ANNAPOLIS — Gov. Larry Hogan took office seven years ago after a campaign in which he criticized state spending and tax policies.
The cover of its first budget was emblematic of this campaign, its unadorned black and white appearance designed to symbolize austerity and caution. And for the next six years, its budgets stayed the same.
It ended on Wednesday when Hogan and state budget secretary David Brinkley took part in a briefing with reporters, purple budget books in hand.
“Now the state is in better shape than ever,” Hogan said. “With families struggling and retirees squeezed by inflation and rising costs in every area, there’s no reason we can’t, once again, put politics aside, to let this be done for the people of Maryland.”
Hogan’s final budget — weighing a total of $58.2 billion — will need the cooperation of Democrats to pass some of his key proposals, including a $4.6 billion tax cut.
The governor faces an uphill battle as Democrats in the General Assembly, who have a super majority of lawmakers, have their own ideas about how to spend a historic budget surplus that exceeds $5 billion over two years.
“We just thought it was such a historic budget, we wanted to symbolically show that it was different,” Hogan said. “It’s really a bipartisan effort, and the purple is the red and the blue coming together. It’s really what my whole administration is all about.
The governor has been rolling out budget priorities in dribs and drabs over the past few weeks.
Including hundreds of millions for public safety.
The governor also plans to spend nearly $1 billion on capital improvements statewide. Using excess cash allows the state to speed up projects and forego borrowing money on which interest must be paid.
And the Governor, as he and others have done for two decades, has proclaimed his support for education not only by meeting the required education spending levels, but by saying he is funding schools across the country. beyond these requirements.
The governor’s plan also includes increased support for low-income families hardest hit by the pandemic in the form of utility assistance, temporary disability assistance to more than 11,000 people and food benefits. improved for 27,000 elderly people and 50,000 children.
“Taken together, these efforts will provide much-needed relief to families and help ensure our state’s children get more of the food they need to grow up healthy, educated and strong,” said Ayesha Holmes, director of No. Kid Hungry. Maryland.
But the biggest priority for Hogan is a $4.6 billion tax cut package.
The largest of these proposed cuts, $4 billion over six years, would eliminate income tax for retirees age 65 and older who also claim Social Security. Currently, only Social Security payments are excluded from state taxes.
In the first year of Hogan’s plan, the state would eliminate taxes on the first $10,000 of retirement income. The change would reduce revenue by about $188 million in the first year.
“It’s the fiscally responsible thing to do,” Hogan said. “We start with the lowest income people who need the most (a tax cut) and work our way up.”
Other years would be phased in at higher amounts. Budget Secretary David Brinkley said those details will be part of legislation the governor will submit in the coming days.
The governor is also proposing to make permanent some of the earned income tax credit increases enacted a year ago. The increases came as part of a compromise deal between Hogan, House Speaker Adrienne Jones and Senate Speaker Ferguson.
But that deal also included payments to undocumented immigrants who would otherwise qualify for the tax credit, known as ITIN filers.
Hogan said his $600 million proposal to make those credits permanent does not include those low-income immigrant workers.
Hogan said historic surpluses — a combination of increased tax revenue and a deluge of federal pandemic relief — mean the state can afford tax cuts.
“We are able to make these commitments while continuing to fund all of Maryland’s top priorities,” he said.
Jones, in a statement, said the spending plan was insufficient.
Hogan’s plan misses $125 million in funding for parts of Kirwan’s education plan, mostly in the city of Baltimore and Prince George’s County. There are also concerns that the tax cuts for retirees, once fully implemented, will hamper the state’s ability to pay for the education plan without a tax increase under a new governor.
“Our responsible fiscal policies and federal relief funds have enabled the governor to present a budget that funds many of our priorities such as child care, higher education, victim assistance and infrastructure upgrades.” , said Jones. “However, I am disappointed that this budget continues to undermine the (Kirwan) Blueprint’s commitment to providing world-class K-12 education for children in every postcode. I am skeptical that this budget will do enough to address historic staffing shortages in the state that put Marylanders at risk every day.
Both Jones and Ferguson have expressed reluctance to potentially spend a one-time surplus on current expenses. Instead, they seem focused on one-time capital expenditures, including buildings, parks, transportation, school construction and renovations, and information technology.
Jones said she would judge the budget and other issues this session by the standard “is it helping families who have been left behind in the post-pandemic recovery?”