Cigarette tax heading toward a showdown

March 17, 1994|By John W. Frece | John W. Frece,Sun Staff Writer

Despite Senate opposition, Maryland House leaders said yesterday they will push for a cigarette tax increase this year as a way of financing new school construction, an increase in welfare benefits and an assortment of other programs and projects.

House Appropriations Committee Chairman Howard P. Rawlings said committee leaders, with the backing of House Speaker Casper R. Taylor Jr., have agreed to push for a 12 1/2 -cents-a-pack increase in the cigarette tax.

That is half the 25-cents-a-pack increase Gov. William Donald Schaefer has requested, but would still raise about $40 million in revenue by increasing Maryland's 36-cents-a-pack tax to 48 1/2 cents.

Such a position puts the House on a collision course with the Senate, where the Budget and Taxation Committee -- prodded by Senate President Thomas V. Mike Miller Jr. -- yesterday defeated proposed tax increases of 25 cents, 24 cents and 12 1/2 cents.

But the final vote in the Senate committee, to raise the tax by 12 1/2 cents, failed by a slim 7-6 margin. And committee Chairman Laurence Levitan, who voted against the increase, said he would switch sides if the program-rich tax bill pending in the House should ever make it over to the Senate.

"I certainly have my mind open if a bill comes over from the House, and will probably support it," said Senator Levitan, D-Montgomery.

Senator Miller, however, and others on Mr. Levitan's committee argued that it was "ridiculous" for the legislature to consider a tax increase in a year when the budget can be balanced with existing revenues.

"Whether it is 12 1/2 cents or 25 cents, it is a new tax that we do not need," said Senate Minority Leader John A. Cade, R-Anne Arundel. "We're sitting here in an election year being asked to approve a tax increase we don't need. I predict there will be political repercussions."

Senator Miller, D-Prince George's, added that even if the committee were to approve it, he doubted a tax increase could survive a vote by the full Senate.

Bereano responds

Bruce C. Bereano, lobbyist for the Tobacco Institute, said yesterday's Senate vote "was nothing to gloat about," adding, "I believe the legislative session is not over yet, at least not by my calendar."

His concern is now focused on the House, where Delegate Rawlings, D-Baltimore, was rolling out a list of programs and projects that he hopes lawmakers will find irresistible, even in an election year.

Many of them would be financed by the cigarette tax increase, the rest with money cut from other budgeted programs.

Among those likely to be most appealing:

* An increase of $40 million in the amount budgeted to build public schools around the state, raising the total to $120 million -- the most for school construction in a single year in at least a decade, Mr. Rawlings said.

* A 2 percent increase in Maryland welfare benefits, which currently provide $366 a month for a family of three. The increase -- about $7 a month -- would cost $3.2 million.

* Nearly $20 million for an assortment of education programs, including $6 million to help schools with a high number of non-English speaking students, nearly $3 million for community colleges and $2.2 million for the governor's proposal to establish a special school for disruptive students.

* A grant of $8 million for the state's poorest jurisdictions, a program that is particularly beneficial to Baltimore.

* Spending $2.5 million of the tax proceeds to help Southern Maryland tobacco farmers find other crops to grow or ways to diversify.

The health factor

Governor Schaefer and a number of lawmakers argue that, as a health measure, the cigarette tax should be increased as much as possible to discourage smoking, especially among young people.

Sen. Ida Ruben, D-Montgomery, for example, said yesterday she could support a dollar-a-pack increase just to discourage smoking.

Keying off that, Mr. Rawlings' list would use $10 million of the tax revenues for cancer-treatment centers at the Johns Hopkins Oncology Center and at the new Gudelsky Tower of the University of Maryland Medical System in Baltimore.

But that move is clever for another reason. Without the cigarette tax, both of those projects would probably have been financed this coming year through the sale of state general obligation bonds.

By paying for them with cash from the tax increase, instead, the lawmakers would free up $10 million in bonding authority in next year's capital budget, money they could then use for other projects -- such as hospital additions, arts centers and fire stations -- that would make them look good back home in an election year.

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