$250 million tax plan set Annapolis vote on budget due today

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

ANNAPOLIS -- Embarrassed that they have already overstayed their welcome, state legislators pieced together a compromise $250 million tax plan yesterday that would balance next year's state budget and allow them to go home.

Although such agreements are never a sure thing until a vote is taken, lawmakers privately confirmed they believe they can pass the compromise package in both houses and end their extraordinary extended legislative session.

Publicly, however, they would only say what they have been saying for days: They are close to agreement.

"I can say we have made significant progress [but] it still is not ironclad. If it's Jello, it's not set yet," said Senate Budget and Taxation Committee Chairman Laurence Levitan, D-Montgomery.

But Gov. William Donald Schaefer, who met with the tax and budget conferees throughout the day, was more optimistic.

"To use the old football analogy, they've passed the 10, they've passed the 5, they're down with the nose of the ball right on the goal line," he said. "Of course," he added later, "they could fumble the ball.

But I don't think that will happen."

After a pair of brief, meaningless sessions yesterday, senators and delegates were ordered to report back to duty this afternoon, when they are expected to be asked to pass the state's $12.5 billion budget for fiscal 1993, which begins July 1.

Because the current extended session allows only action on the budget, a special session will then have to be called to consider the tax plan. According to lawmakers involved in the negotiations, the proposal includes a new 6 percent tax bracket for individuals with taxable incomes of $100,000 or more and for families with incomes of $150,000 or more, a proposal initially pushed by the House.

At the Senate's urging, lawmakers have added an automatic repeal provision that would end the tax after three years.

Also at the Senate's request, lawmakers dropped a House plan to increase the corporate income tax rate. Senators had argued that such a move was counterproductive to state efforts encouraging economic development.

To replace revenue lost by omitting that, the compromise calls for expanding the state's 5 percent sales tax to cover certain building-relating businesses, such as janitorial services.

Otherwise, the tax package includes most of the same provisions contained in separate tax packages passed earlier in the regular legislative session by both houses: a 20-cent-a-pack increase in the state's 16-cent-a-pack cigarette tax; the closing of sales-tax loopholes and exemptions for snack foods and certain other products; and a variety of income and sales tax compliance and enforcement measures.

Part of the agreement is that the proposals are to be broken into three separate bills, which must be approved by the Senate before the House will take them up. Senators, in particular, wanted the opportunity to vote separately on different parts of the package.

In addition to the $250 million in higher taxes to balance next year's budget, one of the bills would raise the state's 18.5-cent-a-gallon gasoline tax to 23.5 cents. That estimated $122 million would go into the separately maintained Transportation Trust Fund.

A scaled-down version of the House's proposal to tax the sale of new "gas guzzler" cars while giving tax credits to "gas sippers" also survived the intense negotiations.

The third bill would grant authority to Baltimore and the 23 counties to increase their maximum piggyback income tax rates to 60 percentfrom the current 50 percent, a shift of responsibility designed to help local governments offset huge cuts in state aid. That measure also would include several local aid programs designed both to help specific jurisdictions, such as Baltimore, and to attract votes for the overall package.

The programs include a $30 million wealth-disparity grant to be distributed among Baltimore and five poor rural counties: Dorchester, Caroline, Garrett, Allegany and Somerset. It also includes funds for police protection in the city and Prince George's County, for special education for disabled children, and other programs.

"We have squeezed as much as we can out of this budget for Baltimore," said Sen. John A. Pica Jr., chairman of the city's Senate delegation. "And I think that in light of circumstances, it is a very good package."

The budget was supposed to have been adopted by midnight March 30 and, failing that, by the legislature's scheduled adjournment at midnight April 6. When the General Assembly failed to do so, it was forced automatically into an extended session.

It is the first extended session since the current budget process was established in 1916, and apparently has become the longest legislative session since a 145-day session in 1853.

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