As State Budget Is Passed, Talk in Senate Turns to Revenue

There was little discussion or dissention as the General Assembly passed a $46.6 billion budget plan early Tuesday.

The budget includes more than $7 billion in education, with $255 million directed to recommendations of the Kirwan Commission.

Coupled with the state’s capital budget – which is expected to be passed by lawmakers later this week – the spending plan also directs a half-billion to school construction next year.

The budget leaves $1.2 billion in the Rainy Day Fund and a $118 million general fund balance.

But the ambitious spending on education leaves a $829 million structural deficit in 2021 that grows to more than $1 billion in 2023.

Sen. Andrew Serafini (R-Washington) rose on the Senate floor to encourage everyone to vote for the budget bill, but he also expressed concerns about the future deficits.

“We’ve got our work cut out for us in the next couple years, and we’re really going to have to pull together,” Serafini said. “And my friends, I don’t think we can cut enough to make it happen.”

He said lawmakers will probably face the decision of whether to raise taxes in the next couple years, when an economic downturn is also likely.

“I just want us to be honest with each other. I just don’t see how we can do all of this without significant tax [increases] and we can’t get enough from the wealthy people. We would have to take tax increases down to the middle class,” Serafini said.

Senate President Thomas V. Mike Miller Jr. (D-Calvert) responded, “There are revenue sources out there that aren’t tax increases.”

He said the state was trying to “get a handle on marijuana” by establishing a joint committee to explore legalization, and legal sports betting could also be on the horizon.

“These are alternatives to tax increases. And we’re doing our very, very best to move forward without any tax increases,” Miller said.

Another potential major source of revenue came up later in the Senate floor session.

Senate Bill 728 would require marketplace facilitators – companies like Poshmark, Etsy and, in some cases, Amazon, that make third-party transactions possible – to pay the state’s sales and use tax.

Since a Supreme Court decision in June and subsequent changes to state regulations in the fall, about $100 million in sales and use taxes are being collected in the state from online sellers like Wayfair. The bill would apply the state’s sales and use tax to large online marketplace facilitators, which could generate an additional $95 million in revenue.

The bill passed second reading Tuesday and will be up for a final vote in the chamber later this week.

The conference committee report on the budget bill passed the Senate 46-0. It passed the House 122-13.

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