ANNAPOLIS — As lawmakers debate a K-12 education overhaul plan this year, a Montgomery County delegate and Democratic House leadership proposed a plan that could raise $2.6 billion in revenue annually to help pay for it.
But on Thursday, Republicans — including Gov. Larry Hogan — heavily criticized the plan.
House Democrats — led by House Majority Leader Eric Luedkte (D-Montgomery), introduced a proposal that would raise $2.6 billion in sales tax annually through the 10-year Kirwan education overhaul plan. The change broadens the state’s sales tax to professional services, while cutting the overall rate from 6 to 5 percent.
Luedtke said after Thursday’s floor session the tax would exempt food, medicine, education services, medical services, social services and nonprofits. Other services, such as accountants and auto mechanics, would be taxed, he added.
“Fundamentally, the question is: Do we think Maryland kids deserve good schools? I do,” Luedtke said. “This is one way to get there, but there are multiple options to get there and we’re still looking at everything.”
Hogan criticized the plan in a news briefing Thursday. He said it would hurt middle-class families and is the highest proposed sales tax in the state’s history.
He listed several services that would be taxed: dog walkers, landscaping, barbers and day care.
“I’ve been saying for at least six months, almost every day, that the Legislature was going to propose billions of dollars in new taxes to help pay for this program,” Hogan said. “And they all continued to say, ‘No, we’re not going to propose billions in new taxes.’”
“I specifically said they were going to raise the sales tax, and they said they would not raise the sales tax. ... It is a tax on working families,” he continued, adding he would not support the proposal.
After Thursday’s floor session, House Minority Leader Nic Kipke (R-Anne Arundel) pointed to another issue: the impact the tax would have on government contractors.
“Government contractors that exist in Maryland who do business with the NSA, and cyber defense, are going to have a 5 percent disadvantage right from the get-go when they bid on contracts,” Kipke said. “So places like Virginia become much more attractive, and they already are attractive.”
More broadly, the fiscal and policy note attached to the legislation references the interim report of the Kirwan Commission — a body that worked for about three years to help draft the legislation.
That interim report estimates the total state and local share at $3.8 billion annually “at full implementation.” Democratic leaders repeated in interviews and in legislative proceedings this month the first three years of Kirwan are already funded.
Despite this, Del. Jesse Pippy (R-Frederick and Carroll), the Frederick County delegation chair, said earlier this week he was wary of adding any taxes in any form during the entirety of the plan.
“I did not run for office to raise taxes. … Maryland is a relatively small state, but it’s a wealthy state,” Pippy said. “Money has not been an issue. We don’t have a revenue problem, we have a spending problem.”
Before the House’s proposal was introduced, Sen. Ron Young (D-Frederick), vice chair of the Frederick County delegation, was supportive of most aspects of a tax on services.
He identified, however, one service he’s uneasy about taxing.
“The only one I’m a little hesitant on is an auto mechanic,” Young said. “A lot of poor people got to get to work, and their car breaks down, and I don’t want to put extra burdens on [them].”