2 tax plans almost opposite Proposals come from Sauerbrey, coalition for poor.

December 20, 1991|By William Thompson | William Thompson,Evening Sun Staff

Gov. William Donald Schaefer and the legislature may be undecided about how to solve Maryland's budget crisis, but others are stepping forward with remedies.

Two plans -- as opposite as two sides of a coin -- were unveiled yesterday in Annapolis, and their supporters argued that their proposals would balance the budget, relieve taxpayers and provide essential state services.

One plan, designed by a coalition of 12 groups promoting the interests of the disadvantaged, calls for significant changes in the current tax structure and restoration of more than $200 million in cuts made over the past 15 months to welfare, health and education programs.

Among other things, the plan would increase taxes on higher-income households, increase personal exemptions for children under 16 and apply the state's 5 percent sales tax to a multitude of services.

"Since our goal is to prepare Maryland to move forward into the next century, we strongly recommend funding priority be given to programs that invest in the development of our citizens," said Lynda Meade, a member of the Maryland Alliance for the Poor.

The other plan, promoted by House Minority Leader Ellen R. Sauerbrey, R-Balto. Co., would freeze welfare grants and state employees' salaries and/or eliminate several state agencies. She contended the plan would balance the budget without new taxes.

"We have just built up a state structure we can't afford," Sauerbrey declared.

Sauerbrey said her plan, which she explained in a letter to the governor this week, is based on her belief that increasing taxes during a recession places undue hardships on struggling taxpayers and would not result in the higher revenues some tax supporters anticipate. "The private sector cannot be further burdened in order to enable government to continue business as usual," she said.

Sauerbrey said the government work force has grown too large. She suggested one way to reduce government size and spending is to force individuals who are eligible for retirement to leave their jobs.

Sauerbrey said lawmakers who argue that the state faces a $1.1 billion deficit in the next fiscal year are counting on spending money for programs and salaries that are not necessary. The deficit prediction, she said, is "smoke and mirrors and scare tactics" intended to frighten Marylanders into supporting tax increases.

The Baltimore County delegate's plan would put limits on spending earmarked for such traditional services as education and public safety.

Sauerbrey's plan would count on only a few sources of increased revenues. She said the state could get an additional $40 million from the lottery games by dividing profits with winners after agency expenses are paid. Currently, the state splits winnings before expenses are paid.

She also said she supports the idea of charging fees to those who use certain services. For example, a Schaefer task force set up to review state spending is expected to recommend today that the Motor Vehicle Administration increase its fees again to become more self-sufficient. The legislature raised a variety of MVA fees last year.

Where Sauerbrey's budget plan generally would keep state spending at current levels -- which represent five rounds of budget cuts -- the MAP plan would restore money cut from welfare benefits, women's services programs, community colleges, addiction treatment centers and prenatal care.

The plan relies heavily on raising more than $300 million by expanding the sales tax to include such currently untaxed services as cable TV, dry cleaning, computer programming and data processing and equipment rental.

So-called "sin taxes" on liquor, wine, beer and cigarettes also would be boosted to raise an additional $50 million, according to the plan.

Ann Ciekot, a representative of Action for the Homeless, said the tax proposal would provide a tax savings for many low- and middle-income Marylanders and would mean little if any increase for the majority of taxpayers.

It would increase taxes for upper-income Marylanders by adding higher-rate brackets for those with a taxable incomes of $50,000 or more. Most of the $184 million in additional income tax revenues for state and local governments would be paid by people with taxable income exceeding $150,000, she said.

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