Senate approves budget, clearing way for final battle $11.6 billion bill counts on $34 million in new taxes

March 22, 1991|By M. Dion Thompson | M. Dion Thompson,Annapolis Bureau of The Sun

ANNAPOLIS -- The Senate approved its version of Gov. William Donald Schaefer's $11.6 billion 1992 budget yesterday, and members of both houses prepare to resolve differences between their proposals.

Already, battle lines are being drawn over the different proposed tax increases the Senate and House of Delegates used to balance their budget proposals. Both houses have made millions of dollars in funding to state-supported local programs contingent on their different taxing proposals.

Those differences will be worked out next week by a select conference committee of House and Senate legislators.

The Senate's budget proposal, which passed by a vote of 43-4, currently contains $34 million in new taxes, based on passage of a 5-cent increase in the excise tax on cigarettes and closing a sales tax loophole on some food sales that are currently exempt.

The House plan does not include those taxes, but does include $39 million in revenues expected to come from eliminating Maryland's 40 percent tax break on capital gains and $37 million from a 5 percent sales tax on cigarettes.

House Speaker R. Clayton Mitchell Jr., D-Kent, said he doesn't like the Senate's excise tax on cigarettes or its proposal to close the sales tax loophole.

"We feel [the sales tax] should be looked at this summer, when we look at the closing of many loopholes," he said. "We would hope that [the Senate] would consider going with our two taxes."

Sen. Laurence Levitan, D-Montgomery, who chairs the Senate's Budget and Taxation Committee, said he doesn't favor the House's capital gains proposal, but also said he is not willing to rule out any changes once the conference committee begins its deliberations.

"Everything is on the table," he said. "I don't think a lot of people are really uptight on any of these small loopholes closing."

Local jurisdictions, however, will have some cause for concern as the legislators hold their budget summit next week. The Senate has placed the budget ax over $69.4 million in the Action Plan for Excellence education program, or APEX, which helps to fund local schools. That cut would go through if the Senate's taxing proposals were not adopted.

"The balancing factor in this whole budget is APEX," Senator Levitan told his colleagues before presenting them with the budget.

On the House side, $25 million in APEX funding is contingent on proposed House tax increases, along with $29.6 million in property tax grants to local jurisdictions, $6 million for magnet schools and $2 million for foot patrol officers in Baltimore.

All told, the House has made $74 million in local funding contingent on its tax increases.

"I think the first thing we have to try to resolve is the revenue picture. Once we deal with that, then we can decide how to deal with the budget picture," Senator Levitan said. "There are all sorts of possibilities."

Delegate Charles J. Ryan Jr., D-Prince George's, who chairs the House Appropriations Committee, said Senate and House budget leaders already have held preliminary meetings on resolving their differences.

In terms of the budget, the major differences are over cuts in higher education, Social Security payments to teachers, the waterway improvement fund and the state's parkland acquisition program.

In previous years, the committee members resolved the differences in budget cuts by reaching a compromise. However, that may not be the case this year, said Delegate Ryan.

This year, panel members are likely to approve the larger of the two houses' proposed cuts, "because we need the money," he said.

Mr. Mitchell and Mr. Levitan also said the conference committee will try to find additional money to aid Baltimore and the state's poorer jurisdictions.

The Senate's tax proposal also includes funds that will be used to offset a projected $9 million shortfall in payments to the Aid to Families with Dependent Children and the General Public Assistance programs.

Governor Schaefer had threatened to cut those programs beginning April 1, but administration officials announced yesterday that the governor has decided not to make the cuts.

Senate, House budget differences

Following are the major differences between the Senate and the House versions of the 1991-1992 budget (figures in millions of dollars):

..... ...... ........ .......... .... ..HOUSE....... .. SENATE

Reductions and transfers

State agencies.... ........ ....... ....$26.4.... ...... $31.6

Higher education. ............ ...... ...13.0..... ...... 19.4

Teacher Social Security. ............ ....6.0...... ...... 8.0

Transfer tax -- open space. .......... ..18.0....... .....14.5

Waterway improvement.. ............. ... 10.5........ .... 2.5

Increased taxes and fees

District Court fees.... ........ ... .... 4.5...... ...... 4.5

Sales tax -- cigarettes. ............ .. 37.0....... .... 35.1

Excise tax -- cigarettes. .......... ...... 0........ ... 19.9

Sales tax -- certain foods. ........ ...... 0.... ........14.4

Capital gains exclusion. ......... ..... 37.0..... ......... 0

Contingent appropriations*

Aid to education (APEX). ......... ..... 25.0..... ...... 69.4

Social security.. ............... ....... 7.0...... ........ 0

Magnet schools.. .......... ...... ...... 6.0....... ....... 0

Fire/ambulance grant.. ....... ....... .. 2.5...... ........ 0

Resident trooper. ............. ..... .... .9....... ....... 0

Prince George's Co. drug grant. .... .... 1.0...... ........ 0

Baltimore City foot patrol. ....... ..... 2.0....... ....... 0

Property tax grant.. ........... .... .. 29.6........ ...... 0

*These appropriations are contingent on passage of the increased taxes and fees listed above.

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