Well, Governor O'Malley should be singing a happy song. The special legislative session, which could have turned out disastrously, gave him a good chunk of what he wanted. Let's take a quick look at the results.
Sales Tax The legislature approved the Governor's proposal to increase the sales tax from 5% to 6%. His proposal to extend the tax to include tanning salons, accountants, landscapers, etc. was rejected but the legislature inexplicably decided to tax computer services. There doesn't seem to be any explanation for this. Perhaps our legislators use tanning salons much more than computers; I wouldn't be surprised. The sales tax holiday which the Governor proposed for back-to-school shopping was approved - but not until 2011, so if you decide to have children now, they'll be just about school age when the tax holiday kicks in.
Income Tax The Governor got his wish to make the income tax a bit more progressive, but, in a transparent bow to their wealthier constituents, the Montgomery County delegation trimmed the top rate below the Governor's proposal. The personal exemption was increased for most taxpayers which will lower their taxes a bit.
Tobacco Tax The Governor's proposal to double the cigarette tax from $1 a pack to $2 a pack was approved. Smokers are everyone's whipping boy these days and fair game for any tax anyone dreams up.
Corporate Income Tax The Governor proposed raising the corporate income tax from 7% to 8%, closing a loophole that allowed corporations to sell real estate without paying transfer tax and implementing something called 'combined reporting' which would reduce the ability of corporations to shift income from high tax states to low tax states for tax purposes. The legislature decided to raise the tax rate from 7% to 8.25%, eliminated the transfer tax loophole but decided to 'study' combined reporting. Now, of course, multi-state corporations have even more incentive to shift income out of Maryland for tax purposes. Apparently big corporations have better lobbyists than cigarette smokers.
Titling Tax The Governor proposed increasing the automobile titling tax from 5% to 6% to beef up transportation spending. The legislature adopted the increase but exempted the value of a trade-in.
Property Tax The Governor proposed reducing the state property tax by 3 cents per hundred dollars of assessed value. The legislature rejected the cut.
Gas Tax O'Malley wanted to index the gasoline tax to inflation to provide more money for transportation. The legislature rejected the proposal, allocating some additional money from the sales tax increase to transportation.
Slots The legislature approved the Governor's proposal for a referendum on slot machines in Maryland. The vote will be held in November, 2008. After four years of wrangling over slots, the Governor and the legislators decided to punt the question to the voters. More on this later.
Budget Reductions The Governor had proposed trimming the projected increase in school spending by almost $250 million. The legislature approved this and some $80 million in additional cuts but asked him to come back with some $220 million in addition cuts to the projected state budget in January.
Overall, it looks like the Governor got the bulk of what he wanted - he should be pleased. The whole package is not as progressive as was originally proposed, but at least he's put the tax issue behind him. It remains to be seen how this plays politically, though. No one ever likes their taxes to go up and most voters have pretty good memories.