Eye on Annapolis

A bipartisan group of Senate leaders is backing legislation that would exempt family farms from Maryland’s estate tax.

“When someone who owns a farm passes, so often the farm is lost to congestion, to sprawl,” said Senate President Thomas V. Mike Miller Jr., D-Calvert and Prince George’s.

The Senate’s bill will exempt up to $5 million in agricultural property passed to a “qualified recipient” who will use the property for farming purposes.

If the property is sold and not used as a farm within a decade, the estate tax would then have to be repaid.

Senators said too often, family members who inherit farms are forced to sell off pieces of their land to pay the estate tax bill.

“I hear this from a number in the industry, that they’re land rich but cash poor,” said Senate Majority Leader Rob Garagiola, D-Montgomery.

Garagiola, who is running for the 6th Congressional District seat in Western Maryland, was joined in promoting the bill by Sen. David R. Brinkley, a Republican who has also thrown his hat into that race.

“The best farm preservation tool we have is anything that makes farming profitable,” said Brinkley, R-Carroll and Frederick.

Gov. Martin O’Malley, a Democrat, has said he will propose a similar measure to defer estate taxes on family farms until they are subdivided or developed.

The bill was not part of the legislative agenda the governor rolled out on Monday, but his administration has said it will be coming soon.

Two proposals that consistently rankle business interests big and small in Annapolis resurfaced Wednesday for their annual appearance in the State House.

They are, of course, the millionaire’s tax and combined reporting. (S.B. 249 and S.B. 269, respectively, if you’re keeping score at home.)

Both are viewed by liberal lawmakers as untapped revenue streams that could be used to ease the state’s persistent fiscal woes.

The millionaire’s tax would raise the individual income tax to 6.25 percent for people who make more than $1 million a year. Business leaders argue that the tax rate – it was passed in 2008 and expired in 2010 – make the state unfriendly to top earners and is unfair to small businesses that file tax returns as individuals.

Combined reporting is a way of assessing corporate taxes based on an apportioned share of company’s revenue nationwide. The goal is to stop companies from stashing revenue in states with lower tax burdens.

Both bills have made frequent appearances in Annapolis in recent years and have failed to gain traction as business groups have fought to keep them from emerging from tax committees in both chambers.

There does not appear to be any more interest in the proposals this year, but with a $1.1 billion budget gap looming and a host of already unpopular balancing measures pushed by Gov. Martin O’Malley, the bills are worth keeping an eye on.

Gov. Martin O’Malley held his first “tweetup” Monday morning, fielding a handful of questions from 16 twitter followers who met in person to discuss issues in the state.

“We have an opportunity in these times to be better connected than ever before,” O’Malley said, kicking the event off.

The questions ranged from softballs — “What book are you reading now?” was the first one — to specific policy questions, like whether libraries would also have to shoulder a share of pension costs along with the counties.

O’Malley said that issue, along with how school funding requirements would be affected by the proposed pension shift, are yet to be decided.

The governor said the state has a “tremendous opportunity” this year to bring in tourist dollars associated with the bicentennial of the War of 1812, an event that could also help clean up Baltimore’s image.

“You have to talk about the good things happening in the city,” O’Malley said. “It’s not a good way to sell newspapers, but it’s a good way to sell the city.”

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The general manager of three annual coin shows in Baltimore threatened to move the events to another state following a proposal by Gov. Martin O’Malley to eliminate a tax break for sales of precious coins and bullion.

David Crenshaw, general manager of Whitman Coins and Collectibles Expo LLC, said the measure included in O’Malley’s budget would “result in significant loss of economic benefit to Maryland and Baltimore since our three shows would most likely move to a friendlier state with no sales tax.”

“Other attractive cities have been anxious to host the national shows due to their overwhelming success in generating economic benefits to city businesses,” Crenshaw wrote to The Daily Record on Thursday.

O’Malley included the proposal to close the precious coin sales tax loophole in the budget he outlined Wednesday. The budget, and the closure of the loophole, still face legislative changes.

The Daily Record wrote extensively about the precious coins tax loophole and the billions in tax breaks the state gives away every year. The tax break in question exempts sales of coins and bullion of more than $1,000 from the sales tax.

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More than three-quarters of Marylanders oppose proposals to raise the state’s gasoline tax, according to a study released Wednesday.

Some 76 percent of voters oppose raising the tax by 10 cents, according to the poll conducted for the Mid-Atlantic Petroleum Distributors Association by Gonzales Research and Marketing Strategies Inc.

A gas tax hike was viewed favorably by 23.1 percent.

Gov. Martin O’Malley is expected to announce a package of tax and fee increases to raise more money to spend on transportation.

Opposition to the gas tax hike — the state’s gas tax has been 23.5 cents per gallon since 1992 — is widespread

Some 90 percent of Republicans oppose raising it 10 cents, as do 68 percent of Democrats and 74 percent of independents.

All but a handful — 96 percent — oppose indexing the gas tax to inflation to allow for automatic increases without legislative approval, and 84 percent strongly oppose such a measure.

Only 3 percent came down in favor of automatic gas tax increases.

“This survey confirms what we hear from our customers on a daily basis,” said MAPDA president Peter Horrigan. “Gas prices are too high and now is not the time to raise fuel taxes causing us to pay more.”

The telephone poll of 808 registered voters was conducted from Jan. 9-15. The margin of error is 3.5 percent.

