Senate panelists put tax package on the sidelines

March 10, 1992|By John W. Frece | John W. Frece,Annapolis Bureau

ANNAPOLIS -- After stoking the engine with enough goodies to assure that a full crew would be aboard, the Senate's tax train unexpectedly chugged right off the tracks yesterday, even before it had cleared the station.

By a 7-6 vote, the Budget and Taxation Committee killed -- for now, at least -- a bill that would have raised $430 million in new taxes by increasing and expanding the state's 5 percent sales tax, and by increasing taxes on cigarettes, alcoholic beverages and long-distance telephone service.

A reconsideration vote is possible and, some committee members predicted, even likely.

"This is just a temporary setback on the way to a budget resolution," said Senate President Thomas V. Mike Miller Jr., D-Prince George's.

But late last week, committee Chairman Laurence Levitan, D-Montgomery, confidently predicted the tax package would pass his committee, saying he was more concerned about it once it reached the Senate floor.

Now that floor debate has been postponed indefinitely.

The surprise vote also delayed action on a proposed 6-cent-a-gallon increase in the state gas tax, and on a variety of special appropriations the other tax increases would have paid for.

They include state takeover of Baltimore's Circuit Court and prosecutor's office, a special grant for Baltimore and the state's four poorest counties, special education for disabled children, an increase in aid for community colleges, and money for "magnet schools" in Prince George's County and for special programs for non-English-speaking students.

"We haven't sunk yet, but we're treading water," Senator Levitan admitted. He and others expressed hope the tax plan could be resurrected, but also warned that if that fails, the consequences could be severe.

Without revenues from the tax plan, the version of the state budget passed by the Senate committee yesterday is still as much as $275 million short of being in balance. That gap can be filled only through a tax increase or further deep cuts in spending. As it is, the Senate's version of the budget already reflects more than $390 million in cuts in local aid programs and state agency spending.

If the General Assembly reaches a stalemate, a long list of contingent budget reductions -- drastic cutbacks known as Gov. William Donald Schaefer's "doomsday" budget -- could go into effect.

Mr. Levitan said he entered yesterday's voting session sure he had eight votes for the plan. Only seven were needed. But fellow Montgomery County Democrat Ida G. Ruben defected, arguing that her county was promised more money from the state in financial help than the package would deliver.

Once Ms. Ruben voted nay, Senate Minority Leader John A. Cade, R-Anne Arundel, followed suit. He declined the chance to be the deciding vote for a tax package that primarily benefits Montgomery and Prince George's counties and Baltimore City, and which five Democrats had voted against.

Mr. Cade declined comment after the vote, but Senator Levitan said: "I don't blame him for not supporting the tax package. It's the Democrats who should have supported it."

He said Senator Cade also was angered by a committee amendment that would have required Prince George's, Harford and Cecil County school boards to spend almost as much on education next year as they are spending this year.

That so-called "maintenance of effort" provision, Senator Cade warned his colleagues, would prompt school boards elsewhere in the state to lobby to have their counties added to the list.

With sparse resources then mandated by law to be spent on schools, county governments would have no choice but to raise local taxes or cut spending on local services to make up the difference.

"This is a recipe for chaos on the floor," he predicted.

Senator Ruben said she had been promised certain changes in state aid programs, including a shift in the way education aid is calculated from using average enrollment to using average daily attendance.

Montgomery County would receive more money through such a change, but Prince George's County and Baltimore -- the two other jurisdictions instrumental in developing the tax package -- would not.

"It just isn't true," said Sen. Barbara A. Hoffman, D-Baltimore, vice chairman of the committee. She said the idea was discussed in Senator Ruben's presence late last week, but quickly dropped.

In addition, the tax plan would permit local governments to raise their maximum piggyback income tax rate from 50 percent to 60 percent, which would give Montgomery the ability to raise at least $61 million more, by far the biggest beneficiary of such a decision for self-taxation.

"The counties that gain the most from being able to raise the piggyback tax, and that gain the most from an increase in the transportation tax, need to understand that unless there is an entire package, there is no package," Senator Hoffman said, noting that city senators would not vote for a tax package piecemeal.

Roll call

Here is the 7-6 vote by the Senate Budget and Taxation Committee against a proposed $430 million tax package that would have raised the sales tax from 5 percent to 5.5 percent, expanded the sales tax base, and increased taxes on cigarettes, alcoholic beverages and long-distance telephone service.

Yea (6):

Laurence Levitan, D-Montgomery, chairman

Barbara A. Hoffman, D-Baltimore, vice chairman

William H. Amoss, D-Harford

Nathan C. Irby Jr., D-Baltimore

Decatur Trotter, D-Prince George's

Albert R. Wynn, D-Prince George's

Nay (7):

John A. Cade, R-Anne Arundel

Julian L. Lapides, D-Baltimore

Donald F. Munson, R-Washington

Nancy L. Murphy, D-Baltimore County

Ida G. Ruben, D-Montgomery

Charles H. Smelser, D-Carroll

Thomas M. Yeager, D-Howard

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