last year, made an exhaustive study of this problem and is recom-
mending that the State expand its aid to support the public school
systems of Baltimore City and the counties. It is my belief that we
should, and must, increase our aid to the subdivisions to achieve
uniformly higher educational standards throughout the State, in-
cluding higher salaries for school teachers. I, therefore, am recom-
mending the enactment of this program at this session. The program
would become effective as of July 1, 1964. The estimated first-year
cost is in excess of $16, 200, 000.

Now, it has been my policy from the beginning that any new pro-
gram the State adopts that involves the expenditure of additional
money contain the necessary measures to finance it. I am asking you
to do this in connection with the new school - aid program. To finance
this additional assistance to public education in fiscal 1965 and future
years, and to meet the normal budget expansions we may expect
in the years ahead (estimated at $27, 000, 000 in fiscal 1966), I am
recommending an increase of 1 per cent in the ordinary income
tax of individuals. However, I am proposing that this increase be
deferred until January 1, 1965. It is estimated that this new tax in
its full year of operation in fiscal 1966 will yield additional revenues
amounting to $42, 750, 000. But since the tax does not become effective
until January 1 of next year, the State will derive only one quarter's
benefits during the year for which we are now budgeting. I am pro-
posing that the school program be financed in fiscal 1965 with the
110, 250, 000 one-quarter yield from the increased income tax, plus
$6, 000, 000 that can be provided from surplus, aggregating the amount
that will be needed to defray the costs of the program for that year.

As you will observe, the revenue expected from the proposed tax
revision exceeds the amount needed for the new school program, at
least for the first few years. But the need for the additional revenue
resource becomes obvious when we project our budget requirements
into 1966 and the years thereafter. For example, in fiscal 1966 we of
course will have to appropriate a minimum of $16, 200, 000 for ex-
panded State aid to public education. As you have seen, we certainly
can expect the normal, customary budget expansion of at least
$27, 000, 000. Add these two figures together and the sum, $43, 200, 000,
is more than the amount you may expect from the increased income
tax when you meet here next January to adopt a budget for fiscal
1966. This projection of future revenue requirements shows un-
mistakably that the revenue from the new tax will be needed to
balance the budgets of fiscal 1965 and 1966 and of subsequent years

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