Evening star., 1955-02-10
Budget Hearing
Opens tuesday
AtAnnapoIS
Record $3.50 Million
Asked by McKeIdin
includes Tax Rise
By Gene Goodwin
Star Stoff Correspondent

By Gene Goodwin
Star Stoff Correspondent
ANNAPOLIS, Feb. 1o.-Mary-
lands Democratic Legislature
started to work today on Re-
publican Gov. McKe1din's
record-smashing 1853 million
budget for next fiscal year.
It's not the total expendi-
ture that makes the legislators
vince. It's the sales and income
tax increases he proposes to go
with the spending program.
Several alternatives already
have been advanced Informally
as ways of getting around the
Governors program of penny
higher sales tax this year and a
so per cent increase in income
taxes next year.
The first thing the lawmakers
want to determine is whether
or not the Governor has sent
them a tight budget.
Begin Hearings Tuesday.
Chairmen of the Senate and
House Ways and Means Com
mittees will begin daily budget
hearings Tuesday. Department
heads and executive officials will
be invited to appear before the
Finance Committee in morning
sessions and the House commit
tee in the afternoons through
March II.
The legislators were given four
books totaling 965 printed pages
on the budget as the Governor
delivered his message to a joint
session yesterday afternoon. 4.
In asking for the tax raises to
support his record budget. Mr..
McKeldin told the joint session:
There are times, happily.
when we can reduce taxes as we
have done on occasions during
the past four years, and as others
have done before us.
Again, like our predecessors.
We encounter times, particularly
in times of unusual growth and
eras Of extraordinary progress.
when it is necessary to increase
our revenues.
I'VE are now in such a time"
Growing Population.
He said Maryland's population
continues growing 'at a rate be-
yond the average for the Ma
tion," swelling school and college
enrollments at time when the
State also is trying to make ad-
vances in mental health, road
building and care of the aged.
Furthermore, the State surplus
that has been the nibbling cheese
of Maryland budget makers since
the sales tax revenues started
piling up in 1948. has dwindled
to virtually nothing.
AS he warned in earlier ad-
dresses, Mr.. McKeldin called for
this tax increase timetable:
/. June /, 1855. increase the
sales tax from 2 to 8 cents on
a dollar.
2. July l, 1855, start withhold
ing State income taxes from pay
rolls on a pay-as-you-go basis.
3. January /, 1856, raise the
tax on individual income from
2 to 8 per cent and on corporate
income from 4 to 5 per cent.
Increased Deductions.
Sandwiched into this sad tale
of tax increase was tax de-
crease proposal promised by the
Governor earlier-an increase in
the dependent deductions on in
come tax from 5000 to $1,000.
This will mean that many fam
lily men will pay less State in
come tax next year even though
the rate goes up from 2 to 3 per
cent.
The Governor also asked for a
half-cent increase in the real
estate tax to a rate of 11.53 cents
on $100 of assessed valuation to
finance $9.6 million capital i'm
provements program. This levy
goes toward retirement of the
State debt and is a minor part
of the total real estate tax bill
paid by property owners. What
ever rate is decided on by the
Legislature. it will not show up
on tax bills until 1856.
These proposals would provide
an estimated $3.50 million in ad-
ditional money during fiscal
1955-56-$18.9 million from in
come taxes and $16.3 million in
sales taxes.
That would take care of the !
$28.3 million deficit in his budget
and leave a 500 million surplus.
Gov. McKeldin asked that this
surplus be left as a cushion for
an expected further jump of IS !
million in school needs in 1857.
Good for Years.
At an, advance press briefing. /
Gov. McKeldin said the tax in
creases he is recommending
would carry him through his en-
tire four-year term. In answer to .
questions, his. aides said there
were only six to eight other
States with three per cent sales
taxes. They could not say
whether any States had both a
three per cent sales and income
tax rate, but pointed out that all
but about four States which tax
income do SO on the graduated
basis used by the Federal gov
ernment.l
There has been some talk here
OF initiating a graduated income
tax system, under which higher
income groups are taxed at a
higher rate, but many legisla-
tors feel such a reform would re-
quire a constitutional amend
ment.