Mathias, McDermott Vote Against Income Tax Hike

BERLIN — State lawmakers this week passed a fiscal year 2013 budget and revenue plan left on the table at the 11th hour of this year’s General Assembly session, but many believe the so-called “doomsday budget” triggered by default at the session’s close would have been better for the people of the Lower Shore.

When the 2012 session expired in April, the General Assembly could not reach a consensus on O’Malley’s ambitious income tax increase plan or the Budget Reconciliation and Finance Act (BRFA), which included, among many other things, a shift in the expense of teacher pensions to the counties. That inaction on the budget package triggered a so-called “doomsday” budget that included an estimated $500 million in spending cuts.

Undaunted, O’Malley and Senate President Thomas V. “Mike” Miller and House Speaker Michael Busch vowed to reconvene the Assembly for a special session and set about securing the votes to push through the tax hike package and teacher pension shift. That special session took place this week and, as expected, the leadership was able to get the package through.

Included in the two bills passed by both houses is an income tax increase for the state’s highest wage earners. The hike includes a quarter of a percentage point increase for individuals making $100,000 or more, and married couples filing jointly that earn a combined $150,000 or more. Also included in the BRFA, or revenue bill, is the highly anticipated shift in teacher pension costs to the county phased in incrementally over four years.

For Delegate Mike McDermott (R-38B), who represents Worcester and the Lower Shore, the predetermined outcome was even less palatable than the tax hike and teacher pension shift.

“What a crappy budget,” he said yesterday. “The fix was in and to me, that’s more disturbing than some of the nuts and bolts of this thing. When I have the governor, the Speaker and the Senate President telling me it’s all been worked out, what do you need the other 180 of us to come up here for? The Senate sends it over to the House with the instructions this is not to be touched. We could have and did have amendments that would have made it so much better. It’s like a bad movie editor when some of the best material is left on the cutting room floor.”

McDermott naturally voted against both bills, but for Senator Jim Mathias (D-38), the final decision was not as easy. Mathias said this week he voted for the BRFA bill, but could not support an income tax increase when so many of his constituents are still struggling with the recession.

“Worcester County has the highest unemployment rate even in the best of times, Wicomico County is on the verge of financial insolvency and Somerset, the second poorest county in the state, is in my district,” he said. “I really couldn’t vote to support a tax increase.”

However, Mathias said he supported the BRFA bill, if only as a means to continue to chip away at the state’s growing structural deficit.

“I did vote for BRFA and that includes the shift in teacher pensions to the county, because it includes $227 million in cuts and gets us a step closer to getting out of the structural deficit. The teacher pension shift has been talked about for four years. At least now, there is a plan in place to make arrangements for that.”

Like most Republicans, McDermott said he was more than satisfied with the default budget because it was balanced and included modest spending increases without tax increases or teacher pension shift.

“It was a balanced budget with around $700 million in additional spending, no tax increases, no teacher pension shift and no raiding of other funds,” he said. “It was probably the best budget Maryland ever passed and it was done by default.”

McDermott said the Lower Shore counties took a hit with the new budget plan, particularly Worcester, which saw almost no increase in state funding.

“Worcester County took the biggest hit in terms of percentage of local funding cut,” he said. “If we kept the budget as it was, Worcester would have seen about $4 million more. As it turns out, it was a zero gain. Worcester didn’t pick up anything.”

McDermott said the leadership threw a few bones to the local jurisdictions in the BRFA bill, but not enough to offset the huge losses.

“Most of that was one-year stuff,” he said. “It’s like my tea needs three packs of sweetener, but you only gave me a quarter of one pack.”

On the eve of the special session last Sunday, Mathias was able to bring Miller to the Lower Shore for a meeting with representatives of the three counties, including Wicomico, Worcester and Somerset, so the Senate president could hear firsthand the desperation with the default budget. Through the approval of the BRFA bill, Wicomico became eligible for relief from the $14 million Maintenance of Effort for education requirement in the default budget.

“Wicomico brought a tremendous amount of information that showed how the county is the last, or worst, county in Maryland to recover from the recession,” said Mathias. “I voted for the BRFA bill because I believe it will help them through this difficult financial time. The Maintenance of Effort requirement would have brought Wicomico to the brink of financial insolvency.”

Worcester County Commissioners Virgil Shockley and Madison Bunting had a 90-minute meeting with Miller last Sunday in Ocean City to discuss the implications of the special session and the proposed tax hikes and teacher pension shift. Shockley said the approved budget and additional cuts and liability transfers were less onerous on Worcester than Wicomico.

“For us, it was more like ‘here’s what you’re getting and not getting,’” he said. “We could have lived with the doomsday budget, but Wicomico could not have. Wicomico’s situation was so desperate after the session ended the way it did, it was probably a real good idea for Miller to come down here and meet with them face to face.”

Shockley said Worcester officials were prepared for the budget changes that came out of the special session as they continue to move forward with their own spending plan.

“We were expecting it,” he said. “Most of us were expecting it last year. We’re trying to run the county like a business and the taxpayers are the stockholders. All of us hoped the outcome would be different.”

During the special session debate, McDermott said he was advised by the House speaker during deliberations to use his “inside voice” because he was turning up the volume too loud on his message. McDermott said on the House floor the voice his colleagues were hearing was actually two voices.

“The first voice you’re hearing is an angry voice, because the people on the Eastern Shore are angry about this whole process and I’m reasonably sure if they were here, they would be speaking in an angry voice,” he said. “Secondly, if you think I’m speaking loud on the floor, I represent generations of people on the Eastern Shore who think you can’t hear them. They think you must be deaf.”

2 comments on “Mathias, McDermott Vote Against Income Tax Hike

  1. What a lot of people miss in this is that it taxes income that happened way before the bill becomes law. It’s retroactive to the beginning of 2012.

  2. I completely agree with Delegate McDermott. Worcester Co. give more than its fair share to the state and it is time we get a fair share back. Unless we stop spending and quit taxing, Maryland will continue to loss its economy to our neighboring states.

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