Legislator proposes tax changes for state

How to balance budget debated at conference

October 17, 2003|By David Nitkin | David Nitkin,SUN STAFF

CAMBRIDGE -- A leading Democratic lawmaker outlined an array of taxes she wants the General Assembly to consider next year to balance the state budget, a list that drew a prickly response from the business group that invited her to present her ideas.

Del. Sheila E. Hixson of Montgomery County said the Ways and Means Committee she heads will consider adding a new top bracket to the state income tax structure, meaning the state's wealthiest residents could pay more.

Hixson said her committee would also consider expanding the list of items subject to sales tax to include services such as automobile repairs, and increasing the gasoline and vehicle title taxes to generate money for roads and other transportation projects.

Hixson, who is leading a House of Delegates study on slot machine gambling, said that her committee would most likely link a slots bill with a one-penny sales tax rate increase, a combination that could yield an additional $1.2 billion yearly that would be dedicated entirely to public schools.

"We are considering everything," Hixson said during a panel discussion with other top lawmakers and the state budget secretary on how to solve the state's budget deficit. "Everything is on the table."

Hixson represented one extreme at a business policy conference organized by the Maryland Chamber of Commerce, but her remarks left many in the room scratching their heads.

Gov. Robert L. Ehrlich Jr. has repeatedly pledged to veto income or sales tax increases, and Hixson's remarks demonstrated that little progress has been made between the GOP governor and the Democrat-controlled Assembly since lawmakers left town in April.

Maryland's budget, which is $22 billion this year, must -- by law -- be balanced. But a gap of at least $700 million between anticipated revenues and expenditures next year faces lawmakers who will convene in January, which means spending cuts, new revenues or some combination of the two are needed.

Filling that gap was the topic of yesterday's panel discussion.

Representing another extreme, Sen. J. Lowell Stoltzfus, the minority leader from the Eastern Shore, said he would seek only spending reductions -- and would not ask the business community to pay any more through corporate loophole closings that Ehrlich recently said he would consider.

Stoltzfus said he would delay the next installment of the Thornton plan to improve public schools, saving about $380 million.

He would also take $100 million from the half-billion-dollar Rainy Day fund, subtract a built-in increase for higher education to save $51 million and take $30 million in tobacco-settlement money earmarked for cancer research.

The six-year Thornton program will cost an additional $380 million in next year's budget, about half the projected spending gap. Talk of reducing the cost in future years is growing among top lawmakers and the governor.

Ideas include limiting growth in education by linking it to growth in personal income; eliminating an all-day kindergarten requirement for some counties; or expanding the number of years in the program to reduce each year's payment.

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