State Senate OKs plan to raise taxes by $245 million Legislators unhappy with compromise

March 18, 1992|By John W. Frece | John W. Frece,Annapolis Bureau

ANNAPOLIS -- The Senate narrowly voted to raise taxes by $245 million yesterday in an action that fit the classic definition of a compromise: It made no one happy.

Senators who voted yesterday, and the delegates who will be on the tax hot seat next, complained the tax plan was too big, or too small, or taxed the wrong things.

The $245 million tax package was approved 26-20, just two votes more than the 24 required for passage.

It would expand the state's 5 percent sales tax to cover a variety of products and services not now taxed -- everything from snack foods to dry cleaning to massage parlors to pay-per-view TV. It also would raise taxes on cigarettes by a dime a pack and increase by 50 percent the current taxes on wine, beer and liquor.

The new taxes would go into effect May 1.

"I don't think we've cured the disease," Sen. Frederick C. Malkus Jr., the 78-year-old dean of the Senate, said of the state's lingering financial problems.

"I think we'll be back because we haven't done the job correctly," the Dorchester Democrat added.

Republican F. Vernon Boozer of Baltimore County said the tax plan not only was too large, but also composed of "taxes of the worst kind -- regressive taxes."

The only point of agreement was that the final tax package the General Assembly will produce before adjournment April 6 will almost certainly be different from the one the Senate passed yesterday.

House Speaker R. Clayton Mitchell Jr., D-Kent, and Delegate Tyras S. Athey, chairman of the tax-writing Ways and Means Committee, said they don't like the Senate's proposed tax increases on alcohol and cigarettes.

Mr. Athey, an Anne Arundel County liquor store owner, added that he doesn't even like the proposed tax on dry cleaning.

Mr. Athey predicted the House's final tax package may raise about the same amount of money as the Senate plan, but said he wants to do it "without a direct tax" that Maryland citizens will feel, such as the proposed taxes on dry cleaning, liquor or tobacco.

"I'm trying to keep away from that kind of thing," he said, suggesting that his committee might push instead for an increase in the corporate income tax rate as a partial substitute.

Mr. Mitchell's latest plan would tap into the $70 million the state pays each year in service charges to lottery agents, retailers, car and boat dealers, and utilities to compensate them for collecting and remitting taxes to the state.

Mr. Mitchell said he'd like to take back 75 percent of that money, or about $52 million.

Those who voted against the Senate tax package were mostly from Baltimore County, where anti-tax fever is hot, or conservatives from rural parts of the state where government is viewed as too big and costly.

Three of the Senate's nine Republicans, including Minority Leader John A. Cade of Anne Arundel County, supported the tax package.

Only one Baltimore County senator did, Democrat Janice Piccinini, a former state teachers' association president interested in maintaining state funding for schools.

Only one city senator voted against the tax package, gadfly Democrat Julian L. Lapides. For that, Baltimoreans United in Leadership Development, a church-affiliated neighborhood organization that has backed higher taxes to help the city, immediately announced plans to hold a demonstration outside his office today.

Sen. Paula C. Hollinger, a Pikesville Democrat who traditionally has voted for government spending programs, not only voted against the tax package yesterday, but against the budget as well for the first time in her 14 years in Annapolis.

"I think there is an extremely strong anti-tax sentiment in the county," she said afterward. "It's dramatic: People have just lost faith in the workings of all government."

After voting for the budget-balancing tax package, the Senate approved the $12.5 billion budget itself on a 30-17 vote without debate.

It also approved a pair of companion budget-reconciliation bills designed to shift various state funds to cover deficits in the current fiscal year and fiscal 1993.

The budget, already lean after 18 months of declining revenues forced the governor and legislature to cut spending six times, reflects an unprecedented withdrawal of $253 million in state aid programs for Baltimore and the 23 counties.

Those reductions affect programs created to help local governments pay for police protection, Social Security and retirement benefits for teachers, librarians and others, and for general uses to alleviate the need to raise local property tax rates.

The budget also included sharp reductions in virtually all areas of spending by state agencies, and was balanced in part though increases in fees for government services.

Senate vote

Here is yesterday's Senate vote on a $245 million budget-balancing tax plan:

YEA (26):

Amoss, William H., D-Harford

Blount, Clarence W., D-Baltimore

Boergers, Mary H., D-Montgomery

Cade, John A., R-Anne Arundel

Della, George W. Jr., D-Baltimore

Denis, Howard A., R-Montgomery

Dorman, Arthur, D-Prince George's

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