Employment and Barriers to Independence
When is a "surplus" the same as a "shortfall"
State Comptroller Peter Franchot today reported that the revenues for the recently completed fiscal year exceeded the official estimates by $184 million. However, those official estimates were exceedingly dismal. The actual results are still a 2.4% decline from the previous year.
Even with this "surplus" the newly elected governor and general assembly will confront a projected budget shortfall of over $1 billion when they meet in January.
The Comptroller's revenue report states: "General fund revenues totaled $12.587 billion in fiscal year 2010, $183.7 million (1.5%) above the forecast. While revenue performance was better than expected, general fund revenues declined 2.4%. Baseline revenues—collections adjusted for $169.9 million in legislative changes and extraordinary transactions for fiscal year 2010—would have fallen 3.7%. That 3.7% decline represents the third-worst revenue performance since 1969 (only last year and 2002 experienced more precipitous declines). Revenues are now $1.1 billion below the fiscal year 2008 peak. Several major revenue sources declined in 2010, reflecting the continuing impact of the recession. Most revenue sources, however, exceeded their estimates."
Stay tuned for MB&TPI's complete analysis. 9/1/10
Reforming “Itemized Deduction” Tax Breaks Could Save Maryland Millions, Make State Tax Systems Less Unfair
Itemized deductions cost Maryland millions of dollars in income tax revenue annually while undermining the fairness of state tax systems, a new report shows. Moreover, federal tax changes enacted during the last ten years have gradually made itemized deductions even more unfair and expensive over the last five years, automatically passing tax cuts onto Maryland's wealthiest residents even as the state faces unprecedented budget challenges. Itemized deduction reform is another option for Maryland to consider in addressing its ongoing revenue shortfall.
A new report from the Institute on Taxation and Economic Policy, “Writing Off” Tax Giveaways: How States Can Help Balance Their Budgets by Reforming or Repealing Itemized Deductions presents estimates of the yield and tax fairness impact of five approaches to itemized deduction reform in the states, each of which would raise significant revenue to fund vital public services and make state tax systems less unfair.
Itemized deductions were designed to help defray a wide variety of personal expenditures that affect a taxpayer’s ability to pay taxes, including charitable contributions, extraordinary medical expenses, mortgage interest payments and state and local taxes. Yet, the deductions undermine the fairness of state tax systems: low-income families receive virtually no benefit from these deductions, and the biggest benefits are reserved for the upper-income families who arguably need them the least.
For example, the most comprehensive reform approach available to states is simply to repeal all itemized deductions and ensure that most middle- and low-income families are held harmless by simultaneously increasing the basic standard deduction available to all families, a step taken this year by the Rhode Island legislature. Repealing itemized deductions and significantly increasing the standard deduction in Maryland would result in a tax cut for 42 percent of the state’s taxpayers, yet the reform still would raise an estimated $429 a year.
The report presents four additional reform options.
Maryland needs a balanced approach to balancing the budget – including some expenditure reductions and some revenue increases. Reform of itemized deductions is an important item for the Governor and legislature to consider as part of this solution. 8/24/10Congress Passes Medical Assistance (FMAP)/Teachers' Jobs Bill
Congress has finally acted and approximately 2500 jobs in schools and state and local governments have been saved. Maryland will receive $290 million from a 6-month extension of the Federal Medical Assistance Percent (FMAP) which reduces the burden on the state's of funding medical assistance program and $180 million for the state's education system (a total of $470 million). Without Congress extending this program, the state's budget would've fallen off a "cliff" and would've been forced to cut other spending designed to counteract the effects of the recession in FY 2012 budget in order to make up the resulting shortfall. 8/10/10
Commentary: The hidden costs of 'tax-free' week
MB&TPI Director, Neil Bergman provides commentary on Maryland's upcoming tax free week in The Baltimore Sun. Bergsman states "The tax holiday is expected to cost the state treasury about $9 million in lost revenues. That's enough to provide 1,000 families with emergency housing assistance, or state college scholarships for 4,500 students. And it comes as the state is about to grapple with how to fill an expected $1.5 billion revenue hole resulting from lower revenues brought on by the recession." The Baltimore Sun. Read full commentary 7/22/10
Maryland Recovery Watch's MONTHLY MONITOR:
Maryland Faces a Budget “Cliff” as Recovery Funding Runs Out 7/22/10
Maryland Policy Report for July
Opening the Bottleneck - Historically High Caseloads and Inadequate Staffing Levels Prevent Many from Accessing Benefits
Happy New Year 2011 – The Free-Fall May be Over
Maryland begins its new fiscal year, revenues stabilized, but federal funds are at risk.
