Tax chorus raising its tune to heights today

March 05, 1992|By John W. Frece | John W. Frece,Annapolis Bureau

ANNAPOLIS -- The Senate's budget committee will be asked today to raise Maryland's sales tax, raise the gasoline tax and raise taxes on cigarettes, alcoholic beverages and long-distance telephone service -- to raise about $430 million in higher taxes in all.

The Budget and Taxation Committee also will be asked to have the state assume the multimillion-dollar cost of running Baltimore's courts and prosecutor's office, and to send the city another $23 million just because it's so poor.

To these politically dangerous questions, the committee's answer is expected to be: yes, yes, yes, yes, yes and yes.

Sen. Laurence Levitan, D-Montgomery, the committee's chairman and a principal architect of the tax package, said he expects the plan to pass the Senate. What happens once it reaches the House of Delegates, where tax paranoia is rampant, is anybody's guess, Mr. Levitan said.

But he argued that the package should win over lawmakers because the higher taxes provide enough revenue to reduce to $50 million the House's proposed $88.5 million cut in state aid to Baltimore and the 23 counties in this fiscal year.

By implementing the new taxes May 1 instead of waiting until the next fiscal year starts July 1, the state would collect an estimated $57 million. That money would be used to offset a lingering deficit in the current budget year estimated as high as $270 million and reduce the need to take the money out of local aid programs.

The rest of the deficit would be eliminated through various fund transfers, additional cuts in state agency spending, proceeds from a Medicaid provider tax on nursing homes and a $42 million transfer from the state's Transportation Trust Fund.

The tax package would include a sales tax increase from 5 percent to 5 1/2 percent, repeal of certain sales tax exemptions and expansion of the tax to cover dry cleaning, repair services, lawn care, cellular telephones and beepers.

The rate increase, however, is intended to be temporary; it would automatically expire June 30, 1994 -- in the midst of a General Assembly election year -- unless the legislature voted to extend it.

The plan also calls for a 6-cent increase in the state's 18.5-cents-a-gallon gasoline tax; a 10-cent-a-pack increase cigarette taxes; a 50 percent increase in the current taxes on beer, wine and liquor; and a tax on some telecommunications services.

The gas tax proposal is a penny higher than the nickel-a-gallon proposed by Gov. William Donald Schaefer. Part of the revenue would go to Prince George's and Montgomery counties to cover most of the payments they make to the Washington area's mass transit agency.

Baltimore lawmakers have been withholding their support for any taxes until they're guaranteed a large infusion of funds for the city.

Sen. John A. Pica Jr., D-Baltimore, chairman of the city's Senate delegation, described the plan as "a fair approach without which the city cannot exist."

Mayor Kurt L. Schmoke has tried for the past couple years to convince the state to take over the jail, the courts and the state's attorney's office.

Under the Senate plan, the city would receive $12 million to run the state's attorney's office, another $9 million for the Circuit Court and $23 million in a grant aimed at eliminating some of the financial disparity between the city and the state's four poorest counties and the rest of Maryland. Somerset, Garrett, Dor

chester and Caroline counties would share in about $5 million through such a program.

Sen. Barbara A. Hoffman, D-Baltimore, said unlike the quick takeover of the former City Jail a year ago, takeover of the courts and prosecutor's office could be phased in.

During fiscal 1993, she said, the city would receive a grant covering its budget for the two criminal justice operations. By fiscal 1994, the state would negotiate a complete takeover, including ownership of buildings and the transfer of personnel to the state rolls.

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