FOR IMMEDIATE RELEASE

Franchot Highlights Productive and Successful 2008 Session

Landmark Tax Compliance Initiative, Computer Services Tax Repeal, Maryland Tax Preparers Act among Agency's successes this Session

Annapolis, MD (April 8, 2008) - Comptroller Peter Franchot today expressed satisfaction for a very productive and successful 2008 legislative session. Most of the Comptroller's top legislative priorities, including approval and funding for an innovative new tax compliance program, the repeal of the computer services tax, the passing of the Maryland Tax Preparers Act, crucial corporate income tax reform, and legislation providing critical rights to domestic partners all passed through the General Assembly this year. The Comptroller praised the Governor and the General Assembly for their work during the 2008 legislative session, but expressed disappointment that the move to ban electronic gaming devices across the state left a gaping loophole for illicit activity to continue in Baltimore County and Baltimore City.

"We proved this session that you can be independent, think for yourself and still get things done through hard work and persistence," Franchot said. "I am very proud of the work this agency has done, both on our own and in partnership with the Governor and the General Assembly. I am especially proud of the role we played in supporting Maryland's knowledge-based economy by repealing the computer services tax, and in protecting Marylanders from unscrupulous and unqualified tax preparers with the Maryland Tax Preparers Act," Franchot continued.

The Comptroller, who will help lead the fight against the final piece of Governor Martin O'Malley's tax package that was approved last year by opposing the slots referendum, expressed disappointment that the legislature failed to outlaw slot machines that are operating illegally across the State. These cash-only operations are ripe for criminal activity and widespread tax evasion.

"I do regret progress was not made on banning electronic gaming machines across the state and eliminating the tax fraud and corruption that go hand in hand with them," said the Comptroller. "What started out a reasonable attempt to ban slot machine copy-cats turned into a special interest free-for-all. I look forward to November when Marylanders will truly have an opportunity to let their voices be heard on the issue of expanded gambling in our state."

Highlights of the Comptroller's 2008 legislative and budgetary accomplishments include:

• Tax Fairness Initiative: Twenty-two new positions were approved as part of a comprehensive investment in technology and personnel that will enhance the tax compliance efforts of the Comptroller's Office. Over the first four years of implementation, the plan will bring an additional $200 million in revenue, and then subsequently yield $80-$100 million annually after that.



• Repeal of the Computer Services Tax: As the earliest and most consistent advocate of repealing this tax, the Comptroller was involved in the formation of the industry alliance that opposed the tax and worked from the very beginning to convince other state leaders that this tax was an attack on Maryland's knowledge-based economy and posed a threat to its hard-earned business reputation.



• Maryland Tax Preparers Act: A pro-consumer measure that would help protect taxpayers against unscrupulous tax preparers and give the state a method of tracking problem preparers. It also helps protect taxpayers from fraudulent and misleading marketing schemes that target the most vulnerable taxpayers in our state.



• Corporate Income Tax Reform: Strengthened corporate tax compliance and enforcement efforts through the adoption of a streamlined "combined reporting" income tax return. This effort will provide critical information for lawmakers in determining whether to adopt a combined reporting law in the future.



• Cigarette Business Licenses: Ensuring that applicants for cigarette business licenses and licensees buy cigarettes from a licensed manufacturer to help ensure compliance with the state's tobacco regulations.



• Enhanced Opportunities for Minority Brokerage Firms: A strong advocate for the state's women and minority owned businesses, the Comptroller supported legislation requiring state agencies responsible for the management of funds to attempt to use minority business enterprise brokerage and investment management services firms and requiring the entities to adopt specified guidelines and to submit an annual report updating their use of minority firms.



• Iran Divestiture: As Vice Chair of the State's Retirement System, the Comptroller supported legislation requiring the Board of Trustees for the State Retirement and Pension System to review specified investment holdings to determine the extent to which funds are invested in companies doing business in Iran or Sudan and requiring the Board of Trustees to take divestment action.



• Recordation and Transfer Taxes: Exempts from recordation tax and state and county transfer taxes instruments of writing transferring property between domestic partners and former domestic partners, a priority of Equality Maryland and the Comptroller's office.



• Kids First Act: Authorizes the Comptroller to send a notice regarding eligibility for the Maryland Medical Assistance Program or the Maryland Children's Health Program to a taxpayer with a dependent child, if income reported on the income tax return does not exceed a specified amount.



• College Savings Plans of Maryland: As a Board member of the College Savings Plans of Maryland (CSPM), the Comptroller supported the effort authorizing the College Savings Plans of Maryland Board to establish the Maryland Broker-Dealer College Investment Plan. This broker sold plan will allow authorized private brokers to sell enrollments in the Maryland College Investment Plan, which will substantially increase public participation in the program and ensure that more families are financially prepared for the costs of higher education.



• Statewide Phase-Out of Electronic Gaming Devices: While not going far enough and outlawing gaming devices in the entire state, this bill does attack the proliferation of electronic gaming machines in Southern Maryland.

In response to language that was adopted by the General Assembly as part of the Fiscal Year 2009 budget bill, Franchot noted that Article VI, Section 2 of the Maryland Constitution gives broad powers to the Comptroller:

SEC. 2. The Comptroller shall have the general superintendence of the fiscal affairs of the State; he shall digest and prepare plans for the improvement and management of the revenue, and for the support of the public credit; prepare and report estimates of the revenue and expenditures of the State; superintend and enforce the prompt collection of all taxes and revenues; adjust and settle, on terms prescribed by law, with delinquent collectors and receivers of taxes and State revenue; preserve all public accounts; and decide on the forms of keeping and stating accounts. He, or such of his deputies as may be authorized to do so by the Legislature, shall grant, under regulations prescribed by Law, all warrants for money to be paid out of the Treasury, in pursuance of appropriations by law, and countersign all checks drawn by the Treasurer upon any bank or banks in which the moneys of the State, may, from time to time, be deposited. He shall prescribe the formalities of the transfer of stock, or other evidence of the State debt, and countersign the same, without which such evidence shall not be valid; he shall make to the General Assembly full reports of all his proceedings, and of the state of the Treasury Department within ten days after the commencement of each session; and perform such other duties as shall be prescribed by law (amended by Chapter 133, Acts of 1929, ratified Nov. 4, 1930).

"I will continue to be an independent voice and a fiscal watchdog, even if doing so ruffles a few feathers from time to time," Franchot explained. "While I respect the opinions of my old colleagues in the legislature, I am ultimately accountable to the people who elected me to serve as their chief fiscal officer."

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Contact: Joe Shapiro, 410-260-7305, office, 443-871-2244, cell