House appropriations panel gives unbalanced budget proposal its OK

Tax package under review expected to cover shortfall

March 16, 2003|By David Nitkin | David Nitkin,SUN STAFF

Working into the weekend to meet a deadline, the House Appropriations Committee gave final approval to a state budget yesterday that is still unbalanced because it relies on other lawmakers to adopt a package of new, disputed taxes.

The $22.6 billion budget takes more than $200 million from transportation and land-buying programs to pay for general government operations, and makes deep cuts in higher education spending.

But those moves weren't enough to balance the budget. The proposal assumes that the House Ways and Means Committee will approve a $175 million package of additional taxes tomorrow, though that panel has delayed a vote several times and Gov. Robert L. Ehrlich Jr. has vowed to veto some tax bills.

Putting pressure on the Ways and Means Committee and the governor, Del. Howard P. Rawlings, chairman of the appropriations committee, released a $200 million list of deeper cuts he said the committee would make if the tax package doesn't materialize.

Rawlings said the list would result in "a doomsday budget as an alternative if the revenues are not coming." He and others hope the list is so distasteful that it compels the Ways and Means Committee to act. The Maryland Constitution requires the governor to propose and the General Assembly to adopt a balanced budget.

The list includes keeping $92 million in income tax receipts intended for distribution to counties, cutting $20.5 million from teacher salary-incentive grants, and eliminating $7.5 million in funds for private colleges.

"The thing that always gives us pause is having that income tax swipe on the table," said David Bliden, executive director of the Maryland Association of Counties. Because the General Assembly began reducing state income taxes before the current fiscal crisis, Bliden said it was "blatantly outrageous" to use local income tax money to replace that lost revenue.

Officials say the most likely tax ideas to be considered tomorrow include an increase in annual filing fees for corporations -- which Ehrlich endorsed Friday -- as well as two proposals the governor has generally opposed, a tax on HMO insurance policies and closing so-called corporate tax loopholes.

The Appropriations Committee met for a lengthy decision-making session yesterday so the budget could be introduced to the full House tomorrow, with debate on Wednesday. The plan will then go to the Senate.

The House version does not include revenues from Ehrlich's slot-machine gambling plan, the centerpiece of his legislative agenda, which has been criticized for being poorly conceived.

The Appropriations Committee incorporated into its plan many of the budget changes proposed Friday by Ehrlich, including an idea to raise the state portion of property tax bills by 5 cents per $100 in assessed value to generate $166 million, and a transfer of $106 million from the state's rainy day fund.

But lawmakers didn't give Ehrlich everything he wanted, reducing by half the $1.25 million he said he would restore for Baltimore lead-paint programs.

"I'm never happy with cuts to our programs," said Baltimore Deputy Mayor Jeanne D. Hitchcock. "But I'm a glass-half-full kind of person. I'll have a chance to work it on the [Senate] side."

Committee members also debated whether the budget should include a safeguard in anticipation of Ehrlich distributing social services dollars to faith-based institutions, an effort he has called a priority.

Some lawmakers wanted the budget to specify that funds cannot be distributed to groups that discriminate on the basis of race or national origin, or "for the furtherance of sectarian religious instruction." Instead, legislators agreed that they would study the issue for a year.

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