Gov. Martin O’Malley unveiled his fiscal 2013 budget proposal in an hour-long press conference complete with a three-page news release and 38 PowerPoint slides that left members of the media swimming in proposed cuts, taxes and spending figures.

One number, however, never made an appearance. The big one. The actual size of O’Malley’s proposed budget.

The answer can be found on page 7 of the budget highlights book  – more of a Patriots blue this year as opposed to Ravens purple last year.

The budget proposed by O’Malley contains $35.9 billion in spending, up 3 percent from the $34.8 billion budget for fiscal 12.

House Speaker Michael E. Busch said Tuesday he did not see “a whole lot of proposals to increase taxes” in the Gov. Martin O’Malley’s upcoming budget proposal.

“We talked about adjusting some of the exemptions that currently exist in the law, particularly on high earners,” said Busch, D-Anne Arundel, after a meeting with O’Malley and legislative leaders that lasted more than an hour.

The governor’s budget will also seek to shift some of the cost of teacher pensions to the counties, Busch said, but would also “give the counties revenue opportunities to make up the difference.”

The speaker said O’Malley’s budget includes an increase of $108 million in K-12 education funding for a total of about $6 billion.

“It’s a huge investment,” he said. “Almost half of our budget goes to education and higher education.”

Busch said the group discussed transportation funding, but said “there was no specific proposal.”

Raquel Guillory, the governor’s spokeswoman, said transportation funding, including a gas tax hike, is still being discussed, but would not be part of the governor’s budget proposal on Wednesday.

Senate President Thomas V. Mike Miller Jr. said earlier Tuesday that he likes where the governor is headed on that issue.

“We’ve talked about the numbers back and forth,” said Miller, D-Calvert and Prince George’s.

Senate President Thomas V. Mike Miller Jr. said Tuesday he thinks Gov. Martin O’Malley’s yet-to-be-revealed transportation proposal would raise enough money to spend on roads, bridges and other transportation projects.

Miller wouldn’t disclose what the governor will propose, but has said that he and the chief executive have discussed the plan.

“We’ve talked about the numbers back and forth,” said Miller, D-Calvert and Prince George’s. “I’m going to meet with him at noon and I’m going to meet with him at four to discuss votes.”

Miller has expressed support in recent interviews for raising less new money for transportation than the Blue Ribbon Commission on Maryland Transportation Funding recommended.

Miller has said the 15-cent gas tax hike proposal is “too much” and said a plan to raise $500 million more a year is more likely than one to raise $800 million.

Business leaders have also tempered their expectations for a transportation revenue package.

Miller also indicated O’Malley has backed off a trial balloon the governor lifted last week as the General Assembly reconvened.

“I’m glad he’s abandoned the sales tax,” the Senate president said.

Miller said the governor is likely to propose a flush tax increase and a shift of teacher pension costs to the counties.

“It’s not what I would like. It’s a compromise,” said Miller. “Compromise is not a dirty word in politics. The governor gives something to the counties, he takes something away. He makes the counties happy, he makes them sad. Not everyone can be happy in these very difficult times.”

Welcome to Week 2 of the Eye on Annapolis Podcast where we look back at the week that was and preview the week that will be in the State House.

The 2012 General Assembly session got off to a more contentious start than most expected.

Gov. Martin O’Malley floated the idea of raising the state sales tax a penny as he and lawmakers face a $1.1 billion budget deficit and calls to invest more in transportation, schools, water treatment plants and other infrastructure.

Senate President Mike Miller put an arrow through that trial balloon almost as soon as it launched.

With the governor’s budget on tap this week and much of his legislative package expected, we will soon see how he intends to close the budget gap, spur development of an offshore wind farm and raise money to spend more on roads, trains and other transportation projects.

Listen up.

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Rocky Gap Lodge and Golf Resort, the state-owned hotel, conference center and golf course property in Western Maryland, is $66 million in the hole and that debt has played a central role in efforts to find a casino developer to take over the complex.

One of the reasons the Video Lottery Facility Location Commission tossed a bid for the Allegany County casino license is the development group never came up with a proposal that the holders of Rocky Gap debt found palatable.

The resort posted operating losses of $2.9 million in both fiscal 2008 and 2009, and in fiscal 2010, losses rose to $3.8 million, making Rocky Gap the biggest drag on the finances of the Maryland Economic Development Corporation. (Figures available here, page 9.)

The 280-acre resort — it includes 215 hotel rooms and an 18-hole Jack Nicklaus Signature golf course — generates enough cash to cover its operating expenses, but not enough to cover its debt payments, according to legislative budget analysts.

Most of the resort’s debt is in the form of MEDCO bonds issued to private entities. Four different issues carry $46.86 million in outstanding principal, and $2.82 million in interest.

The resort also has a $650,000 line of credit with MEDCO. As of June 30, it had tapped $579,692.

Rocky Gap also owes:

• $6.7 million in ground rent to the Department of Natural Resources, which owns Rocky Gap State Park.
• $482,296 in surcharges to DNR
• $306,774 in “host community fees” to Allegany County
• $3.36 million for a MEDCO service fee
• $608,145 in an advance to MEDCO
• $3.31 million to the Department of Business and Economic Development, which extended the resort a loan from the Maryland Economic Development Assistance Authority and Fund in May 1996
• $1.5 million to DBED, which also extended an interest free loan in November 2001