Delegates hint deal with slots and taxes

But governor rejects compromise, declares Md. voters have spoken

General Assembly

April 01, 2004|By David Nitkin and Howard Libit | David Nitkin and Howard Libit,SUN STAFF

In a day of high political drama, leaders in the House of Delegates all but offered yesterday to pass Gov. Robert L. Ehrlich Jr.'s cherished slots initiative if he would bend on their proposed tax increases. Ehrlich, however, promptly rejected the offer and dared the legislature to kill the slots bill immediately rather than link it with higher levies.

House Democrats convened a passionate if packaged lunchtime news conference, warning that the state budget would face a gap of more than $800 million in coming years even if Ehrlich's proposal on gambling becomes law.

"There is a hole in this budget that is bigger than life, which no one wants to address," said House Speaker Michael E. Busch, deriding Ehrlich's slots plan as a giveaway to racetrack owners. "When horses become more important than people, then we are not doing our jobs."

Busch, the General Assembly's most influential gambling opponent, orchestrated the defeat of Ehrlich's plan last year and has proposed a tax package - including a rise in the sales tax - that would net the state an added $670 million a year. He refused to say yesterday whether slot machines would be part of the budget fix, but other key leaders said expanded gambling could be included in the solution if the governor yields on taxes.

"Between slots and taxes, we have the ability to solve the problem without hurting real people," said Kumar P. Barve, the House majority leader from Montgomery County.

Asked if she thought Busch would accept a compromise that includes slots and taxes, Del. Sheila E. Hixson, chairwoman of the House Ways and Means Committee, which is considering the slots bill, said: "Yes, I do."

But the governor and Senate President Thomas V. Mike Miller, a Prince George's County Democrat, rejected the plea for a negotiated compromise, saying that House leaders need to listen to the people who elected Ehrlich and stop delaying action on his plan to legalize slot machines.

"The same folks who brought you the structural deficit are out there complaining about our budget plan," said Ehrlich, who rapidly organized his own news conference to counter the latest Democratic message. He repeated his pledge that he would veto any sales- or income-tax increase that reaches his desk.

Ehrlich has proposed - and both chambers of the legislature passed - a budget of nearly $24 billion that is balanced for the fiscal year beginning July 1. Lawmakers could leave town April 12 without a solution to projected future budget shortfalls; however, all sides say that they don't want to leave the problem for next year.

But with 12 days left in the Assembly session, they spent yesterday sparring through the news media rather than negotiating face to face.

The unusual House Democratic news conference featured each of the chamber's six standing committee chairmen, including those who are usually silent on budget issues, delivering pointed messages on the need for taxes and accusing Ehrlich of negligence in not providing a total fiscal solution. To illustrate his point, Busch held aloft a volume of the operating budget for fiscal year 2005, a 942-page document with a 4-inch hole bored through it.

Democrats were responding yesterday to Ehrlich's testimony Tuesday before a House committee. If his gambling plan is not approved, the governor said, he would balance his next budget - which would take effect in July 2005 - through deep cuts in Medicaid and assistance to local government.

Ehrlich argues that passing his slots proposal would provide almost $900 million a year in revenue for the state when all of the machines are up and running - enough to cover almost all of the remaining commitment under the landmark $1.3 billion education legislation known as the Thornton plan.

But administration officials and legislative analysts say the first machines would not be up and running until spring 2005, and that most would not be in place until two years after passage of any bill - essentially leaving Maryland with relatively few gambling dollars until the fiscal year that begins July 1, 2007.

Even if slots were to pass, House leaders say, the state would be facing a projected shortfall of more than $800 million in the two fiscal years after July 1, 2005 - then escalating to more than $1 billion a year.

Their revenue plan would increase the sales tax from 5 percent to 6 percent, impose a temporary surcharge on taxable income over $150,000 for individuals and $200,000 for joint filers, and increase car titling fees but reduce the state property tax rate.

The governor said yesterday that House leaders should be seeking a dialogue with Senate counterparts, because Miller and other senators have also said they oppose tax increases, knowing that the governor would veto them.

"They've got no credibility with the people," Ehrlich said. "For the first time in a long time, they have someone upstairs who is saying no."

Ehrlich and Miller said that if House leaders intend to kill the slots plan, they should do it and move on.

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