ANNAPOLIS -- The General Assembly sounded the death knell yesterday for the Schaefer administration's mammoth $800 million tax proposal, but in doing so promised to study the plan and fashion an alternative for next year.
Gov. William Donald Schaefer's proposal to restructure the state's tax system and direct more money to Baltimore and other poor jurisdictions was soundly rejected by both the House Ways and Means Committee and the Senate Budget and Taxation Committee.
But Delegate Tyras S. Athey, D-Anne Arundel, who chairs the Ways and Means Committee, said the bill is a basis for legislators to address Maryland's needs.
"I don't think anyone came into this room with the idea that it was over, dead and gone," said Delegate Athey. "We're going to look at it, and we're going to work pretty hard on it over the summer."
Yesterday, Speaker R. Clayton Mitchell Jr., D-Kent, told the House of Delegates that something had to be done to alleviate the differences between Maryland's rich and poor jurisdictions.
Sen. Laurence Levitan, D-Montgomery, who chairs the Senate's Budget and Taxation Committee, said he envisions a joint committee examining the state's revenue needs and its expenses. He also said the committee will try to find a way to funnel money to Baltimore on a continuing basis.
Because the tax restructuring bill has been in trouble ever since it was introduced, administration officials were not surprised by yesterday's action.
David S. Iannucci, the administration's chief legislative officer, called the action a "disappointment."
"I think we still have to acknowledge that our income tax remains not progressive and the sales tax remains insufficient and riddled with loopholes," he said. "Those were things that this administration thought could have been addressed by this General Assembly."
The bill recommended that the sales tax be increased from 5 percent to 5.5 percent and applied to broad categories of services, from auto repairs to tanning salons. It also included a more progressive income tax structure that offered some relief for middle- and lower-income taxpayers while hitting the rich harder.
The plan also included a 2 percent personal property tax on motor vehicles and boats. It called for property tax breaks for everyone, with the greatest relief going to areas burdened by the highest rates.
R. Robert Linowes, the Montgomery County lawyer who headed the commission that devised the tax plan, said he hopes the General Assembly will keep its promise and come up with definite proposals.
"The tragedy is that we're losing a year, and the tragedy is that there may be so many tragedies, that so much that needs to be done will not be done," he said. "If the report is going to have any kind of value,which I think it does, it is to bring the issue to the fore and make sure that legislators and government in general address these problems."
With the legislators now committed to working on Maryland's tax structure, Senator Levitan said he thinks a bill will be fashioned that can pass the General Assembly next year.
The lack of legislative involvement in shaping the administration's bill was a major reason for its demise, said Senator Levitan.
"The legislature believes and over the years has deemed that tax policy and fiscal policy is legislative policy," he said. "If you don't have some legislators there, it's just not going to fly."
Delegate Paul Weisengoff, D-Baltimore, who voted in favor of the bill, said he was encouraged by the promise that something will be done to help his city.
"This is the most encouraging word I've heard in a long time in the General Assembly," he said. "I think there is some hope now."