Sauerbrey plan to cut taxes raises questions CAMPAIGN 1994 -- THE RACE FOR GOVERNOR

September 25, 1994|By John W. Frece | John W. Frece,Sun Staff Writer

Ellen R. Sauerbrey sees herself as the next Christine Todd Whitman, the New Jersey Republican who won an underdog race for governor by promising to cut taxes.

Mrs. Sauerbrey could be right. But if she wants to win votes,

Maryland's GOP nominee likely will have to explain how her tax cuts would affect government services.

As Ms. Whitman did a year ago, when she beat incumbent Democrat James J. Florio, Mrs. Sauerbrey has made tax relief the centerpiece of her campaign for governor against Democrat Parris N. Glendening.

Using Ms. Whitman's pledge to cut taxes 30 percent as a model, Mrs. Sauerbrey has promised to cut per- sonal income taxes in Maryland 6 percent the first year and 24 percent over four years. She says her plan would reduce income tax revenue by $820 million a year (out of what is now a $13.4 billion state budget).

And she has pledged that she would give up her $120,000 governor's salary if she fails.

Critics say her math might work, but that her plan won't. Except for the first year, they argue, she hasn't said what she would cut or by how much. They say essential government services would be hit hard by her proposed near-freeze on government spending and cuts in the state work force.

Del. Howard P. Rawlings, a Baltimore Democrat who is chairman the House Appropriations Committee, called it "Alice in Wonderland economics." Sen. Laurence Levitan, a Montgomery County Democrat and chairman of the Senate Budget and Taxation Committee, dismissed it as "ridiculous."

"If you want to get elected, it sounds good. But as a practical matter, it's not going to work," he said.

Mrs. Sauerbrey said Democrats lack the backbone and determination to make hard decisions. Even her critics agree she has a willingness to take on sacred cows.

She and her advisers have fashioned a plan that would benefit families and low-income residents in the first year. It would boost from $1,200 to $2,200 each personal exemption that a taxpayer claims, which would mean a tax reduction of $50 per exemption.

It also would eliminate the lowest tax bracket, 2 percent of the first $1,000 of taxable income, for a cut of $20 per return.

A family of four earning $30,000, for example, would see its individual state income tax drop from $1,000 to $780 in the first year and to $638 after the full 24 percent reduction was implemented. Some of the state's poorest taxpayers would be dropped from the tax rolls.

But Mrs. Sauerbrey has not said how the final three-quarters of her tax cut would be implemented or paid for, other than to say she wants to reduce the number of poor people eligible for welfare and Medicaid and continue reducing the state work force through attrition.

Echoing former President Ronald Reagan, one of her political idols, Mrs. Sauerbrey said a tax cut would stimulate Maryland's economy by attracting and retaining businesses and by giving individuals more money to spend.

"As an economist, I can say we will have a stimulating effect on the economy," said Stephen J. K. Walters, chairman of the economics department at Loyola College and one of Mrs. Sauerbrey's key advisers. "But we are assuming no multiplier [increase in revenue]. It is an extremely conservative approach to budgeting."

Mrs. Sauerbrey's critics say the plan might work in theory the first year but that it gradually would ruin Maryland's quality of life.

Rather than expecting the cost of government to grow at least at the rate of inflation, they say, Mrs. Sauerbrey would constrain most of next year's spending at this year's levels.

The candidate would not say which, if any, government services would be curtailed or eliminated as a result.

"I can't sit here today and tell you what [programs] they are," she said.

But she said there will be a test: Is it a legitimate function of government? Is it cost-effective? Is it affordable?

The Glendening camp is not so hesitant, suggesting that her cuts would result in higher college tuition, reductions in health services and the elimination of social programs.

They say life would become more dangerous for overburdened prison guards and more difficult for increasingly short-handed employees who care for Maryland's ill and needy.

'Real pain'

Over four years, Democrats say, the cumulative impact of the Sauerbrey cuts would be $2 billion.

"For the sake of a political gimmick, she's costing Marylanders real pain," said Emily Smith, Mr. Glendening's campaign manager.

Susan Leviton, a professor at the University of Maryland School of Law and founder of Advocates for Children and Youth, criticized Mrs. Sauerbrey's plan to reduce the size of the state work force by eliminating all currently vacant state jobs and 20 percent of newly vacant positions.

"That's not a rational way to cut government," Ms. Leviton said. "Just saying a position is vacant doesn't mean the position isn't needed."

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