Governor Martin O’Malley has called the General Assembly into a special session starting October 29 that promises to be a wild roller coaster ride of unknown duration and destination. The Governor has requested the General Assembly to enact his plan to resolve the state’s $1.7 billion general fund structural deficit, which has been building over the past five years.

The Governor’s plan includes the following elements:

• State budget cuts of $400 - $500 million in future years, primarily in slowing the growth of local education aid;
• Authorization of slots ultimately yielding over $500 annually;
• Tax increases in the sales tax, individual and corporate income taxes, transfer taxes and cigarette taxes generating $1.2 billion annually;
• Increased general fund spending or revenue reductions of over $300 million annually; and
• Increased transportation taxes and revenues yielding slightly under $400 million annually.

The Governor’s package may be comprised of as many as 10 bills, which should be available by the middle of next week and likely be heard by committees the middle of the week of October 29. Chamber staff will closely review the bills and testify at the hearings.

At this point our view of the Governor’s revenue package is that:

• Greater emphasis should be placed on future state spending restraint and the authorization of slots;
• The proposed new taxes on businesses would total over $662 million annually by fiscal year 2011, and would damage our competitive position;
• Fewer new taxes would be needed if greater spending restraint is exercised and less revenues lost through the new spending proposals;
• Transportation revenues should be increased by $600 million annually.

To view a chart summarizing the impact of the Governor’s revenue package on business, and for daily special session updates, click here (pdf). We will be providing updates and tracking special session news links online at www.mdchamber.org/specialsession. Contact Ron Wineholt for further information at rwineholt@mdchamber.org.