Association of nonprofits opposes plan to cut income tax Md. can't afford reduction amid declining revenues, charity officials say

November 22, 1995|By Frank Langfitt | Frank Langfitt,SUN STAFF Sun staff writer John W. Frece contributed to this article.

An association of 570 nonprofit organizations -- including religious groups, homeless advocates and other charities -- urged state legislators yesterday to oppose a personal income-tax cut next year, calling the proposal fiscally irresponsible.

Citing the projected loss of billions of federal dollars over the next seven years, the Maryland Association of Nonprofit Organizations said the state cannot afford to cut taxes in the face of plunging revenues.

Peter V. Berns, the association's executive director, said the federal cuts alone could cost thousands of Marylanders insurance coverage for routine health care.

"Maryland is digging itself into a hole," Mr. Berns said.

"Private charity is not going to be able to step in and take care of everyone."

Standing in front of the State House yesterday, Mr. Berns said aloud what some legislators have been saying privately for months: With budget deficits projected to reach hundreds of millions of dollars in coming years, the state doesn't have enough money to cut taxes.

Heavy pressure

The governor and legislative leaders, however, are under heavy pressure to trim taxes during the 1996 General Assembly session, which will begin in January.

The state's business community is pushing for a tax cut, arguing that Maryland has a high personal income-tax rate that contributes to an unfriendly business environment.

Many in the Democrat-dominated legislature also feel pressure from last year's gubernatorial race, which Republican candidate Ellen R. Sauerbrey nearly won on the strength of a proposed 24 percent income-tax cut.

Yesterday, Gov. Parris N. Glendening said he was sympathetic to the nonprofit groups' position, but that he still supports a modest tax cut over several years to stimulate the state's economy.

"I understand their concern," said Mr. Glendening, a Democrat.

However, he said, "We must become competitive in terms of business and job development, and part of that is to start the process of personal income-tax reduction."

Approving a state tax cut in 1996 would make it that much harder to balance Maryland's budget. The state already faces a shortfall of $176 million next year because of a federal capital-gains tax cut and a drop in state revenue due to lost jobs and declining consumer confidence.

If the governor requests a 3 percent tax cut as some have suggested, he would have to cut another $48 million in spending to submit a balanced budget as required by Maryland's constitution.

When governments are forced to cut services, some politicians say they expect nonprofit organizations to pick up the slack.

But Mr. Berns said yesterday that the hundreds of groups he represents cannot possibly meet the need.

In recent years, charitable giving has barely kept pace with inflation, he said. Donations in Maryland would have to increase 13-fold over the next seven years to make up for cuts in programs affecting nonprofits and the people they serve, Mr. Berns said.

Outpouring of charity

"Some members of Congress seem to believe that there will be a tremendous outpouring of charity to meet the growing needs in the community," Mr. Berns said. "That simply is not going to occur."

Mr. Berns predicted that if state political leaders insist on cutting taxes next year, budget shortfalls may force them to raise taxes in 1998 when Maryland holds its next statewide elections.

The Maryland Association of Nonprofit Organizations includes a wide variety of groups.

Among the 18 people who attended yesterday's announcement in Annapolis were representatives from the Associated Catholic Charities, the Baltimore Jewish Council, the Maryland Low Income Housing Coalition, the Maryland Legal Services Corp. and Habitat for Humanity of Prince George's County.

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