Budget puzzle remains unsolved Conferees fail to reach agreement on new taxes.

April 06, 1992|By John W. Frece and Marina Sarris | John W. Frece and Marina Sarris,Annapolis Bureau

ANNAPOLIS -- Angry House and Senate conferees broke off talks on new taxes yesterday, pushing the General Assembly to the brink of tonight's scheduled adjournment without a budget.

Blaming each other for inflexibility, the two sides could not agree on how long to extend a proposed 6 percent income tax bracket for Maryland's wealthiest citizens.

That disagreement could force the legislature to pass a last-minute "doomsday" budget balanced by $260 million in cuts to local aid, school funding and health care for the poor -- or pass no budget at all.

In a rare Sunday session, legislative leaders had hoped to come up with enough taxes to pass the $12.5 billion 1993 budget without those cuts.

Those reductions -- listed in legislative documents under the title "Armageddon" -- would stick Baltimore and the 23 counties with another $95 million in cuts in state aid, on top of the $250 million in local aid already chopped from the remainder of the budget.

The cuts would mean closure of most state parks and forests and of the state mental hospital in Crownsville. They would also mean deep cuts in state aid for public schools, community colleges, rental housing, Medicaid and a long list of other programs the state once believed it could not live without.

If legislators fail to pass a budget by midnight tonight, the scheduled end of the 90-day session, the session will automatically be extended until they do so -- something that has not happened in Maryland for at least 35 years. That alone will cost taxpayers $15,000 to $20,000 a day.

The Maryland Constitution prohibits consideration of anything but the budget during an extended session, which means the state's $350 million capital construction program for next year and any other legislation still pending when time runs out would die.

Several important measures still await final votes, including Gov. William Donald Schaefer's bills regulating suburban sprawl and providing additional court remedies to battered women.

"I'm worried, uneasy and nervous" about the bills getting lost in the budget frenzy, said David S. Iannucci, the governor's chief lobbyist.

Only enactment of new taxes can keep the additional cuts from going into effect. But grim legislative leaders conceded yesterday that even if they can strike a deal in a conference committee, they may not have the votes for taxes on the floor tonight. This is especially true in the Senate, where one anti-tax senator could single-handedly filibuster the deal to death.

It was shaping up as a fitting end to a legislative session in which a suddenly vocal Republican minority forced many rank-and-file Democrats -- scared of an anti-tax, anti-incumbent electorate -- to push for a no-new-taxes budget.

If no tax bill is enacted, the political losers may turn out to be those who got caught in the switches: lawmakers who put their careers on the line by voting for taxes but who still will be blamed for passing a budget containing so many deep cuts in programs and services.

If the tax bill fails, with it will go a nickel-a-gallon increase in the gasoline tax proposed to revive the state's moribund road-building program and a 20-cents-a-pack increase in cigarette taxes, the death of which will make smokers and tobacco lobbyists happy.

Just as important, local governments would not get an increase in taxing authority that local officials had counted on to offset huge cutbacks in state aid.

Also at stake were several special local aid programs that would be financed by the proposed tax increase, including a $30 million "disparity" grant to Baltimore and five poor rural counties, $17 million for educating disabled students, mass transit subsidies for Montgomery and Prince George's counties, a grant to fight violent crime in Baltimore and Prince George's, a grant for magnet schools in Prince George's and a separate grant for schools around the state that fail to meet minimum statewide standards.

"If the House members are going to walk away from that, so be it," said a disgusted Sen. Laurence Levitan, D-Montgomery, chairman of the Budget and Taxation Committee.

From the outset, the Senate tax conferees opposed the House's plan for a new 6 percent tax bracket for Marylanders with taxable incomes of $100,000 a year or more. Such a plan would have cost a taxpayer with $120,000 in taxable income a total of $200 a year.

To break the deadlock, the senators suggested extending the tax increase for only two years, fearful a permanent change might bring the state an embarrassment of riches.

The House countered with a proposal to repeal the new tax bracket only if the state's rainy day fund tops $180 million -- a sum that House leaders wanted to offset future swings in the economy.

"We're trying to be fiscally conservative," said Del. James C. Rosapepe, D-Prince George's, a chief draftsman of the House tax plan.

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