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PARRIS N. GLENDENING, Governor
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H.B. 437
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unappropriated. The fund may consist of real property, in kind contributions, or funds
expended prior to the effective date of this Act. In case of any dispute as to the amount
of the matching fund or what money or assets may qualify as matching funds, the
Board of Public Works shall determine the matter and the Board's decision is final.
The grantee has until June 1, [2002] 2004, to present evidence satisfactory to the
Board of Public Works that a matching fund will be provided. If satisfactory evidence
is presented, the Board shall certify this fact and the amount of the matching fund to
the State Treasurer, and the proceeds of the loan equal to the amount of the matching
fund shall be expended for the purposes provided in this Act. Any amount of the loan
in excess of the amount of the matching fund certified by the Board of Public Works
shall be canceled and be of no further effect.
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
June 1, 2002.
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May 15, 2002
The Honorable Casper R. Taylor, Jr.
Speaker of the House
State House
Annapolis MD 21401
Dear Mr. Speaker:
In accordance with Article II, Section 17 of the Maryland Constitution, I have today
vetoed House Bill 437 - Qualified Tuition Programs - Income Tax Treatment.
House Bill 437 makes two significant changes to the Maryland Prepaid College Trust
and the Maryland College Investment Plan. The legislation provides for an income
tax subtraction modification of up to $2,500 per contributor per beneficiary for
contributions to a qualified prepaid tuition program or higher education investment
program. Secondly, the bill expands the types of programs that qualify for the
subtraction modification to include college savings programs sponsored by other
states. Under current law, this subtraction modification is limited to contributions
made to Maryland programs only.
The Maryland Prepaid College Trust was created in 1997 to assist Maryland families
saving for college. Taxpayers who make a contribution to the program were allowed to
take a subtraction modification for a certain amount for each child's account. The
College Investment Plan was created in 2001, and similar subtraction modification
provisions were made applicable to contributions to these accounts. Unfortunately,
the Maryland Higher Education Investment Board interpreted this provision as
allowing a $2,500 subtraction for each investment option offered by the Plan, rather
than each account holder. In other words, an individual could invest $2,500 in each of
the 10 investment options offered by the Board for one child, and take a $25,000
deduction. This was clearly not my intent nor the intent of the General Assembly.
During the 2002 Session, House Bill 437 was introduced to clarify the limit of the
State income tax deduction. I agreed with the General Assembly's intentions and
supported this measure. However, the bill was amended in committee to expand the
subtraction modification to any state sponsored Section 529 college savings plan. This
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- 5113 -
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