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Wednesday evening, the House Ways & Means Committee
scheduled a meeting to take executive action on the
House version of a 2010 Supplemental Operating Budget (HB
2824). After convening the hearing, the Committee
recessed almost immediately so members could meet in
their respective political caucuses to discuss potential
amendments to the budget. After caucusing for a
considerable amount of time (more than four hours),
members returned to be briefed by Committee staff about
the numerous budget amendments before them. After this
briefing, the Committee was again recessed for the
purposes of caucuses…and they never returned. The House
Ways & Means Committee is now scheduled to take
executive action on its budget tomorrow, Feb. 26.
Meanwhile, the Senate Ways & Means Committee spent
yesterday holding a public hearing on the Senate tax
package intended to raise $918 million to fund its
budget proposal. The Committee took public comment on SB
6873, SB 6874 and SB 6875.
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SB 6873 would eliminate a series of tax
loopholes or tax exemptions, raising an expected
$518 million.
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SB 6874 would increase the cigarette tax from
$2.25 per pack to $3.25 per pack, raising an
expected $86 million. The new revenue would go into
a “Basic Health Plan stabilization account.” The tax
would go into effect June 1, 2010. The bill only
makes the appropriation to the stabilization account
for 2011 — meaning the Legislature could use the
money for other purposes beyond that, according to
Committee staff.
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SB 6875 would temporarily increase the state
sales tax by three-tenths of a cent, raising an
estimated $313 million. The sales tax “surcharge”
would be imposed from June 1, 2010 to June 30, 2013,
with revenues being used to maintain funding for
Local Effort Assistance, state-funded all-day
kindergarten and state higher education need grants.
The bill includes a new Working Families Tax Credit,
which would offset the tax increase for low-income
citizens. Like the increase in the tobacco tax in SB
6873, the revenues would be required to fund the
education items listed above through this biennium,
then the revenue would go into the General Fund and
could be used for other purposes.
The Senate Ways & Means Committee met today, but held
a public hearing on several house bills and is not
scheduled to take executive action on its budget
proposal (SB
6444) until tomorrow, Feb. 26.
We continue to await a tax package from the House.
The House budget relies on $857 million in new revenue
as part of its solution to the state’s current $2.8
billion budget problem, but it remains unclear where
than new revenue would come from. The House tax plan was
scheduled to be released yesterday, but that was pushed
back to today — and now will apparently be pushed back
until at least tomorrow. The word on the street is that
we “might see it tomorrow.” The release apparently
hinges on successfully achieving a consensus on a
package at a scheduled House Democrat caucus meeting
this evening.
As we continue to wait for movement of the two
legislative budget proposals (and an unveiling of the
House tax plan), it is important to remember that today
is Day 46 of this scheduled 60-day session. With 14 days
remaining until the March 11 adjournment deadline, many
legislative observers are beginning to question whether
this Legislature can complete its business in time.
Yesterday, when Senate Majority Leader Lisa Brown was
asked if she believed the session would adjourn on time,
she only replied that “the Senate will have its budget
voted on by then.” The obvious obstacle is the
reconciliation of a 2010 Supplemental Operating Budget.
Both the House and Senate plans have similarities;
however, there are also major differences: the level and
targets for cuts are different; assumed federal relief
is different; the amount of transfers (and the size of
the ending fund balance) is different; and the estimated
new revenue is different. Forging a compromise budget
between the House and Senate is usually a difficult
task. This year, the difficulties are compounded by the
$2.8 billion budget deficit and the anticipation that
new taxes will have to be part of any budget solution.
Brown remarked that, “The revenue piece is going to be
the most difficult piece." And until we see a
revenue plan from the House, it will remain unclear how
difficult the compromise may be.
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