State tax plan, budget flounder in Senate panel Leader Miller calls on senators to find compromise

April 01, 1992|By John W. Frece | John W. Frece,Annapolis Bureau

ANNAPOLIS -- The president of the Maryland Senate pleaded with his budget committee yesterday to set aside "petty grievances [and] petty needs" and work with the House on a compromise tax package.

The only thing the two houses could agree on yesterday was a 20-cents-a-pack tax increase on cigarettes, and even that could be meaningless if the broader effort to strike a deal collapses.

Senate President Thomas V. Mike Miller Jr., D-Prince George's, averted an immediate showdown with the House by persuading his Budget and Taxation Committee to put off for a day a vote on a new tax plan that would polarize the two houses even further.

That plan would raise just enough taxes to fill the hole between expected revenues and proposed spending next year.

The sweeteners in the House tax package -- including a $30 million grant for Baltimore City and five poor counties, $8 million in police aid to the city and Prince George's County, and millions more to various counties for education aid -- would be scrapped.

Mr. Miller said the Senate budget committee's proposal also would not have included an increase in the gasoline tax needed to finance state road construction.

Nor would it have included authority for Baltimore and the 23 counties to raise their maximum piggyback tax rate from 50 percent to 60 percent to offset cuts in state aid. Both of those proposals are also part of the House tax package.

"I hope the Senate can put aside petty grievances, petty needs and look to the good of the entire state," he said.

With Monday's midnight adjournment rapidly approaching, House and Senate leaders have failed to resolve differences not only over taxes but also over the 1993 state budget the added tax revenues are designed to balance.

Mr. Miller warned the Senate that if the General Assembly fails toreach agreement, it faces the prospect of an extended session and a "doomsday" budget, with cuts that could cripple state agencies and programs. That, he added, could lead to Maryland's losing its coveted triple-A bond rating.

None of this seemed to panic Gov. William Donald Schaefer, who yesterday said calmly, "There is still time. Now is not the time for me to intervene."

But as the Constitution requires when there's no budget by the 83rd day of the session, Mr. Schaefer yesterday issued a proclamation extending the session for 10 days.

If agreement is reached before midnight Monday, the extension will be unnecessary. If not, the legislature would be restricted to working on nothing but the budget during the extended session.

House and Senate conferees on the tax legislation began yesterday with a cordial opening meeting, differing on most issues but agreeing to one: that the state's 16-cents-a-pack tax on cigarettes should be raised to 36 cents.

Mr. Schaefer threatened to veto any budget-balancing tax package that failed to include a cigarette tax increase of at least 20 cents.

"We don't like it, but we'll go with it," said Sen. John A. Cade, R-Anne Arundel.

Beyond that, however, the House and Senate differed on almost every front:

* The Senate would not go along with the House's proposed new 6 percent tax bracket for Marylanders with taxable incomes of $100,000 or more.

While the House attempted to characterize the idea as a "tax on the wealthy," the senators said it would raise taxes on the same scientists, computer specialists, university professors and business executives the state tries hard to lure.

* The Senate opposed a House proposal to raise the corporate income tax rate from 7 percent to 7.5 percent for most businesses, and to 8 percent for those with annual profits of $1 million or more, calling it anti-business. But senators indicated they might consider a temporary tax surcharge on personal or corporate incomes as long as it would last only a year or two.

* While senators preferred simply raising the state's 5 percent sales tax to 5.5 percent, they were dissuaded from that by the House, which favored broadening the sales tax base.

But, the senators complained, when they sent the House a tax package that broadened the base to include previously untaxed services such as dry cleaning or repairs, the House rejected it.

* The senators said they didn't like a House proposal to increase the titling tax on gas-guzzler cars, while giving tax credits to those who buy more fuel-efficient cars. The gas-guzzler tax has met strong opposition from car dealers and domestic auto manufacturers, who fear it will hurt sales.

"There are so many competing interests, it's hard to fight on so many fronts at one time," said a discouraged Mr. Miller.

Late yesterday, however, several of the House and Senate conferees met informally, raising hopes that a compromise might still be fashioned before either side digs in too deeply.

"Sometimes it takes a nudge, a push, a small plea or a cajole," said Mr. Miller. "Right now, we're miles and miles apart."

Today in Annapolis

10 a.m.: House and Senate convene, State House.

10 a.m.: Board of Public Works meets, State House.

1 p.m.: Senate Economic and Environmental Affairs Committee considers House bill that would change the official observance of Memorial Day, Room 200, Senate Office Building.

There are six days remaining in the 1992 General Assembly session.

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