House Democrats list potential tax increases

Goal to balance budget without slots revenue

February 05, 2003|By David Nitkin | David Nitkin,SUN STAFF

Democratic leaders in the House of Delegates plowed forward yesterday with an effort to balance next year's budget without money from slot machines, releasing a list of potential tax increases and other moves that could raise $2.1 billion.

But the fact that the House Ways and Means Committee reviewed a three-page handout of possible taxes before a room of empty chairs -- instead of a series of bills with testimony from scores of lobbyists -- underscored the difficult prospects for tax increases this year.

Two weeks ago, Ways and Means Committee Chairwoman Sheila E. Hixson, a Montgomery County Democrat, said she would introduce bills to increase the state sales tax, expand the items eligible for the sales tax, raise the levy on gasoline and take other measures.

Since then, Democratic leaders have grown nervous about the message they are sending by endorsing tax increases, and Gov. Robert L. Ehrlich Jr. forcefully stated he would veto an increase in taxes on either income or sales.

So in a tentative effort to build support, Hixson scheduled a briefing yesterday to review several taxing options. She was noncommittal about when legislation might be introduced.

"I would think we'd have them all on the table," Hixson said. "What we're looking at is everything: slots, cuts and taxes."

Ehrlich has proposed filling a $1.2 billion budget gap for next year through roughly equal amounts of spending cuts, transfers and reserves, and money from slots.

But House Speaker Michael E. Busch is raising tough questions about Ehrlich's slots plan, and many lawmakers say they want to find other revenue or spending cuts to replace the $395 million the governor projects to come from gambling license fees and operations.

Lawmakers also say Ehrlich's budget delays even tougher decisions, and would leave a $700 million deficit in the budget year beginning July 1, 2005, even if slots are approved.

The House tax list includes items Ehrlich has pledged to veto, such as increasing the sales tax from 5 percent to 6 percent to raise $575 million. Other possibilities on the list include expanding the sales tax base to include such services as automobile repairs and hair salons, raising the gasoline tax by 10 cents per gallon and raising a tax on telecommunications.

Hixson also is proposing to eliminate the state Heritage Tax Credit program, saving $23 million. The program offers breaks to developers who renovate older buildings, and is seen as instrumental in helping revive some Baltimore neighborhoods.

In an interview, Hixson said the program is too costly to afford during lean times, and needs to be scaled back.

Many of the tax items elicited groans and head-shakes from committee members, and Republicans in particular expressed doubt that they would ever be approved.

"None of these are workable," said Del. Jean B. Cryor, a Montgomery County Republican. "It's just another day of trial balloons."

House Minority Leader Alfred W. Redmer Jr. said he was puzzled by the Democrats' ever-shifting message and strategy over tax increases. "All I know is there are a lot of people walking around the State House scratching their heads because they can't figure it out, either," he said. "It appears they really, really want to raise taxes in Maryland, and they can't find anybody who wants to go along."

But Hixson is not giving up. She said a similar briefing will be conducted before each committee in the House, as well as before the Women's Caucus and the Legislative Black Caucus.

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