Accord reached on new budget

House, Senate negotiators authorize cuts, tax bill

Ehrlich vows veto of tax measure

He challenges legislators to attempt an override

April 05, 2003|By David Nitkin and Michael Dresser | David Nitkin and Michael Dresser,SUN STAFF

House and Senate negotiators completed their work on a $22.4 billion state budget last night, authorizing final spending cuts and a $135 million tax bill that Gov. Robert L. Ehrlich Jr. has pledged to veto.

The budget could be approved by the General Assembly as early as today and sent to Ehrlich. Whenever it lands on the governor's desk, the political and fiscal wrangling that accelerated this week after the defeat of Ehrlich's slots plan will reach a crescendo.

The governor vowed again yesterday to veto the tax bill, which contains a 2 percent tax on health maintenance organization policies; a 10 percent surcharge on corporate income taxes; and $35 million in so-called corporate loophole closings.

"The governor is adamantly opposed to the tax bill and will not let it stand," said Budget Secretary James C. "Chip" DiPaula.

Ehrlich dared the legislature to attempt an override. He warned that the Democratic majority would face a backlash from voters if they pushed through higher taxes despite a gubernatorial veto. "We'll have extra photographers recording that vote," Ehrlich said.

But it was uncertain yesterday whether lawmakers would attempt such a move.

Earlier, they had talked about adding a "doomsday" list of cuts to the budget which would automatically be triggered if Ehrlich vetoed the tax bill. But yesterday, they reversed that position, in effect telling Ehrlich to make the cuts himself.

"Why not allow him to take the heat?" said Sen. Ulysses Currie, chairman of the Senate Budget and Taxation Committee. "If we put out a doomsday list, the headline would be that the legislature is proposing $400 million or $500 million in cuts."

The final details of the legislative accord fell into place when the conference committee agreed to restore more than $30 million in cuts that the House had made in the higher-education budget. Colleges and universities had absorbed a significant reduction in Ehrlich's original proposal.

Instead, negotiators closed the gap largely by cutting funds from a program designed to supplement teachers' salaries -- leaving it to local governments to make up the $31 million difference. Lawmakers also made a new $10 million cut to local governments yesterday, reducing money they were to receive through property tax credits.

If lawmakers try to lessen the pain by overriding a veto of the tax bill, they might have to call themselves back into session -- a move that takes a majority vote of both chambers.

House Majority Leader Kumar P. Barve said he believes his chamber can muster enough votes to frustrate Ehrlich's plans.

"If he vetoes it, I am hoping he does it in time for us to override it before we leave," the Montgomery County Democrat said.

Senate leaders are less optimistic about their ability to override.

If a veto override fails -- or if legislative leaders decide not to attempt one -- the Board of Public Works would make the spending cuts needed to close the resulting $135 million budget gap. The board includes Ehrlich, Comptroller William Donald Schaefer and Treasurer Nancy K. Kopp. DiPaula said the administration had not decided on what it would propose.

The legislative agreement came about a week later than usual this year -- largely because of a standoff over Ehrlich's proposal to allow slot machines at Maryland racetracks.

Talk swirled yesterday that the administration was making a behind-the-scenes effort to revive that bill, which died in a House committee Wednesday.

House Speaker Michael E. Busch squelched those reports, holding fast to his belief that the issue needs further study. Ehrlich dismissed rumors that the administration had proposed a stripped-down slots bill limiting the machines to two tracks.

"That is something floated by lots of people, but it has not been subject to negotiations in any serious way," Ehrlich said.

Ehrlich expressed surprise at comments by Busch, reported in The Sun yesterday, saying that if the Assembly does move forward with gambling legislation next year it should consider "destination" casino locations as well as slots at racetracks.

"For 86 days he talks about how awful slots are, and now he talks about casinos?" Ehrlich said.

Busch's statement brought a new salvo from Senate President Thomas V. Mike Miller, a slots supporter who has been critical of the speaker. "Mike Busch has masqueraded as a Boy Scout all session long, and I think he needs to maintain that profile for the remaining three years of his term," Miller said.

Sun staff writer Tim Craig contributed to this article.

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