$100 million in new taxes discussed House, Senate tax plans may be combined.

March 27, 1991|By Jon Morgan | Jon Morgan,Evening Sun Staff

Leaders of the Maryland General Assembly, who began the week debating rival tax plans approved by the Senate and House of Delegates, may end the week combining most of both plans into a nearly $100 million package of tax increases.

Plans now being discussed would add $20 million to the separate tax plans passed by the House and Senate and may target the money to social programs and financially ailing Baltimore.

In their budget deliberations since January, the House and Senate each came up with about $75 million in new taxes.

Both Houses voted to extend the state's 5 percent sales tax to cigarettes and other tobacco products, something that will raise about $36 million. Both chambers also voted for raising $4.5 million from district court fees.

Additionally, the Senate is calling for another nickel be added to the 13-cent a pack cigarette tax and for the closure of a variety of food taxes, such as eliminating the sales tax exemption on food bought in university and hospital cafeterias and carry-out restaurants. The cigarette tax would raise about $19 million and the food tax another $14 million a year.

The House, however, rejected the food taxes and opted instead to close the loophole that exempts from income taxes much of the money made on capital gains, usually the money made on the sale of stock or real estate. That measure would raise an estimated $37 million in the fiscal year.

Altogether, the House voted for $78.5 million in new taxes and the Senate $73.9 million. Both chambers also cut spending to keep the budget balanced.

Sen. Laurence Levitan, chairman of the Budget and Taxation Committee, said the Senate and House plans likely will be merged in part.

"I think it's fair to say that the House would not get capital gains unless the Senate gets the food tax," said Levitan, D-Montgomery.

Levitan said he still opposes the capital gains tax passed by the House but would consider a modified form of it.

Likewise, Del. Tyras S. Athey, chairman of the House Ways and Means Committee, said he had some complaints with the Senate's food tax but added, "We're going to look at all of it."

Athey, D-Anne Arundel, said he viewed $75 million as a "bottom line" necessary to balance the state budget. He said if lawmakers wanted to provide any additional funding in the budget for Baltimore or other jurisdictions, the House would have to consider accepting elements of the Senate plan.

"If there needs to be some assistance for the city or poorer jurisdictions, then we have to look beyond capital gains and the cigarette taxes," Athey said.

The Senate and House tax plans overlap in some areas, but if they were both implemented in total it would result in about $115 million in new taxes.

Both Athey and Levitan said a compromise of about $95 million to $100 million is more likely. The compromise probably will include some form of a capital gains tax, an extension of the sales tax to cafeteria food and one of the cigarette taxes, they said.

House Speaker R. Clayton Mitchell Jr., D-Eastern Shore, who has been reluctant to raise taxes at all this session, said yesterday that he had not decided whether to support some of the Senate taxes on top of the House-approved measures.

"I didn't say I'm for it or against it, but I've asked the committees to look at it and get back to me," Mitchell said.

Athey and Levitan are members of a joint Senate-House committee that is working out the differences in the tax plans presented by both sides. The committee met yesterday for the first time and was scheduled to resume talks today and probably reach agreement by Friday, Athey said.

A plan being pushed by the city's Senate delegation would target the $20 million in additional tax revenues to poorer jurisdictions, with up to $16 million going to Baltimore. But Athey said it's unlikely the city would get that much of the money.

Levitan said the money could be used to fund some of the $48 million in social programs requested by Gov. William Donald Schaefer earlier this week in a supplemental budget. That budget request was rejected by the General Assembly, which dismissed it as a "public relations" move.

Schaefer yesterday issued a statement denying that his supplemental request was a politically motivated "public relations" move. "I cannot begin to understand why the legislature continues to ignore the real human needs across the state," Schaefer said. "I have repeatedly pointed to the needs of the most vulnerable Marylanders . . . and have tried to help them. The legislature has decided not to help them."

Levitan said that if the General Assembly does approve a tax package greater than the $75 million already passed by each house, it could determine how the additional revenue would be spent by negotiating another budget supplement with Schaefer or by passing legislation mandating certain programs.

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