...and more 7/7/10
The Regular Person’s Guide to Maryland’s Tax System
The Maryland Budget and Tax Policy Institute presents the Regular Person’s Guide to Maryland Taxes. Here you can get the facts about state taxes: What is taxed? How much? Who pays? And what are the big policy issues?
MB&PTI will release sections of the Guide periodically over the course of the year.
Now Available:
Overview of Maryland's Tax System 6/28/10
In Case You Missed "Health Care Reform: Ask the Experts" on June 24 & 25, 2010 - co-sponsored by Maryland Nonprofits at the Johns Hopkins School of Public Health view the webcast here.
Maryland Recovery Watch's MONTHLY MONITOR:
MEDICAID AND HEALTH EXTENSIONS NEEDED TO SUSTAIN RECOVERY
programs, update on ARRA assistance to individuals, and 1st-quarter jobs report 6/10/10
New State Policy Encourages Saving
Effective May 1, 2010, case managers at Maryland’s local departments of social services (DSS) no longer count a customer’s cash resources when determining eligibility for Temporary Cash Assistance (TCA) recipients. Prior to this policy, if a beneficiary or applicant’s bank account(s) exceeded $2,000, he/she would be disqualified from receiving cash assistance. 5/20/2010
>>Read Fact Sheet by MBTPI, MD CASH Campaign & Welfare Advocates [PDF, 4 pp.]
PLAY THE MARYLAND BUDGET GAME!
We have included options recommended by GOP lawmakers as well as many of the budget actions actually proposed in the Governor's Budget.
A project of the University of Baltimore and MB&TPI, made possible by the Stoneman Family Foundation. 4/12/10
My 2 Cents Winning Videos- Click here to see the Winning Videos
The My 2 Cents Video competition is all about combining creativity with an interest in Maryland public policy topics. We challenged young filmmakers to create interesting, engaging videos about the value of taxes and the challenges of paying for college. See our winning videos - they are Fresh, Fun and inFormative 1/26/10
The Maryland General Assembly has enacted a $32 billion, balanced budget for the state, three days before the end of its 90-day legislative session. The new budget takes effect July 1, 2010. 4/24/10
>> Read MB&TPI's Summary [PDF, 2 pp.]
Recovery Act - Weatherization Program Weathers Implementation Challenges 5/1/10
>> Recovery Watch Maryland's Monthly Monitor
Maryland Budget and Tax Policy Institute supports corporation tax "combined reporting" legislation
>>Position Statement on SB 354 2/24/10
New Report: 5 reasons to Preserve Maryland's
Millionaire Tax Bracket - from ITEP, the Institute for Taxation and Economic Policy. 1/8/10
Maryland Taxes Hit Poor & Middle Class Far Harder than the Wealthy
Low- and middle-income families in Maryland pay a far higher share of their income in state and local taxes than do the richest families in Maryland, according to a study by the Institute on Taxation & Economic Policy (ITEP). 11/19/09
October Revenue Report Comptroller Announces - General fund revenues for the month of october totalled $892.8 million, a drop of 2.3% from October 2008.... Performance in generally in line with expectations, which remain very low." 11/16/09
TDAP Recipients Dominate Legislative Hearing
Current and former Temporary Disability Assistance Program (TDAP) recipients testify that DHR's proposed regulatory changes could cause increased homelessness, hospital visits, incarceration, and even death.
