Delayed cut gets mixed reaction GOP legislators say Glendening waffles on tax reduction

Major issue of '96 session

Business leaders acknowledge impact of federal actions

January 12, 1996|By Frank Langfitt | Frank Langfitt,SUN STAFF

Gov. Parris N. Glendening's decision not to seek a tax cut in the budget he presents to the General Assembly next week is drawing a mixed reaction from business executives and Republican legislators.

Several GOP lawmakers said yesterday the governor seemed poised to renege on last year's pledge to reduce personal income taxes, a step that some argue is vital to improving Maryland's economy.

"The governor has been waffling on the tax cut for the past two months," said Senate Minority Leader John A. Cade, an Anne Arundel County Republican.

Business leaders were less critical of the governor's decision to wait until March before deciding whether to propose a tax cut. They acknowledged that the unknown impact of planned federal cuts on state government programs and revenue has clouded Maryland's budget picture.

"While I'm personally disappointed, I also think he's being prudent," said Kenneth H. Trout, president of Signet Bank. "I think he's waiting to see all the facts before he comes out with a decision."

A personal income tax cut is likely to be one of the major issues during the 1996 General Assembly session that opened Wednesday. Mr. Glendening has said the state won't know until March whether it can afford such a reduction.

By March, he said, the state will have new projections of the revenue it can expect from slumping sales and income tax receipts. He said Maryland also should know by then how much aid it will lose in the federal budget now under discussion in Washington.

For instance, he said, the U.S. Senate and the House of Representatives are at odds over how much federal support to cut from a program that provides heat to 11,000 Maryland senior citizens during the winter. If the House has its way, the state would lose the entire $15 million it currently receives for the program.

Joining Mr. Glendening in support of the delay was state Comptroller Louis L. Goldstein, who said a call for a tax cut could jeopardize the low interest rates the state receives when borrowing money. Maryland is one of only a handful of states with a Triple A bond rating, the best available. Over the past eight years, the Triple A rating has saved taxpayers $53 million through lower interest rates, the governor said.

Mr. Goldstein warned that a push for a tax cut during uncertain economic times might put an end to such savings.

"Maryland's Triple A general obligation bond rating would fall under great suspicion if we did not take the prudent course of waiting to see how our revenue picture develops," the comptroller said.

Some tax cut proponents, however, said the delay will make it that much harder for the legislature to pass such a measure this year. Senator Cade said it is much easier to build a budget around a tax cut than to add a tax cut late in the 90-day legislative session and find the money to pay for it.

One former lawmaker, Robert R. Neall, who now lobbies for the Maryland Chamber of Commerce, was more sanguine. The chamber has requested a 15 percent income tax cut over the next three years. The governor's delay, though, didn't seem to surprise or faze Mr. Neall.

The General Assembly usually leaves its toughest financial decisions to the end of the session in March and early April, said Mr. Neall, a former GOP House minority leader.

"It can come together," he said of a tax cut.

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