Alternative to State Service Cuts
Alternatives to State Services Cuts
The Hogan Administration has proposed draconian fiscal cuts to State services, while significant revenue savings and enhancements sit untouched. Below are just a few examples.
Funds /Accounts | Description | Potential Money |
Maryland has 243 Dedicated Special Funds. | These funds have many revenue sources that go toward many purposes. Historically Maryland has tapped excess funds to fill budgetary gaps. | ProjectedFY19Balanceforall Funds = $2.258B (DBM) |
Local Income Tax Reserve Account | During the O’Malley Administration, $916.8M was borrowed over two fiscal years to fill budget gaps | TBD |
Bond budget PAYGO items | $142M savings |
Revenue Enhancements | ||
Combined Reporting | Require large, multistate corporations to pay their fair share in corporate taxes for profits generated in Maryland | $78.6million(2019Fiscal Note) |
Throwback Rule | Require large, multistate corporations to pay their fair share in corporate taxes for profits generated relatedtosalesinMaryland. | $56.8million(2018Fiscal Note) |
Close the pass-through/LLC loophole | Applya4%entity-leveltax onprofitsover$1millionof S-corporations, partnerships,andLLCs. Reduces special treatment ofpass-throughbusinesses in state tax code. Exempt sole proprietorships, first$1 million profits of all companies. Expected to affectlessthan2%ofpass- through companies. | $124 million (MDCEP Estimate) |
Decouple 529 Tax Benefit | Prohibitanindividualfrom claimingtheStateincome subtraction modification for contributions made to the Maryland College Investment Plan if the contributedfundsareused for private elementary or secondaryeducation expenses. | $20.3million(2018Fiscal Note) |
Means test individual tax credits | Disallowtaxcredits(suchas for solar panels and accessibilityramps)for high-income tax filers | Past proposals spread across multiple bills; total revenue unknown, possibly about $10 million. |
Restructure personal income tax brackets and rates | Lowerincometaxrateson income earners below median, raise rates on income earners above, restoremillionairetaxat 7%. | $689 million (MDCEP Estimate) Restoring millionaire tax with no other restructuring - estimated $81 million |
Capital gains surtax | Applya1%surtaxoncapital gains income to partially offsetspecialtreatmentin federal tax code. | $66–$96 million (2012–2016) |
Carried Interest | Applya19%stateincome surtaxonthedistributiveor pro-rata share of a pass- through entity’s taxable incomethatisattributable to investmentmanagement servicesprovidedinthe State. | $79million(2017FiscalNote) |
EstateTaxGiveawayReversal | Reversehandouttowealthy given in 2014 by resetting the estate tax exemption limitat$1millioninsteadof $5 million. | $137.7million(2014Fiscal Note) |
Carbon Tax | Establish a greenhouse gas (GHG) pollution charge on all GHG-producing substances distributed or used in the State. | General Fund revenue generated:$721.1million initially,$2.7billionbyfifth year(2019FiscalNote) |
Expand Sales Tax to Services | DLS est. $600M annually | |
Tax Digital Goods | DLS est. $38-54M over next four years | |
Expand Sports Betting | DLS est. $14M annually |
Personnel Adjustments | ||
Hiring Freeze | FY20 est. savings $100M | |
Renegotiate Service Contracts | Analyze%ofoverallstate budget goes to service contracts,auditandreduce | TBD |
Span of Control / Management Cuts First | Analyze top-heavy management agencies and recalibrate | TBD |
Early Retirement Buy-Outs | Allow service credit purchasestospeedup voluntary/retired separation fromservice | ForFY12,itwasprojected 1,000earlyretireeswould savethestate$40M |
TOTAL | $5,104,500,000 |