Democrats' hopes buoyed by economy Party leaders plan to accelerate tax cuts, seek help for poor

'Time to roll up the score'

Election will be decided by trust, ethics, GOP says

March 15, 1998|By William F. Zorzi Jr. | William F. Zorzi Jr.,SUN STAFF Sun staff writer Thomas W. Waldron contributed to this article.

Democrats in Annapolis moved quickly last week to capitalize on the state's increasingly rosy economic picture, uniting behind plans to speed up an income tax cut and offer tax relief for the working poor -- all with an eye toward November.

Buoyed by a budget surplus of more than $350 million, party leaders are hoping to reclaim the political stage this election year with both tax cuts and a progressive agenda that is in keeping with traditional Democratic programs.

"Everything we do down here this year is going to put points on the board," said Del. D. Bruce Poole, a Democrat who is expecting a tough re-election fight in increasingly Republican Washington County. "The economy's good, and it's time to roll up the score."

When officials learned Tuesday that state revenue estimates for this year and next were nearly $143 million higher than forecast just three months ago, Gov. Parris N. Glendening and legislative leaders wasted little time in announcing their intentions for a Democratic tax relief package that would be enacted before the General Assembly adjourns April 13.

The Democrats are in agreement that the state should speed up a 10 percent income tax cut -- a plan that benefits mostly the middle class -- and legislative leaders want to offer a new tax credit for the working poor as well.

"When we've got the opportunity where we can responsibly cut taxes without hurting programs, we're going to do it," said Del. Thomas E. Dewberry, a Democrat from a conservative Baltimore County district.

"In the last election, the voters sent a message that government is too big and taking too much of their money," he said. This year, "we're going to make substantial tax reductions and put money back in the people's pockets."

The state's surplus also is allowing Democrats to push social programs such as Glendening's proposal to provide health coverage for 60,000 children and pregnant women from working-poor families.

Two House committees on Thursday approved a version of the plan, which would cost the state nearly $30 million next year. Lawmakers say they are confident that differences with the Senate will be resolved and the program will win final approval.

"Just because the word 'liberal' is out of fashion doesn't mean progressive values don't make sense," said Del. Cheryl C. Kagan, a Montgomery County Democrat who has been targeted by the GOP in the November elections.

The more upbeat tone came as lawmakers sought to move beyond the ethics controversies -- all involving Democrats -- that dominated the first two months of the General Assembly session.

On Jan. 16, the Maryland Senate expelled Larry Young of Baltimore for ethics violations. Last month, Gerald J. Curran of Baltimore resigned from the House of Delegates amid a probe by the legislature's ethics committee.

On Wednesday, the Joint Committee on Legislative Ethics concluded that House Speaker Casper R. Taylor Jr.'s reported role in a Western Maryland land deal violated no state laws and decided not to conduct a formal investigation.

The Democrats are hoping to turn their attention to the issues pending before the legislature -- and boosting their approval among voters.

High on the Democrats' list is the matter of cutting taxes further -- an effort to take away from the Republicans a campaign issue put forward by GOP gubernatorial hopeful Ellen R. Sauerbrey in 1994, when she won huge support from Maryland voters by touting a 24 percent income tax cut.

Democrats responded to the Sauerbrey challenge last year with legislation to cut income taxes 2 percent a year over five years. That became effective Jan. 1.

Now that Democratic leaders have agreed to accelerate the cut, the only question is how much and how soon.

Glendening wants to cut taxes 3 percent this year, 3 percent next year and 4 percent in 2000 so that the full 10 percent cut would happen in three years instead of five.

An alternative backed by Senate leaders would double the tax reduction for 1998 to 4 percent, a change that would mean an additional $52 in tax savings this year for a typical family of four with income of $40,000.

That proposal calls for another 2 percent cut in 1999, with the legislature reassessing the state's fiscal picture during the 1999 session to determine how to phase in the remaining 4 percent cut.

Republicans have their own plan for cutting more taxes faster. They also take credit for prompting the Democrats' tax reduction plan.

"Glendening is desperate and trying to steal the Republican agenda -- like the tax cut -- merely to survive," said Del. John S. Morgan, a Howard County Republican.

One page certainly not in the GOP playbook is the Democrats' proposal to broaden a tax credit available to the working poor.

Under a formula that considers family size, income and other factors, Maryland gives low-wage families a credit that reduces or eliminates their state tax bill. But unlike the federal government, if the credit is more than taxes owed, the state does not send them a check.

vTC Pending legislation would make a portion of that credit refundable at a cost of about $37 million a year to the state.

House and Senate leaders want to approve some version of the plan, but Glendening, registering concerns over the price tag, has yet to sign on.

"I understand the thinking of the people, but we have to come to a bottom-line decision about what's affordable," the governor said Friday.

Republicans such as Morgan maintain that no matter what the Democrats do this session, November's election will be decided on questions of trust and ethics -- not on the programs passed this year.

"No one's hearts and minds are going to be changed by what we do in the next five weeks," Morgan said.

Pub Date: 3/15/98

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