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Maryland alcohol tax moves ahead with education funds

Senate President Thomas V. Mike Miller

ANNAPOLIS — An increase in Maryland’s alcohol tax advanced in the Maryland Senate on Tuesday, with a significant portion of the first year’s proceeds set aside for Prince George’s County and Baltimore schools.

The Senate measure would raise Maryland’s sales tax on alcohol from 6 percent to 9 percent over three years, increasing 1 percentage point a year. It would raise about $29 million in fiscal 2012, $58 million the following year and $85 million in the third year, fiscal analysts estimate.

In fiscal 2012, Baltimore schools would receive about $12 million, and Prince George’s County would receive about $9 million to help boost education funding in jurisdictions that lagged others because of school funding formulas. Proceeds from the alcohol tax would be diverted to those school districts only in a one-time adjustment.

“These are two of the largest consumers of alcohol in the state, and most of the tax revenue is generated from those two jurisdictions, and under the governor’s plan, unfortunately, these two jurisdictions come up short in terms of state aid as contrasted to the rest of the state,” said Senate President Thomas V. Mike Miller, D-Calvert. “It’s the result of formulas. It’s not anybody’s diabolical plan.”

Two counties in Western Maryland would receive more money, but not because of the alcohol tax. The Senate also approved an amendment to budget legislation Tuesday to limit the reduction in direct state aid to school districts. Under the amendment, aid to districts could not be reduced more than 6 percent in the next fiscal year from what they received this year. That means Allegany County would receive about $853,000 more than planned, and Garrett County would get about $759,000 more.

While criticizing the distribution of the alcohol tax money, Sen. E.J. Pipkin, R-Upper Shore, pointed out that school districts in other parts of the state are being told to either make cuts or raise property taxes to fill budget gaps. He questioned why two school districts should benefit so much from a tax affecting residents across the state.

“Again it appears we’re taxing the entire state for a disproportionate benefit for two districts because they need help with their schools,” Pipkin said.

The funding increases would depend on passage of the alcohol tax bill. The Senate could take a final vote on the bill Wednesday. That would send the measure over to the House of Delegates.

Maryland made record investments in education during Gov. Martin O’Malley’s first term. But budget problems caused the governor to fund education less than school systems had been expecting under a state funding formula.

Budget legislation passed by the House of Delegates already has restored about $58 million of $94 million O’Malley cut from kindergarten-through-12th grade funding in his budget proposal submitted in January.

The funding riding on passage of the alcohol tax increase would be in addition to that.

Sen. Richard Madaleno, D-Montgomery, said the added money for Prince George’s and Baltimore is needed to help them continue to make progress.

“Because of the economic downturn, we haven’t been able to keep the same level of commitment, and this is trying to say: ‘Look, we can’t jeopardize the momentum that those school systems and all of our school systems have by cutting down the fund,’” Madaleno said.

The alcohol tax bill allocates $5 million for the developmentally disabled in fiscal 2012. The money increases to $10 million the following year and $15 million in fiscal 2014. However, the Senate rejected an amendment to steer more to the developmentally disabled.

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Online:

Read House Bill 70: http://mlis.state.md.us/2011rs.billfile/hb0070.htm

Read House Bill 72: http://mlis.state.md.us/2011rs.billfile/hb0072.htm

Read Senate Bill 994: http://mlis.state.md.us/2011rs/billfile/sb0994.htm

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