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H.B. 1188                                                VETOES

Speaker of the House
State House
Annapolis, MD 21401

Dear Mr. Speaker:

In accordance with Article II, Section 17 of the Maryland Constitution, today I have
vetoed House Bill 1188 - Higher Education Affordability and Access Act of 2004 -
Supplementary Appropriation.

The 11 public institutions that comprise the University System of Maryland (USM)
and Morgan State University (MSU) produce excellent graduates that contribute
greatly to our economy and quality of life in the State of Maryland. For these reasons,
my Administration worked hard to stabilize funding levels for USM and MSU in fiscal
year 2005 at the same level as FY 2004, despite a $1.2 billion deficit in FY 2005. In
addition, despite the budget shortfall forecast for FY 2006, we are using our best
efforts to provide additional funding in next year's higher education budget, while
continuing an aggressive capital funding strategy.

House Bill 1188 creates an unfunded mandate that would necessitate general fund
subsidies. The bill requires that the corporate income tax be increased by 10% for
calendar years 2004 through 2007 from 7% to 7.7%. The proceeds from this increase
will go into a special fund to support the University System of Maryland and Morgan
State University, above the $796.1 million I included for these institutions in the
State's FY 2005 budget. Under House Bill 1188, for FY 2006 to 2007, USM and MSU
would receive 5% increases over the previous fiscal year's appropriation. Sixty
percent of the 5% increase in funding would come from the increase in the corporate
income tax. Forty percent would come from the General Fund. The bill does not
identify a specific funding source. USM and MSU would be limited to increasing
tuition and fees by 5% per year for FY 2005 to 2007. House Bill 1188 also calls for
increases in the Sellinger and Cade formulas for private schools and community
colleges, respectively, as well as for Baltimore City Community College. Finally, the
bill establishes a task force to study the coordination, funding, education delivery, and
State commitment to higher education in Maryland, and to report to the General
Assembly by December 1, 2005.

I must veto House Bill 1188 because it is irresponsible and haphazard to create an
unfunded mandate that would siphon over $250 million from other State agencies
over the next three years. Especially in difficult fiscal times, we need flexibility in
order to handle all of the responsibilities of State government. Although the intent of
this legislation is commendable, because the General Assembly has failed to provide a
funding source, I must veto it. Along with the restraints House Bill 1188 would have
on the State budget, it would also increase the corporate income tax at a time when
businesses are recovering from a recession, and the required higher education study
is duplicative of the Maryland Higher Education Commission's (MHEC) ongoing
efforts.

Unfunded mandates should play no part in the management of Maryland's fiscal
resources. The required general fund contributions would come at the expense of
other necessary State programs. Currently, the General Assembly's failure to agree on
a permanent revenue source for Thornton requires that other programs in the State

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