Rawlings says House `failed' in its fiscal duties

$900 million budget gap is predicted next year

March 19, 2003|By David Nitkin | David Nitkin,SUN STAFF

Even as the final taxation portion of the House of Delegates' budget fell into place yesterday, a leading architect of the spending plan decried his chamber's work as inadequate in light of troubling fiscal conditions.

"We have failed at the most important task," said Del. Howard P. Rawlings, chairman of the Appropriations Committee, during a speech on the House floor to introduce the budget. "That is the task of putting our fiscal house in order and putting the state on a course to structural budget balance by fiscal 2005.

"Even after all we have done, and assuming an economic turnaround, our staff tells us that next year we will face a budget gap between revenues and spending of roughly $900 million," Rawlings said. "We are leaving a hell of a lot undone. And if we leave here in April - or May - without having done much more, we will not have served the fiduciary interests of our constituents."

His comments set the stage for a full debate today on the merits of a $22.6 billion spending plan. The House budget cuts $206 million from Gov. Robert L. Ehrlich Jr.'s proposed budget, and eliminates 1,700 vacant positions. It does not include slot machine revenue.

More cuts could be coming. The budget relies on a $225 million package of new taxes given final approval by the House Ways and Means Committee yesterday, but several of the elements are opposed by Ehrlich. If the Senate or the governor rejects the taxes, the money would be replaced by deeper program reductions.

The taxes and fees include higher annual filing fees for corporations than those proposed by the governor last week; a 2 percent tax on the insurance policies of health maintenance organizations; and the closing of certain corporate tax loopholes.

"Most of that package is a nonstarter," said Ehrlich yesterday, stopping short of saying he would veto it. "Some of this is negotiations. Some of it is posturing."

With the Senate working on its spending plan, none of the taxation items should be ruled out, said Senate President Thomas V. Mike Miller.

"Everything remains in play," Miller said yesterday, noting that all sides must be willing to compromise to reach a solution. "Neither the governor nor I are in a position to criticize their partial solution."

Serious talks began last week during a closed-door meeting of the three leaders, he said, and must continue. "The governor said he would support a tax increase. The speaker said he won't oppose slots. I said I won't oppose anything," Miller said.

Two days after the meeting, Ehrlich announced he would support a state property tax increase. However, House Speaker Michael E. Busch continued to deny yesterday that he has reversed his position on slots.

Legislative Republicans remain disgruntled about any tax increases. All seven Republicans on the Ways and Means Committee voted against the tax bill, and the GOP is preparing amendments for the budget bill that will be debated today. "I'm not inclined to raise any taxes," said Del. David G. Boschert of Anne Arundel County.

Speaking of the HMO premium tax, which would raise $43 million, House Republican Leader Alfred W. Redmer Jr. said: "Ultimately, it's a tax on health care." The House Democratic package "is way too much," he said. "I'm looking forward to vigorous floor debate."

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