Governor derails faster tax cut After proposing break during fall campaign, Glendening backs off

Other spending has priority

December 16, 1998|By Greg Garland and JoAnna Daemmrich | Greg Garland and JoAnna Daemmrich,SUN STAFF

Gov. Parris N. Glendening all but abandoned yesterday a proposal he floated in the last days of his re-election campaign to use the state's budget surplus to accelerate a 10 percent income tax cut for Maryland residents.

The governor refused to make any commitments yesterday, even as he was presented with new revenue estimates projecting a surplus of $195 million -- higher than the $173 million that had been projected when he made the suggestion in October.

He indicated other issues are a higher priority than speeding up the tax cut.

"There are just huge needs out there -- in higher education, in school construction and in programs that are basically about compassion and treating people with dignity and fairness," Glendening said.

"Our obligation is to meet the balance between being fiscally responsible in order to pay for tax reductions that are already adopted and to meet the [public's] needs."

He refused to say specifically whether he thinks the budget surplus should be used to speed up the tax cut, telling reporters repeatedly that he is "working with legislative leaders to develop a fiscally responsible budget that meets our obligations."

In October, Glendening had said state revenues pouring in at a faster-than-expected rate might allow the state to give Marylanders a 5 percent tax break in 1999, instead of phasing that cut in over the next four years.

At the time, his statements took even his aides by surprise.

A 10 percent tax cut was approved in 1997 that was to have been phased in over five years, but the legislature accelerated the cut to give Marylanders the first half -- a 5 percent reduction -- in their returns for 1998.

When he suggested speeding up the tax cut, key lawmakers reacted coolly; Senate President Thomas V. Mike Miller Jr., a Prince George's Democrat, called the proposal "cheap election-year rhetoric."

Glendening's Republican opponent, Ellen R. Sauerbrey, had made tax relief a key part of her two hard-fought but ultimately failed campaigns for governor.

At a state Board of Revenue Estimates meeting yesterday where the latest revenue estimates were released, Glendening said nothing about speeding up the tax cuts until questioned about it by reporters.

Instead, he said he would recommend that legislators use the surplus funds for one-time expenses, such as school construction projects.

Several key Democrats agreed yesterday that spending for school construction would be a priority but promised to consider speeding up the tax cut during the coming legislative session.

Republican leaders said it would be difficult without Glendening pushing the acceleration.

'Kicking and screaming'

"It's not 100 percent dead, but it makes it very difficult," said House Minority Leader Robert H. Kittleman, a Howard County Republican.

"The governor never wanted an income tax reduction in the first place," Kittleman said. "We dragged him kicking and screaming into it.

"He went into the campaign, and he was talking a little differently, but now he's back to his core beliefs. That shouldn't surprise anyone.

"I don't think he's waffling -- he's just slowly changing position."

Miller said, "We'll keep the door open. We've got very high revenue estimates, so we'll look at education, and we'll also look at the income tax issue."

Sen. Barbara A. Hoffman, a Baltimore Democrat who chairs the Senate's Budget and Taxation Committee, also said it was too early to rule out accelerating the tax cut.

But she said she wants more detailed estimates on how a faster tax cut would change the state's long-term financial prospects.

"I want to see what impact there is five years down the road if the [tax] revenue is forgone," she said.

"What's best for the state is more school construction.

"But of course, if you're not in a crowded school district, you might have a different view."

Ray Feldmann, the governor's press spokesman, said Glendening had only said in October that he would consider accelerating the tax cut if the state's revenue picture continued to look good and if it could be done in a fiscally responsible way.

Need for consensus

Feldmann said speeding up the tax cuts hasn't been ruled out but depends on whether there is a consensus among legislative leaders that it can be done while paying for school construction and other unmet priorities.

State Budget Secretary Frederick Puddester said it would cost the state an additional $300 million if the full 5 percent tax cut was accelerated to take effect next year, instead of being phased in over the next four.

Pub Date: 12/16/98

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