A world of options

March 04, 2003

SLOT MACHINE gambling and repeated threats of "Draconian" budget cuts get all the attention, but Maryland's budget shortfall this year can be managed without panic.

Reasonable revenue-raising alternatives to slots are making their way through the legislative pipeline. Gov. Robert L. Ehrlich Jr. and the Assembly should select one of these or a combination of them - and avoid premature action on slots.

The governor and Assembly leaders could devise a straightforward plan for filling the fiscal 2004 revenue gap - estimated at $500 million - by choosing from options outlined in a range of pending bills:

Governor Ehrlich has proposed a series of "tax compliance" measures - efforts to compel payment of $50 million in taxes owed each year but not paid.

Corporate tax reforms would eliminate tax avoidance schemes, raising $145 million.

An income tax surcharge on relatively wealthy taxpayers - used to advantage in the early 1990s - would yield a total of $600 million over three years and then end.

Legislators might also do what they should have done last year, knowing that harder times were coming: They could suspend the fifth year of the recent income tax reduction, raising about $150 million.

They could also add 1 percent to the current 5 percent sales tax, raising an estimated $575 million.

About $550 million could be found by applying the sales tax to services: haircuts, auto repair, cable TV and the like.

The sales tax could be applied to motor fuel, raising $200 million or so.

A plan can be put together using one or more of these proposals. The Assembly and the governor would then have time to properly study the slot machine idea: Does it pose too many risks? If slots are part of the answer, who should run them and where?

As the Assembly moves into its decision-making final weeks, a mischievously pro-slots proposal is making the rounds in Annapolis. Architects of the idea would attach a token tax package to the slots legislation in the hope of finding enough votes to pass the gambling measure and force Governor Ehrlich into accepting a tax bill - something he has rejected.

This ploy reflects the deeper reality: Slots won't provide enough revenue to pay for a massive education aid package and other government needs. Spending commitments and revenue are way out of balance. So, another billion-dollar deficit will be on the table next year, the year after and the year after that.

It's time for the governor and the Assembly to concede that slots is an answer whose time has not come. What has come is a time to choose responsible alternatives.

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