House Passes Budget Based on Fairer Income Tax Code, Senate to Weigh in
And other legislative updates in this week’s Up the Street
THIS WEEK IN ANNAPOLIS
House Passes Budget Based on Fairer Income Tax Code, Senate to Weigh in
Today the Senate started debating the fiscal year 2026 budget, House Bill 350, that the House passed Wednesday (100-39). In the grip of federally engineered chaos and state fiscal pressures, legislators have had significant challenges to untangle in modernizing the state’s tax code while making it fairer and less complex and also protecting priority funding areas including our public schools.
The budget that the Senate, and conference committee—if necessary—will be fine-tuning is a significant improvement over the initial budget proposal regarding school funding. House and Senate leadership signaled early in the session and as recently as last week that they are in agreement on several foundational principles: fully funding community schools, and supporting students in poverty, multilingual learners, and special education, among other statewide priorities. The two chambers have differences in how they attempt to reach these principles (see below), but the progress made over the course of session is noteworthy and encouraged by the advocacy and voices of thousands of educators.
The budget also includes a fairer tax code that asks more of those who earn more, upwards of $500,000, and reduces the income tax liability from the majority of regular Marylanders to generate revenue for the FY26 budget and beyond. Key revenue provisions include:
- Two new tax brackets: one for earners who make between $500,000 and $1 million, and another for those who make above $1 million
- Increasing standard deduction by 20%
- Phasing out itemized deductions for incomes greater than $200,000
- Creating a surcharge of 2% on capital gains incomes over $350,000
- Increasing sports wagering tax from 15% to 20%
- Establishing an IT/data services sales tax of 3%
- Increasing local maximum piggyback income tax from 3.2% to 3.3%
Excellence in Maryland Public Schools Act Nears Finish Line
The latest version of the governor’s Excellence in Maryland Public Schools Act, House Bill 504/Senate Bill 429, will also be up for debate in the full Senate on Monday. The differences between the House and Senate versions will likely have to be resolved in a conference committee, but like the budget this bill has also shown major improvements since its introduction in restoring funding for students in poverty, multilingual learners, and students receiving special education services in particular.
The Budget and Taxation and the Education, Energy, and the Environment committees largely agreed with the direction of the House version of HB504. They support reversing the bill’s proposed freeze to community school funding and holding harmless funding for students in poverty, multilingual learners, and special education programs that would have seen cuts to expected increases due to a delay in collaborative time implementation.
The House recommends a higher per pupil foundation amount and $40 million for the Consortium for Coordinated Community Supports, while the Senate committees favored funding the Consortium at $70 million (in FY26; $100 million thereafter) and a lower per pupil foundation amount. The foundation amount difference is tied to the House’s leaving the foundation as it’s written in current law despite pausing the requirement of collaborative time implementation for a year; the Senate committees pause collaborative time implementation for four years and paused the associated funding in the foundation, while holding harmless multilingual learners, students in poverty, and students receiving special education services.
The Senate accepted the House version’s allocation of $19 million for the Grow Your Own programs that MSEA has strongly supported as both a pathway to addressing educator shortages and as a way to support education support professionals who choose to pursue becoming a teachers.
Additional details to be reconciled between each chamber’s version of the bill include: the possible inclusion of economic downturn contingency triggers; community school reporting requirements and fund usage procedures; Maryland’s potential joining of the Interstate Teacher Mobility Compact, among other areas.
Teacher Pathway Expansion Bill to Have Hearing
With an ongoing educator shortage, MSEA strongly supports House Bill 888, sponsored by Delegate Kris Fair (D-Frederick), to expand the pathways for a teacher to obtain a license. Providing additional high-quality pathways to teacher licensure will benefit the state’s workforce and students. Research on the edTPA assessment that is frequently relied on for licensure also finds that racial bias may affect the test’s scoring; it has limited efficacy to assess performance; and it poses a financial burden for aspiring educator applicants. This legislation has the potential to ease a high quality candidate’s entry into the profession. HB888 will have a hearing Wednesday in the Senate Education, Energy, and the Environment Committee.
NEWS AND NOTES
NEA Lawsuit Filed to Stop Trump Plan to Dismantle Department of Education
The National Education Association, Prince George’s County Educators’ Association, NAACP, Montgomery County parents, and AFSCME Council 3 are among plaintiffs citing direct harm from President Trump’s plan to dismantle the U.S. Department of Education. Their suit, filed on Monday, addresses the cancelation of $1.5 billion in federal contracts and grants. It focuses on the mandated responsibilities of the department that Trump’s actions disable, including the collection of data to support students who require special education and enforcing civil rights laws.
The effects of dismantling the department will set back the fair delivery of special education, according to Marcie Lipsitt, an advocate for students with disabilities. “Parents are going to have to fight harder than they have fought in 60 years for accountability,” said Lipsitt.
MSEA has created a clearinghouse for information that educators may find useful to navigate the implications of major federal policy changes here. The National Education Association’s website and Education Justice pages contain the latest information.
The Baltimore Banner established a site where updates on many of the largest suits involving the Trump Administration will be posted.
New Math Policy Adopted
On Tuesday the Maryland State Board of Education adopted a new math policy to be implemented over the next three years for K-12, as MSEA President Paul Lemle and Montgomery County Education Association President David Stein cautioned the Board to be mindful of workload and roll-out realities.
“I want to reiterate that as this policy is implemented, we not only consider but prioritize educator time and workload management to both ensure that we’re not exacerbating the teacher shortage nor unintentionally causing our teachers and educators to be ill-equipped to implement this policy,” Stein said.
Lemle assured the SBOE that educators would be engaged to see a good policy implemented. School Board Chair Josh Michael acknowledged that the policy is flawed. “We know that there are components of this policy that we do not get right,” Michael said. “At the same time, we have to put lines in the sand” that direct school districts. “This document will drive the direction we are headed in the state.”