All Marylanders should be able to achieve their full potential in a healthy economy that offers a widely shared, rising standard of living

Transcription

1 Investing in Opportunity Budgets are Moral Documents Christopher Meyer Research Analyst Housing Day 2019 February 14, 2019 Rigorous Independent Shared Prosperity All Marylanders should be able to achieve their full potential in a healthy economy that offers a widely shared, rising standard of living 1

2 $45.7B Proposed Operating Budget Natural Resources $1 Legislative, Public Debt Judicial, Legal $1.3 $0.9 Public Safety $2.2 Human Services $2.8 $2.2 Health $14.6 Transportation $5.4 FY 2020 $ in billions Higher Education $7 Pre-K-12 Education $8.5 Individuals pay majority of operating expenses Higher Education Funds $4.8 Federal Funds $13.2 General Funds $19.5 General Fund Revenue Sources Individual Income Tax Sales & Use Tax Corporate Income Tax Business Taxes State Lottery & Casinos Tobacco & Alcohol Taxes FY 2020 Estimate $10.5 billion $5.0 billion $965 million $605 million $535 million $397 million FY 2019 $ in billions Special Funds $9.1 Estate & Inheritance Taxes Court revenue revenues $164 million $90 million $406 million Department of Legislative Services Board of Revenue Estimates, March Estimate 2

3 $5.2 Billion Proposed Capital Budget Environment 9.3% Housing and Community Development 3.3% Transportation 64.4% 35.6% Education 6.4% Public School Construction 8.5% 6.1% Public Safety 2.0% How MD Finances Capital Investments Transportation Sources 6.6% General Funds 1.4% Revenue Bonds 0.7% Federal Funds 23.5% 35.6% GO Bonds 21.0% Sources 12.6% Special Funds 31.9% General Funds 2.4% 3

4 FY 2020 Budget Picture Sunny January Strong revenue projection Easy budget Welcome changes: No major operating cuts Stormy February Month-long federal shutdown Another shutdown possible? March revenue estimate will likely be lower Lifted misguided bond cap Some new investments in housing But: $62 million structural imbalance (How) will General Assembly cut? Status quo misses lots of needs 19,000 students on waitlist for state need-based financial aid Public benefits only bring family income to 61% of the Maryland Minimum Living Level Public employees are underpaid and overworked Kirwan Commission recommends $3.8 billion annual increase in K-12 funding (state + local) 4

5 Storm Clouds Sluggish wage growth & explosion in student debt MD unemployment rate low, but higher than US (highly unusual) Now $1.5 trillion (more than auto loans or credit cards) Looming recession, perhaps in 2020 Will the federal government provide another stimulus? Potential for other adverse federal actions Budget, staffing cuts Counterproductive restrictions on investments in economic security Trade slowdown (fight with China, Brexit, etc.) Maryland Faces a Choice Strengthen our revenue system Continue underfunding schools Cut other essential services 5

6 Maryland Taxes Near the Middle of the Pack State and Local Taxes as a Share of Personal Income, % 16% 14% 12% 10% 8% U.S. Average 6% 4% 2% 0% North Dakota New York District of Columbia Hawaii Maine Vermont Minnesota Wyoming Illinois West Virginia New Jersey New Mexico Rhode Island Connecticut California Mississippi Maryland Iowa Nebraska Wisconsin Delaware Massachusetts Ohio Pennsylvania Arkansas Oregon Kentucky Nevada Montana Kansas Michigan Louisiana Indiana North Carolina Utah Washington Colorado Idaho South Carolina Texas Arizona Missouri Georgia Virginia New Hampshire Oklahoma Alabama South Dakota Tennessee Florida Alaska Source: Tax Policy Center Footnote text can go here. Wealthiest Marylanders Pay a Smaller Share of their Income in Taxes 12.0% 10.6% 11.0% 10.6% 10.0% 9.8% 9.5% 9.7% 9.0% Total Tax Share of Family Income 8.0% 6.0% 4.0% 2.0% 0.0% Lowest 20% Less than $24,100 Second 20% $24,100-$43,600 Middle 20% $43,600-$65,900 Fourth 20% $65,900-$120,000 Next 15% $120,000-$238,800 Next 4% $238,000-$534,800 Top 1% $534,800 + Who Pays? A Distributional Analysis of the Tax System in All 50 States. (2018). Institute on Taxation and Economic Policy. See: 6

7 Business taxes are a smaller share of MD s economy than in most states 8% 7% MD business gets a $1 return for every 70 cents invested in state and local taxes 6% 5% 4% 4.5% 4.1% 3% 2% 1% 0% VT ME MI NY MV RI DC IL NB FL TX SK AK WY USA WI TN CO AL MA MD VA UT OR MI CT Ernst & Young, FY16 COST report on state and local taxes We can afford to invest in Maryland s economic backbone Clean up our tax code by removing tax breaks inserted by large, multistate corporations and powerful special interests: $560 million Modernize our sales tax to reflect the role of services and digital commerce in our economy: $460 million Strengthen our income tax to ask more of the small number of wealthy individuals who pay less under our current system and recently received a windfall from the 2017 federal tax overhaul: $920 million 7

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