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Maryland’s Budget Picture: The Lone Ranger and the Three Big Bad Wolves

Maryland’s Budget Picture: The Lone Ranger and the Three Big Bad Wolves. Neil Bergsman Maryland Budget and Tax Policy Institute Presentation to United Seniors of M aryland November 19, 2012 . The deficit has evaporated. DLS 11/13/12. How did this happen?. Planning a nd management

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Maryland’s Budget Picture: The Lone Ranger and the Three Big Bad Wolves

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  1. Maryland’s Budget Picture: The Lone Ranger and the Three Big Bad Wolves Neil Bergsman Maryland Budget and Tax Policy Institute Presentation to United Seniors of Maryland November 19, 2012

  2. The deficit has evaporated DLS 11/13/12

  3. How did this happen? • Planning and management • Recovering economy • Good luck

  4. Planning and management • (Really) • Restraint in spending growth • Largely protecting public schools and the safety net • Transfers and expedients • Putting in a good word for gimmicks and can-kicking • Never touched 5% Rainy Day reserve • Revenues • Sales tax, tobacco tax, casinos, liquor tax, income tax

  5. Casino revenues for the state DLS 11/12/12

  6. Recovering Economy

  7. Recovering Economy

  8. Good luck • Revenue estimate revisions • Bond sale premiums

  9. Let’s go, Tonto. Our work here is done. • Maybe not ….. • Fiscal Cliff • Structural Deficit • Transportation

  10. Fiscal Cliff National Maryland Federal grants About $117 million Federal employment and procurement 20% of Md’s economy Defense 10% Nondefense 10% Federal nondefense 4% of MD workforce • Expiring tax provisions • individual and corporate rates • Earned income and child credits • Social security tax • Sequestration • 8.6% domestic • 9.6% defense

  11. Structural Deficit

  12. So … what’s likely to happen? • Likely off the table • Income tax • Gambling • Pensions • Employee pay and furloughs

  13. Possible spending reductions • Defer repayment of Program Open Space and Local Income Tax Reserve funds • Cuts to Medicaid rate increases • Also community health providers – mental health, developmental disabilities • Eliminate increase for higher education • Could mean tuition increases above 5% • Eliminate formula increases: • Community colleges, libraries, local police, private higher education, local health, arts • Employee and retiree health • Numerous small program cuts

  14. Possible revenue increases • Gas tax for transportation • Cigarette tax

  15. Corporate income tax • Push for rate reduction • Opportunity to couple this with reform?

  16. Transportation • Gas tax last raised in 1992 • Gas tax and vehicle titling tax both are depressed • Funding for highway projects dwindles and disappears by 2017. • Funding available only for system preservation • No fund source for mass transit projects • Purple line, Red Line, Capital Corridor • The projections are considered the “rosy scenario”

  17. Advocacy Points • You are still on defense • Protect funding for your key programs • The next big issue could be responding to the effects of federal deficit reduction • Next 3 years: • Identify your next big issue(s) • Build awareness and support

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