Slots vs. tax debate goes on

Senate President Miller sees an OK for gambling

Speaker Busch is doubtful

'There is a long way to go'

2004 Assembly session will be tough, both predict

December 13, 2003|By David Nitkin | David Nitkin,SUN STAFF

SOLOMONS - Senate President Thomas V. Mike Miller predicted yesterday that Maryland will legalize slot machines during the coming General Assembly session, but a skeptical House Speaker Michael E. Busch said a 1 cent increase in the sales tax is a more equitable way to pay for education and other state needs.

The legislature's presiding officers, Democrats Miller and Busch offered a dismal outlook for the annual 90-day session during a presentation at a Maryland Association of Counties conference here.

With Gov. Robert L. Ehrlich Jr. insisting he will veto a sales or an income tax increase, Miller and Busch said they see no palatable way to resolve the state's fiscal crisis, which continues even as the economy is improving.

Revenues for the budget year that begins July 1 are projected to fall $700 million below what is needed to fund current programs, with adjustments for anticipated cost increases. The state's operating budget is about $10 billion this year.

The projected gap rises to $1.2 billion and $1.7 billion in the two following years, presenting a challenge for lawmakers who must, under the state constitution, balance the books each year.

While Maryland might muddle through the 2004 session, which starts next month, the following year "is going to be a train wreck, a total train wreck," Miller said. "[Ehrlich] knows it. I know it."

Miller said he thinks lawmakers will approve a slot machine gambling plan in the coming months, and that a bill will be introduced by the governor - despite Ehrlich's insistence that he will not sponsor legislation after its defeat in the House during the last session.

But Miller said money from slots - estimated at between $400 million and $700 million -won't pay the full price of a public-schools reform plan, higher education or roads.

"The slots money should be icing on the cake. It shouldn't be the cake," he said.

Busch was far less certain about the fate of gambling legislation, which has been the subject of a study by the House Ways and Means Committee, which is preparing guidelines and recommendations. "I wouldn't want to wager an opinion on that," Busch said. "I think there is a long way to go."

Busch and Miller said they would prefer to balance the state's books through an increase in Maryland's sales tax, an unlikely prospect given Ehrlich's stand. "Mike Busch can talk about a sales tax increase all he wants but it's not going to happen," Miller said.

Ehrlich's no-new-taxes pledge tells only part of the story, Busch said, because state budget cuts will force counties to increase taxes and fees.

"I believe over this four-year period of time, Marylanders will end up paying more taxes and fees ... than they did the previous eight years," he said.

A statewide tax increase is more equitable and progressive, Busch said, because poorer counties get back more than their residents pay, while richer counties receive less.

Maryland's sales tax rate is lower than several neighboring states, Busch said, and an increase from 5 percent to 6 percent, which would yield more than $500 million yearly, would match the rates in New Jersey, Pennsylvania and West Virginia. Virginia's sales tax is 4.5 percent, and Delaware has a gross receipts tax instead.

Paul E. Schurick, the governor's communications director, ruled out the possibility of such an increase and said Maryland can fill the budget hole through a combination of gambling, budget cuts and efficiencies.

Busch turned to humor yesterday as an outlet for his frustration over Ehrlich's no-tax stand, even as the administration ponders a surcharge on water and sewer bills to pay for treatment plant improvements, and an increase in vehicle registration fees for road construction.

"The first bill we're going to pass this year is changing every reference in the tax code from 'tax' to 'fee,' " Busch said, because the latter is apparently more acceptable to Republicans. He then continued his speech referring repeatedly to a "sales fee" and a "gas fee."

Busch and Miller met privately with county leaders, telling them that they should prepare to raise their taxes.

"They said, `You all better find ways to raise local revenues," said Howard County Executive James N. Robey, "because there will be more and more cut from the state.' "

Also yesterday, Kenneth H. Masters, Ehrlich's legislative director, outlined the bills Ehrlich hopes to adopt during the session, including a new program to redevelop industrial sites; tougher penalties for criminals who intimidate victims and witnesses; and refinements to the state's historic renovation tax-credit program.

But Miller, an attorney, pounced on one of Ehrlich's initiatives, declaring a medical malpractice reform initiative - that would, in part, place limits on pain and suffering damages - dead on arrival.

"It's straight out of the Newt Gingrich playbook," Miller said. "It's not going anywhere."

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