Lawmakers eye rise in tobacco tax

But how to disburse the money to schools is a matter of debate

`Test of political wills'

Montgomery County legislators balk at need-based funding

March 25, 2002|By David Nitkin | David Nitkin,SUN STAFF

The Maryland General Assembly is leaving one of its toughest decisions for its final days.

Legislative leaders want to give millions of dollars more to public schools before facing voters this fall, and they generally agree that the cash should come from smokers. They increasingly are talking about raising the tobacco tax, a prospect that appeared unlikely when the Assembly session began 11 weeks ago.

But what on the surface seems a straightforward decision - raising the per-pack tax by 34 cents or more and devoting some or all of the $100 million to education - is complicated by sharp differences between House and Senate leaders over how to distribute the money.

Key senators want it spent according to a formula devised by a blue-ribbon panel that has recommended a redistribution of resources to help needy school districts catch up.

But the formula is vigorously opposed by Montgomery County legislators, who say the state's largest and wealthiest jurisdiction would be shortchanged. Montgomery representatives control important positions in the House of Delegates, and House leaders say they won't approve a tobacco tax if the money is tied to the findings of the Thornton Commission.

For now, lawmakers are concentrating on finishing their work on a $22 billion budget, which does not include the increase. But in about a week, all eyes will turn to the school funding debate. No one can predict a resolution, and answers won't be known, most say, until just before the session ends April 8.

"This is a test of political wills," said Sen. Robert R. Neall, an Anne Arundel Democrat who sat on the Thornton panel. "The time has come."

Added Del. Sheila E. Hixson of Montgomery County, chairwoman of the House Ways and Means Committee: "At this point, there is a total difference between the House and the Senate."

While a compromise appears difficult, the General Assembly's top members aren't giving up.

"I have a sense [a tobacco tax] is going to be a part of the final end result," said Senate President Thomas V. Mike Miller. "It's going to be part of funding for education. I think the will of both bodies is some kind of tax increase, as long as it goes to public education."

Maryland's last effort at raising the state tobacco tax, in 1999, left a bitter aftertaste. The governor proposed a $1 per pack increase over two years, which led to a Senate filibuster. The end result: a hard-fought 30-cent increase.

Because of the struggle three years ago and the unstable dynamics of election-year politics, anti-tobacco advocates were uncertain of their prospects when they floated an idea for a 70-cent-per-pack increase at the start of this year's session. A slumping economy that has left lawmakers scrounging for revenue is in their favor.

"We offered the tobacco tax as a public health measure," said Eric Gally, a lobbyist for the American Cancer Society and the American Heart Association. "There were good reasons, and there were strategic reasons. Perhaps people might be interested in the money, and that might help us pick up votes."

Maryland's tax is 66 cents per pack, so raising it by 34 cents would put it at $1. The national average is 45 cents.

A poll conducted for The Sun in January showed that Marylanders pick education as the most important issue facing the state; 22 percent said it was their top concern, compared with 13 percent who named crime. Fifty-two percent said they were willing to pay higher taxes to support schools, compared with 40 percent opposed.

Still, lawmakers have spent most of the session working furiously to prevent the appearance that they've raised taxes.

Gov. Parris N. Glendening's proposed budget called for postponing this year's final installment of a phased-in, 10 percent income tax cut. But top lawmakers say they want to keep their promise to taxpayers and are preparing budgets that maintain the reduction, which means cutting $177 million from the governor's spending plan.

Glendening has told legislators he will support a tobacco tax increase.

House Speaker Casper R. Taylor Jr. said his leaders and the governor share the same position: that about $50 million from a tobacco tax should go toward schools, but not according to the Thornton formula. The remainder would go to other programs the legislature has been forced to cut.

He said the education panel's recommendations should wait a year, when the economy might improve and the state might have a better idea to cover the price tag. The Thornton Commission has called for $1.1 billion more for schools annually, phased in over five years. The first-year cost would be about $140 million.

Taylor wants to form a commission to conduct a broad review of the state's taxing capacity, a review that is certain to consider slot machines as a revenue source. The panel's work, he said, could identify where the money for the Thornton plan would come from.

"With the existing revenue stream we have, the best we can do [this year] is add $50 million to the $160 million in new money that is already in the budget," Taylor said. "Which means we're walking out of here with $200 million in new money going to public education."

But Neall said it's important to approve the Thornton formula this year, before the election changes the makeup of the General Assembly. Redistricting will give more power to recalcitrant Montgomery County by shifting representation there, and will weaken Baltimore - a city that stands to gain under Thornton.

The Thornton report makes clear, Neall said, that school districts across the state are in dire need of extra money. "I'm going to spend the next 18 days trying to make it happen," he said.

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