Go here to preview MBTPI's statement in opposition to the proposed regulatory changes to TDAP 11/10/09
Special Report - A Balanced Approach to Meet Maryland's Needs
Maryland has within its reach reasonable revenue options that would be a productive part of the balanced approach needed to preserve public investments--education, health, public safety, a good quality of life and a decent standard of living for all Marylanders. >>10/21/09
Monthly Monitor - First report on Jobs Created and Saved - Human Resources programs in Maryland - Education Innovation Grants Announced >>10/16/09
Study on Effects of Corporation Tax Combined Reporting.
Maryland’s Bureau of Revenue Estimates has released its long-anticipated analysis of the revenue effects of “combined reporting” for corporation income taxes. The report estimates that if corporate income tax combined reporting had been in effect in Maryland in 2006, the state would have raised an additional $109 million to $170 million, depending on the details of the combined reporting requirement.
Read MB&TPI's Special Report [PDF, 6 pp.]
See the Bureau of Revenue Estimates'study [PDF, 10 pp.]. >>10/2/09
Most Recent Census Data Shows Poverty Rate Held Steady in 2008 - Decline in Poverty Wasn't Statistically Significant. Due to the effects of the recession, Maryland's poverty rate is expected to get worst when the Census reports the 2009 poverty rate next year. Go here for more information >> 9/29/09
Monthly Monitor - Recovery Act Funding for Housing and Community Development Programs in Maryland >> 9/24/09
Revenues down more!
The State Board of Revenue Estimates has revised its estimate for the current fiscal year and issued its first official estimate of revenues for fiscal year 2011. The economic recession continues to depress state revenues, particularly income and sales taxes.
The Board downgraded its estimated for the current fiscal year (fiscal year 2010) by $683 million, to $12.3 billion. This would be a 4.5% decrease from fiscal 2009, which itself was 4.8% under 2008.
The largest adjustments from previous estimates were to individual income tax (-480 million) and sales tax (-82 million). Most revenue sources were adjusted downward. The only estimates that increased were estate and inheritance taxes (+2.5 million) and court fees and fines (+9 million).
This estimate will leave a shortfall of over $200 million in the current budget, even after the $736 million in cuts approved in July and August.
In fiscal 2011, the Board projects 3.4% growth to $12.7 billion. This would still be less than the amount actually collected in fiscal 2007 – four years earlier. The Maryland Budget & Tax Policy Institute estimates that this indicates approximately a $2 billion shortfall in the 2011 budget. The Governor must present a balanced budget proposal for 2011 to the legislature in January. >>9/18/09
709,500 Marylanders Lack Health Coverage, Job-Based Coverage Declining, New Census Bureau Data Show >>9/11/09
See MBTPI's Press Release on Census Health Insurance Data(PDF)>>
Comptroller Peter Franchot announces fiscal 2009 final revenues. Total is $348 million under latest official estimates.
Budget-watchers in Annapolis had expected revenues to come in $400 million under the official estimate. This is SLIGHTLY BETTER than the reduced expectations.
Almost all of the shortfall was in the individual income tax (-304 million) with lesser shortfalls in other sources, for example, corporation tax (-32 million), insurance tax (-23 milllion), and estate and inheritance taxes (-21 million).
Sales tax revenues were roughly on target, (9 million over the estimate, up just 3/10 of 1%), and the lottery was $17 million over the estimate.
Maryland Budget & Tax Policy Institute's complete analysis (PDF)>>
Revisions to revenue estimates for fiscal 2010 and 2011 are set to be released September 17. 9/1/09
Center on Budget and Policy Priorities' report:
At Least 41 States Have Imposed Cuts That Hurt Vulnerable Residents
Federal Economic Recovery Funds and State Tax Increases Are Reducing the Harm>> 9/3/09
Special Report: $454 million More Cuts Approved - Governor Martin O'Malley and Maryland's Board of Public Works approved $454 million in additional budget cuts for the current year on Wednesday, August 26. Combined with cuts approved in July, the current budget has now been reduced by $736 million since its enactment.
