing public employees earlier Thursday and worker representatives already have indicated they plan to push for pay hikes in the negotiations.

Past efforts by Hogan to push tax cuts have fared poorly in the Democrat-controlled Maryland General Assembly, where lawmakers often ignored Hogan’s preferences and instead voted to put state revenues toward spending priorities.

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Senate President Bill Ferguson of Baltimore said Hogan’s news conference raised more questions than it answered.

“As always, the devil is in the details,” Ferguson said in a statement. “It is imperative that we make strategic investments in Maryland’s future while also getting support to vulnerable Marylanders across the state.”

Del. Maggie McIntosh, a Baltimore Democrat who chairs the influential House Appropriations Committee, said lawmakers are keenly aware of the surplus and already have been discussing how to best use the money.

Although McIntosh welcomed some of Hogan’s suggestions — especially providing a raise to state workers — she added that “we need to be very cautious about spending this type of money on things that are more than one-time expenditures.”

The governor’s pitch for permanent tax cuts likely will get a skeptical reception from state lawmakers, McIntosh said. Instead, she said she’d like to see the money spent on investments in things like transit, transportation and school construction.

McIntosh noted that Maryland Democrats hope the surplus is further boosted by billions more in federal spending contained in dual infrastructure plans proposed by President Joe Biden and currently being negotiated in Congress.

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