Lower Md. revenues predicted

Expected decline of $250 million points to cuts in budget plan

Weak capital gains collection

Legislators disagree whether 2% tax cut should be delayed

March 08, 2002|By Howard Libit | Howard Libit,SUN STAFF

Maryland will collect about $250 million less in revenue over the next 15 months than previously thought, officials said yesterday, reinforcing lawmakers' resolve to make significant cuts to Gov. Parris N. Glendening's budget proposal.

At the same time, most legislative leaders said they are determined not to delay a 2 percent cut in income taxes scheduled to take effect this year.

But a growing number of Democrats - including at least one member of the Senate leadership - are questioning whether the sharp budget reductions being considered are worth keeping the planned tax cut.

Glendening's budget proposal calls for postponing the tax cut, a move that would cost the average family of four about $75 this year and generate about $177 million in state revenue.

"To cut all of the services that we're planning to cut ... just to give people $75, I would rather see us delay the tax cut," said Sen. Clarence W. Blount, a Baltimore Democrat and the Senate majority leader.

"I think if we explain to people the kinds of cuts that would need to be made to the environment, higher education and programs for the needy, the majority will understand," Blount said.

His comments came as the Maryland Comptroller's Office said the latest revenue estimates show a significant decline from earlier projections - largely because of weaker tax collections from capital gains. The write-down will be $124.4 million for the current fiscal year and $124.7 for the fiscal year beginning July 1.

The governor and legislative leaders said the decline was about what they had expected - but at least one legislator said it might prompt some lawmakers to reconsider delaying the tax cut.

"I think at least it will be back up for discussion," said Del. Maggie L. McIntosh, a Baltimore Democrat and the House majority leader. "But from my perspective, it's still a promise we need to keep."

Nine delegates circulated a letter this week urging their colleagues to support delaying the tax cut.

And Sen. Christopher Van Hollen Jr., a Montgomery County Democrat, resigned as chairman of a budget subcommittee, saying he would prefer an increase in the cigarette tax and a delay in the income tax cut over the budget reductions being proposed.

Senate President Thomas V. Mike Miller and Senate Budget and Taxation Committee Chairwoman Barbara A. Hoffman, a Baltimore Democrat, remained adamant that the General Assembly would follow through on the tax cut, the final installment of a five-year, 10 percent reduction.

"We're not going to go back on our word," said Miller, a Prince George's County Democrat.

Hoffman's committee tentatively approved more than $300 million in cuts yesterday to Glendening's $22.2 billion spending plan for next year. It must address a revenue shortfall of at least $1.2 billion for this year and next.

The committee voted to give no budget increase next year to the University System of Maryland, and to make significant reductions to many of Glendening's environmental protection plans.

The panel is expected to keep working on the budget tomorrow and Monday, and all decisions made yesterday are subject to change.

The full Senate will take up the plan next week.

The committee approved a 25 percent cut in Maryland Arts Council grants. But it preserved $4 million of the $5 million sought by the governor for private school textbooks - provided public schools get some of the money called for by the Thornton Commission.

Senators said they were frustrated by their inability to provide more support for medical assistance and mental health programs.

"We can't do everything for everybody in this budget all at once," Hoffman said.

Sun staff writers Tim Craig and David Nitkin contributed to this article.

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