The cuts include $211 milion in cuts to local aid (most of it from transportation programs), $75 million from state employee furloughs of 5 to 10 days, and various rate reductions and program closures and curtailments.
The cuts abolish 364 state positions, 202 of them filled. The health and public safety departments lose the largest number of positions.
The Maryland Budget and Tax Policy Institute has prepared additional information and analysis on the cuts. Download the Special Report here>> 8/27/09
Monthly Monitor - Overview of
Maryland's Recovery Funds>> 8/5/09
Board of Public Works cuts $281 million from state budget
- Health and higher education are the biggest losers
- Half of the cuts are “fund swaps” or transfers
- Revenues continue to deteriorate
- More cuts to come
- Reasonable revenue options are also available
As state revenue reports continue to deteriorate, Maryland’s Board of Public Works approved $281 million in budget cuts. The cuts include a combination of program cuts, operating cost reductions, and actions that move money around to save general funds.
Download the full report (PDF)>> 7/21/09
Stimulus Job Numbers
The US Council of Economic Advisors estimates that the Federal Stimulus Bill (The American Recovery and Reinvestment Act of 2009, or ARRA) will create or save 3.5 million jobs across the country over two years. The council estimates 66,000 jobs in Maryland. The numbers are estimates based on economic models and "rules of thumb." When the actual numbers start coming in this fall, they'll be different--especially since it will be hard to identify and count the "jobs saved."
Ohio's Center for Community Solutions has prepared a great report on how these estimates were constructed and what happens next.
Download the report (PDF)>>6/22/09
Link to Ohio Center for Community Solutions
THE MYTH OF MARYLAND'S MIGRATING MILLIONAIRES
Millionaires are not fleeing Maryland.
Recent press reports, including the Washington Times', DC Examiner's, (Annapolis) Capital's and Wall Street Journal’s suggest that our state's recent surtax on income over $1 million is sending the wealthy to seek refuge in other states. That finding is contrary to available evidence.
There are fewer million-dollar returns because income is down – especially dividends, investments, corporate bonuses and the like. In addition, many high-income taxpayers are facing unusually complex tax situations, and likely filed for extensions. The Institute for Taxation and Economic Policy's analysis shows that the number of prelminary $1 million returns is not very different from the number filed last tax season. An additional 4,700 came in with extensions last year. See below. There are no reports of sudden unexpected surpluses in Virginia, Delaware or Pennsylvania from millionaires “escaping” Maryland.
The additional ¾ of one percent tax on income over $1 million is a small charge placed on those most able to contribute to support education, health care and public safety. Studies in New Jersey and California have shown that personal income tax rates don’t significantly affect location decisions of high-earners.
What about the shortfall in revenue? It’s the economy.
-Neil Bergsman 5/29/09
Budget Update - April Revenues Down 17%>> 5/13/09
>>Check out real stories of Marylanders in need at Md Alliance for the Poor's Blog
State Budget Wrap-up>> 4/15/09
Special report - Senate approves budget - conference committee set to resolve differences>> 4/3/09
Special report - House Appropriations Committee approves balanced Budget (PDF)>> 3/23/09
Special Report - Revenue board cuts estimates by $1.1 billion. (PDF)>> 3/13/09
Special Report - Board of Public Works approves $94 million in budget cuts. (PDF)>> 3/6/09
Special Report - Governor's Plan for Using Federal Stimulus Dollars (PDF)>> 2/27/09
MARYLAND POLICY REPORTS
2010
June Policy Report - Surpluses and deficits over the years, encouraging savings, and more: see the June 2010 issue of Maryland Policy Reports>>6/1/10
>> Full Report: PDF document 12 pages
March Policy Report - Legislative Republicans propose alternative budget cuts. 3/5/10
September Policy Report - Back-to-School Issue: education, food and shelter (and more)>> 9/16/09
August Policy Report (PDF)>> 8/18/09
July Policy Report (PDF)>> 7/16/09
June Policy Report (PDF)>> 6/16/09
May Policy Report (PDF)>> 5/19/09
January Policy Report (PDF) - 1/19/09
2008 (click here for Archive)
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