State leaders inch toward tax increases Schaefer to offer 'minimum' or 'doomsday' plans

December 14, 1991|By John W. Frece | John W. Frece,Annapolis Bureau of The Sun

ANNAPOLIS — TC ANNAPOLIS -- Slowly, agonizingly, Maryland government leaders are moving toward raising taxes.

Gov. William Donald Schaefer and most of the top brass in the General Assembly have succumbed to the idea that there is no practical alternative. Maryland's budget hole is simply too big to fill in any other way, most of them seem to agree.

Although he has offered few details, Mr. Schaefer has expressed support over the past two weeks for raising and expanding the sales tax, restructuring the personal income tax and phasing in an increase in the gasoline tax.

Late last week, the Senate's influential Budget and Taxation Committee took a straw vote in favor of raising as much as $400 million in new revenue to help balance the next fiscal year's budget.

And even though his boss, House Speaker R. Clayton Mitchell Jr., D-Kent, disagrees, Appropriations Chairman Charles J. Ryan D-Prince George's, says he, too, is convinced a tax increase is inescapable.

"The bottom line is, there are going to have to be some substantial budget reductions and some substantial revenue increases," Mr. Ryan said last week.

But the problem these leaders have is that when they look over their shoulders, there may be no one following. Most of them agree the public does not believe a tax increase is necessary, and they doubt rank-and-file legislators will support one until the public does.

The budget dilemma has nearly paralyzed decision-making. After five rounds of reductions, many lawmakers say they cannot stomach further cuts in state spending, especially not in the money that goes to Baltimore and the 23 counties.

But at the same time, most of them say they cannot vote for higher taxes, certainly not in the midst of a recession. That their political futures could be in jeopardy usually goes unstated, but is obvious. The nightmare for the legislature's Democratic majority is the belief that Republicans are just waiting for them to pick their poison: raise taxes or cut something important, like funds for education.

Without clear public backing, they do not know which way to turn. State officials now are asking themselves if they are going to have to let state government be decimated by cutbacks in order to prove that tax increases are needed to save it.

Even Schaefer administration officials who believe a tax increase is the only way to eliminate a $1 billion deficit over the next 18 months privately concede that Speaker Mitchell's stubborn anti-tax stance may best reflect the current mood of the electorate.

That is one reason Mr. Schaefer has decided to make a rare, prime-time television appeal to Maryland citizens Tuesday night, hoping to convince the public the budget crisis is both real and serious; to tell them that he and the legislature face an array of options, all of them bad.

Twenty-six senators and delegates were selected to work with the governor's staff to choose among those options and develop a comprehensive solution. So far, the "Gang of 26" has had three lengthy meetings but accomplished little other than to vent their frustration.

Some believe the group is too large and diverse to reach a consensus. "If I had to forecast what we're going to do in this group, based on what we've done in the past two weeks, my forecast would be zero," said Senate Minority Leader John A. Cade, R-Anne Arundel.

Late last week, however, a small group from the "Gang of 26" began to meet quietly to piece together a possible solution that one lawmaker said resembled "a Chinese menu."

Here is the sort of plan they may eventually serve up:

* First, to prove they have done all they can to "downsize" government, legislators are likely to insist on more budget cuts, probably resulting in more employee layoffs. To achieve this, they also may be willing to relax some spending mandates, possibly including the heretofore sacrosanct area of education.

To mollify vocal conservatives such as Sen. Charles H. Smelser, D-Carroll, they also are likely to go after the frills or "perks" of government the public complains about most: cars, car phones, the proliferation of public information officers and the like. Even though eliminating such items would save comparatively small amounts of money, cuts are likely for symbolic reasons.

* Next, they will insist on cutting and restructuring the state's biggest and most expensive social programs, Medicaid and welfare, moves the Schaefer administration already has begun.

* They also may propose raising the fees levied by regulatory boards, state parks or other entities in an effort to make them self-supporting.

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