Senate committee approves slimmed-down tax plan $265 million blueprint includes no rise in sales tax.

March 11, 1992|By John W. Frece | John W. Frece,Annapolis Bureau

ANNAPOLIS -- A chastened Senate budget committee has backed down from a plan to raise $430 million in higher taxes, voting instead for a more modest $265 million tax plan considered more salable to the rest of the General Assembly.

One casualty is the proposed state takeover of Baltimore's Circuit Court and prosecutors' office.

The tax package as approved would mean Marylanders would pay more for pretzels and chips and other snack foods, for cigarettes, beer, wine and liquor, for dry cleaning, pay TV, tanning or massage services, lawn care, newspapers sold over the counter and repairs for television sets, computers, watches, musical instruments and a long list of other consumer goods.

The main difference between the tax plan approved on a 7-6 vote by the Budget and Taxation Committee last night and the one defeated by a 7-6 vote a little more than 24 hours earlier was that last night's plan eliminates a proposed half-percent increase in the state's 5 percent sales tax.

"If [the original plan] had hit the floor, it would have been very iffy," committee Chairman Laurence Levitan, D-Montgomery, said. "This [new] plan has a level of taxation a lot of senators can support."

The Senate committee's action should avert a fight with the House, where Speaker R. Clayton Mitchell Jr., D-Kent, has been trying to limit tax increases to around $250 million.

The eliminated provision to raise the sales tax rate would have raised $165 million in new revenue alone and would have helped pay for a list of budgetary goodies that would have primarily benefited Montgomery and Prince George's counties and Baltimore -- the three jurisdictions most instrumental in developing the original plan.

Those benefits would have included state takeover of the cost of running Baltimore's Circuit Court and prosecutors' office, a special grant for Baltimore and the state's four poorest counties, money for "magnet schools" in Prince George's County, a $27 million restoration of a deleted state aid program to educate disabled children and funds for another program to teach students for whom English is a second language.

The two education programs would have been particularly helpful to Montgomery County.

But on Monday, that was not enough for Sen. Ida G. Ruben, D-Montgomery, who cast the deciding vote killing the $430 million package because she said Montgomery County deserved more.

As it turned out, she -- and the other jurisdictions -- got a lot less.

Last night's compromise package contained none of the "ornaments" normally hung on such bills to attract votes.

The committee even postponed votes on two other tax issues that are of broad interest to local jurisdictions, but particularly to Montgomery County.

One is a proposed increase in the state's gasoline tax, which traffic-clogged Montgomery wants.

The other would give Baltimore and the 23 counties authority to raise their maximum piggyback income tax rates from 50 percent to 60 percent to offset some $240 million in cuts in state aid programs to local government.

Because of its high-income population, Montgomery County can raise far more money through such an increase than any other local jurisdiction.

The revised tax plan was approved only after the committee -- pushed by fiscally conservative senators who had been intentionally excluded from shaping the original tax plan -- pressed for and got another round of budget cuts aimed at reducing the reliance on higher taxes.

The result was $67 million in additional cuts. They included:

* $14 million that would have gone to local governments, but mostly to Baltimore, for police protection.

* $12 million from the already-decimated state program that buys parkland and makes waterway improvements.

* $12 million from various Medicaid health care programs for the poor, including measures that would limit Medicaid eligibility for nursing homes.

* $3.5 million to reduce welfare grants to fiscal year 1992 levels, which, for a family of three, would be $401 a month.

* $1 million, or 10 percent of the state portion of its budget, from Maryland Public Television.

* The $9 million remaining in a $20 million anti-cancer initiative proposed by the governor. The program already had been cut by $11 million.

When it came time for the senators to vote another $1 million cut in the General Assembly's own office expense accounts, the proposal failed, 8-5.

When asked to trim $1 million from the fund senators and delegates use to dispense college scholarships, the committee again said "no" on a 7-6 vote.

Even with the revenue anticipated from the higher taxes, the "surplus" left over would be so small that most members of the committee agreed it would probably be wiped out when the state's Board of Revenue Estimates meets today to update revenue estimates.

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