Bush:
I’m Matt Bush, and you’re listening to WYPR news.
On Wednesday, Gov. Wes Moore released his proposed budget for the next fiscal year. WYPR senior reporter Rachel Baye has been digging into the budget and joins me now to discuss some highlights. Rachel, thanks for joining us.
Baye:
My pleasure.
Bush:
This is a $67.3 billion budget, so there’s way more in here than we have time to get into. So give us the big picture.
Baye:
As we have been reporting, Moore had to close a nearly $3 billion deficit with this budget. He proposes doing that with about $2 billion in cuts to existing programs and nearly a billion in new taxes and fees.
The biggest change on the tax side is in personal income taxes.
Moore plans to double the standard deduction, which will likely benefit most low- and middle-income taxpayers, while eliminating the ability to itemize deductions, which will likely raise taxes for some higher-income earners.
He also proposes two new tax brackets, for individuals who earn more than $500,000 a year and those who earn more than a million a year. And he is consolidating the lowest four tax brackets.
The end result of all these changes is that households that earn more than $700,000 a year are likely to pay more.
But the governor says about two thirds of Marylanders will get a tax cut.
Bush:
Are there other proposed tax changes, besides the income tax?
Baye:
Yes, the budget also cuts the corporate tax rate, which is something Republicans say they have been pushing for for years.
On the higher-income side, there’s a 1% surcharge on capital gains for certain earners.
On the lower-income side, the budget makes more people eligible for a child tax credit.
Other tax changes include increases in taxes on table games and cannabis. The tax on sports betting doubles to 30%.
And this is not a tax exactly, but the budget also proposes a new $0.75 fee on all deliveries from large companies. So this would affect anything you order from Amazon, as well as food deliveries that use services such as DoorDash and Grubhub and grocery deliveries from companies like Instacart.
Bush:
Ok, those are the new taxes. What about the nearly $2 billion in cuts you mentioned?
Baye:
The cuts really span the government, but here are a few examples.
The governor wants to give the state Department of Education the ability to freeze enrollment in the child care scholarship program to keep costs down.
And Moore proposes freezing funding for community schools.
There are also cuts at public four-year colleges and universities, and the governor cuts about $200 million from the Developmental Disabilities Administration.
Many other cuts come from programs that were underperforming or weren’t really being used.
Bush:
What has the reaction been like?
Baye:
Republicans, predictably, are promising to fight the proposed tax increases. Senate Minority Leader Steve Hershey spoke about the potential effects of the new tax on people who earn more than five hundred thousand dollars.
Hershey:
There are states south of us that have much better tax climates, and it is not too difficult for people that have the means to be able to leave Maryland because of tax policies and move to other states. So it's very concerning, because a lot of times those individuals bring jobs with them.
Baye:
Republicans also raised concerns about small businesses that file taxes as individuals and therefore might be hurt by the higher income tax rates.
On the Democrat side, Senate Budget and Tax Committee Chairman Guy Guzzone said his committee members have initial concerns about the cuts to the developmental disabilities programs and to funding for crime victims. But he said they are still going through the details of a very large budget.
Bush:
That’s WYPR senior reporter Rachel Baye joining us to talk about Gov. Wes Moore’s proposed budget for the coming fiscal year. Rachel, thanks for joining us.
Baye:
My pleasure.
Bush:
I’m Matt Bush, and you’re listening to WYPR News.
