Md. budget differences ironed out

Both chambers must vote by midnight Monday on $14 billion compromise

General Assembly

April 11, 2009|By Laura Smitherman | Laura Smitherman,laura.smitherman@baltsun.com

Maryland motorists would miss out on a state tax break when buying a new car under a final budget deal crafted Friday, though they would still save federal tax money promised as part of a program to jump-start the slumping auto market.

Putting the finishing touches on the state's nearly $14 billion operating budget, lawmakers also decided to throw a $5 million lifeline to Bon Secours Hospital. The grant would not be delivered until the struggling hospital's board devises a long-term plan to solve its financial problems.

And lawmakers resolved disagreements over funding for stem cell research and tax credits for biotechnology. They cut Gov. Martin O'Malley's proposal by $3 million to $15.4 million, averting a much larger reduction, and restored a total of $6 million in tax credits for the biotechnology industry that the Democratic governor has championed.

The spending compromise - crafted amid one of the worst economic downturns in memory - now heads to the House of Delegates and Senate for final approval, as lawmakers race to finish before the session adjourns at midnight Monday.

The House is expected to take up the bill first, on Saturday.

Maryland's budget must be balanced, and lawmakers have cut programs, frozen state agency spending and denied state workers raises. But the governor and legislative leaders say they've preserved as much money as possible for public schools, universities and health care, and avoided deeper cuts thanks to federal stimulus spending.

Senators and delegates resolved dozens of disagreements between the two chambers in recent days, and the final bill leaves a roughly $100 million cash balance that can be tapped if the economy deteriorates further.

Lawmakers also endeavored to preserve about $180 million for Program Open Space, under which state and local governments purchase land for preservation and recreation. With the state low on cash, about $140 million of projects would be funded through bonds. Lawmakers and advocates say that with the real estate market collapse, now is an opportune time to acquire public land.

"This is a debate that happens when budgets get tight," said Kim Coble, Maryland executive director of the Chesapeake Bay Foundation. "But it gets more expensive all the time to preserve land and the environment, so the longer we wait, the more we will have to spend."

Lawmakers extended a federal tax break for unemployment insurance, allowing up to $2,400 of benefits to be excluded from state taxes. They also allowed a federal increase in the earned-income tax credit for low-income residents to be reflected on state returns.

Under state law, Maryland automatically buffers itself from federal tax law changes estimated to alter state revenues by more than $5 million. So to allow car buyers to fully benefit from a new federal break authored by U.S. Sen. Barbara A. Mikulski, lawmakers would have had to take affirmative action.

They declined, saving the state an estimated $10 million.

The state tax break would have been about $96 on the purchase of a $20,000 car, though taxpayers will still get the federal benefit of about $350.

"This is one of the few benefits we'd be going back to taxpayers with," Del. Sheila E. Hixson, a Montgomery County Democrat and chairwoman of the Ways and Means Committee, said before the conference committee reached its decision on the car tax.

Sen. Ulysses Currie, chairman of the Budget and Taxation Committee and a Prince George's County Democrat, responded by warning that the economy could worsen and that lawmakers needed to build a budget cushion in case state tax revenues take a dive.

"I understand," Hixson said.

Mikulski, a Democrat, proposed the federal tax break to let buyers of new cars, light trucks, recreational vehicles and motorcycles deduct sales and excise taxes from the purchase on federal returns next year. An aide said Friday that Mikulski's office would review the state's move to assess its impact.

With Bon Secours, lawmakers stepped in to help save the hospital that lost $22 million last year, its largest loss in a decade. The hospital has had difficulty sustaining a profit in a community where most of its patients are poor and uninsured.

"I am certainly pleased and excited about the opportunity to continue to serve the West Baltimore community," said Dr. Samuel L. Ross, Bon Secours' CEO. "I definitely see this as a new beginning. This really shows the confidence that people show in our ability to make a difference."

State Sen. Verna Jones, a Baltimore Democrat whose district includes the hospital, said she was relieved about the state aid. "This is a part of getting a new dialogue on how health care is delivered in this district," she said.

Lawmakers annually debate funding for stem cell research, and this year many argued that there would less need for state dollars after President Barack Obama lifted restrictions on federal funding for embryonic stem cell research. Opponents say the use of embryonic stem cells is morally wrong, and proponents say the funding could yield life-saving treatments for many diseases.

Baltimore Sun reporter Kelly Brewington contributed to this article.

highlights

Maryland's $13.8 billion budget:

* Absorbs $1 billion in federal stimulus money

* Allows for tuition freeze at public universities

* Eliminates cost-of-living increases for state employees

* Cuts $162 million for local road maintenance

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