Ehrlich says stand against new taxes is the stronger one

House, Senate Democrats differ on whether higher levies should be passed

January 30, 2003|By Tim Craig | Tim Craig,SUN STAFF

Gov. Robert L. Ehrlich Jr. said yesterday that he believes he has the upper hand in a brewing debate over whether taxes should be increased to help solve the state's budget shortfall.

The Republican governor made the prediction as Democratic leaders in the General Assembly continued to disagree over whether their party should embrace higher levies this year.

On one side are Senate Democrats, who all but ruled out higher taxes yesterday because of fears that it would hurt their party's image with voters.

On the other side are the Democratic leaders of the House of Delegates, who say it is fiscally irresponsible to stifle debate on higher taxes.

Above it all is Ehrlich, who said he believes he has the loudest voice in the dialogue.

"I think people are just believing everyone in Maryland is tired of us always going to them for more" money, he said after speaking to members of the National Federation of Independent Business.

The governor's stance was boosted when Del. Sheila E. Hixson, chairwoman of the House Ways and Means Committee, said she is backpedaling on plans to propose a 1-cent increase to the state's 5-cent sales tax.

"The governor has said he would veto the sales tax, so we put that on hold, but we may bring it up later," said Hixson, a Baltimore Democrat who still plans to introduce proposals to increase the gas tax and close corporate tax loopholes.

House Speaker Michael E. Busch maintains that a variety of tax increases -- including higher sales taxes -- should be left open for discussion.

Ehrlich and the General Assembly must eliminate about a $1.2 billion shortfall projected for next fiscal year's budget, which the governor has proposed closing by cutting programs, shifting money from reserve funds and legalizing slot machines at racetracks.

Legislative analysts estimate that the state faces a $700 million shortfall in the fiscal year 2005 budget even if the General Assembly approves the slots proposal. If gambling is not expanded, the budget gap would grow to more than $1 billion.

"I want to look at all the taxes," said Busch, an Anne Arundel County Democrat who opposes legalizing slot machines. "Corporate taxes, alcohol taxes, business taxes, let's look at them all."

Del. Howard P. Rawlings, chairman of the Appropriations Committee, said he is also considering introducing a bill that would impose a temporary surcharge on people who earn more than $100,000 -- a move that helped to solve the state's last fiscal crisis in the early 1990s.

"Both our governor and Democratic leaders in the House and Senate have to move beyond party interests and serve the best interest of the state with regards to our serious structural deficit," said Rawlings, a Baltimore Democrat.

But Senate Democrats bristle at calls for increasing taxes because they worry that the party will face a backlash from voters.

"I have been around a long time," Senate President Thomas V. Mike Miller said. "I just know if you want to pass a tax increase you have to have a body of public opinion to support it. The case has not been made. The public sees the state budget as a black hole, and tax money goes into this black hole."

Senate Majority Leader Nathaniel J. McFadden, a Baltimore Democrat, agreed.

"We don't like taxes at all," he said. "That has been the bane of the Democratic Party for years and it would be unwise for us to be talking about taxes."

Ehrlich said he is pleased with the debate among Democrats as well as the shifting attitudes about higher taxes.

"I would love to take credit for it," the governor said.

Sun staff writer David Nitkin contributed to this article.

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