Bell Atlantic unlikely to get Md. tax break Assembly preoccupied with stadiums, cuts in budget, gun control

Legislators call reform needed

But situation is clouded by Congress holding up communications bill

January 22, 1996|By Michael Dresser | Michael Dresser,SUN STAFF

Gridlock in Washington over a landmark telecommunications reform bill has legislative traffic backed up all the way to Annapolis.

As a result, Bell Atlantic Corp.'s fondest wish for the current General Assembly session will apparently turn out to be in vain.

Backed by other telecommunications companies, Bell Atlantic is seeking an overhaul of the way the state taxes telephone companies. As utilities, telephone companies are subject to taxation at a higher level than other businesses, and Bell Atlantic wants to change that.

"This is something that Bell Atlantic regards as vitally important," said Sean Looney, director of government affairs for Bell Atlantic-Maryland.

However, key legislators say that while reform is needed, the legislation is unlikely to come up for a vote this year. The main reason, they say, is that the uncertain status of the federal telecommunications bill makes it difficult to legislate at the state level.

"What's holding us back is every time you look around, the environment's changing," said Sen. Barbara Hoffman, the Baltimore Democrat who chairs the powerful Budget and Taxation Committee.

Senator Hoffman, who sponsored similar legislation last year, said she would be "inclined to say no" if asked to do so again.

The federal legislation has already gone through a conference committee that has combined the House and Senate versions into a single bill.

Usually that paves the way for a routine final vote, but nothing about the telecommunications bill has come easily. After the conference agreement was announced, it quickly ran into opposition from House Republicans and Senate Majority Leader Bob Dole.

The resulting uncertainty makes it difficult for state legislators to deal intelligently with telecommunications taxation issues, Senator Hoffman said.

Del. James Campbell, the Baltimore Democrat who chairs the House Ways and Means subcommittee that would handle such legislation, said he shares Senator Hoffman's concerns about legislating in a federal vacuum.

"Chances don't look good this year," he said.

Even without the federal impasse, Delegate Campbell said, it would be difficult for the General Assembly to deal with such complex legislation during the current session, which will be dominated by such issues as budget cuts, stadium deals and gun control.

"The plate's so full this year," he said.

Other factors could be at play as well.Bell Atlantic made some serious missteps during the last session. In one case, legislators were surprised to find out in the press that convoluted language in an ultimately unsuccessful bill they sponsored at Bell Atlantic's request would have imposed a tax on existing satellite TV services.

In the Senate, the sponsor was Senator Hoffman. In the House, it was Del. Anne Healey, a Prince Georges County Democrat. Delegate Healey said she had no interest in sponsoring the Bell Atlantic-supported tax legislation this year.

Mr. Campbell said of Bell, "I think they may have lost some amount of credibility on that."

The legislation Bell Atlantic is seeking would eliminate the 2 percent gross receipts tax on Bell Atlantic's revenues in Maryland, which Mr. Looney describes as "archaic" at a time when the telephone industry is becoming increasingly competitive.

"If you eliminate the gross receipts tax, all that money goes straight over to the corporate income tax," Mr. Looney said.

The bill would also lower the company's property tax assessment from 100 percent of market value to 40 percent, the amount non-telephone companies pay. Instead, the legislation would expand the state sales tax to all telephone services. Mr. Looney said Bell Atlantic would recommend a reduction in telephone rates proportionate to its savings in taxes.

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