Not what you call the world's best timing: Tax reform must...

THE WEEK IN MARYLAND

December 02, 1990

Not what you call the world's best timing: Tax reform must 0) fight recession fears

Fear of the economic slump could decisively affect some of the state government's most cherished initiatives, and officials were trying hard to sell them to a skeptical public and lawmakers.

Topping the list was the Commission on State Taxes and Tax Structure, which unanimously approved its final report. Members the commission said they hoped to sell their recommendations to a reluctant General Assembly and the public as tax relief, even though the proposals would raise $807 million in new tax revenue next year alone. "I see this very much as a tax relief package for the average taxpayer," said Richard O. Berndt, a Baltimore lawyer. The bulk of the new money -- to be raised through a vast expansion of the state sales tax, an increase in personal and corporate income tax rates, and a new 2 percent personal property tax on motor vehicles and boats -- would go toward public school and transportation improvements across the state. Most of that money, in turn, would go to the state's poorest jurisdictions, while all jurisdictions would be required to cut their property taxes. Gov. William Donald Schaefer was expected to endorse the report eventually, but his aides said he was preoccupied with the state budget deficit.

Light rail price rises again, or does it?

Transportation officials contended that a new financing plan to help pay for Baltimore's light-rail system will save the state $44 million, not cost it $43 million as The Sun reported. The officials' claim came after several legislators, during a Senate Budget and Taxation Committee meeting, criticized the Maryland Transportation Authority's plans to issue bonds in part to help pay for the rail project, saying an estimated net $43 million in added interest costs would come out of taxpayers' pockets. Stephen Zentz, deputy director of the Department of Transportation, and John Agro, executive director of the Transportation Authority, said the authority's plan to borrow $78 million by issuing 15-year bonds next month would do more than permit it to loan the DOT money needed to build the rail system. The new bonds, they said, would also permit the authority to repay two older, higher interest bond issues quicker and would eventually save the state a net $44 million. But "Any way you cut it, it's going to cost the taxpayers," said Sen. Julian L. Lapides, D-Baltimore. Mr. Zentz and Mr. Agro pointed out that bond interest costs are never included in a project's construction budget -- a point confirmed by a legislative fiscal analyst, another state budget expert and Transportation Secretary Richard H. Trainor.

Growth controls could spread across state

A second commission, dealing with growth in the Chesapeake Bay region, presented long-awaited proposed legislation that would affect development in every corner of the state, targeting growth to specific areas and limiting sprawl into environmentally sensitive land. "What we are proposing is a minimal plan," said Commission Chairman Michael D. Barnes. "I wish we could go much further in 1990. Today we have 1 percent of the oysters that our grandparents enjoyed. . . . Our children and grandchildren will not have crabs, if we don't change the way we are living." The centerpiece of the legislation, the Proposed Maryland Growth and Chesapeake Protection Act, would require individual counties to classify each acre of land into one of four categories, each with its own development pattern. The goal of the legislation is to steer the majority of growth into already developed locales and in designated growth areas. Counties could be sued by the state or lose money for violating the guidelines. But officials denied they were interested in statewide planning. Walter A. Frey III, a commission member, said, "The state is not in a position to micro-manage growth."

Group wants more aid, new deal for schools

And despite the threat of economic crunch, a statewide reform group proposed a top-to-bottom revision of the way Maryland finances school aid, calling for spending an additional $628 million a year on education. (See article, page 5B.) The reformers, organized as the Metropolitan Education Coalition, calculated that it would take an average of $900 more per child to offer equal educational opportunities across Maryland. Sen. Laurence Levitan, D-Montgomery, chairman of the Budget and Taxation Committee, said the proposal was appealing because it ties additional money to performance. "But as a practical matter," he said, "there's no money." He predicted it would go on a back burner while legislators digested it, then emerge for serious discussion in future years when the economy picks up and more money is available.

USF&G brings in outsider as chief

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