Senate adopts its version of $26 billion state budget

Body rejects House plan to reduce property taxes

General Assembly

March 30, 2005|By David Nitkin | David Nitkin,SUN STAFF

The Maryland Senate unanimously adopted its version of a $26 billion state budget yesterday, rejecting a House of Delegates proposal to roll back property taxes by about $100 yearly for the average homeowner.

The tax cut is expected to be the most divisive issue facing a committee of select Senate and House negotiators, who could begin meeting as soon as tomorrow to reconcile their differences.

The property tax cut has been a priority of House Speaker Michael E. Busch, who favors diverting land-preservation funds to reverse an increase in the state portion of property taxes. The tax was raised two years ago in a budget-balancing move endorsed by Gov. Robert L. Ehrlich Jr.

But senators say this is not the year to send $163 million in taxpayer dollars to a bond repayment fund, a transfer that would allow the tax rate to go down.

"The economy is still fluid. We think it makes more sense to wait another year," said Sen. Ulysses Currie, a Prince George's County Democrat and chairman of the Budget and Taxation Committee.

The spending plans of the two chambers are similar in key areas.

Both maintain a $43 million increase for higher education and a $397 million increase for K-12 education, as proposed by Ehrlich in January. Both chambers propose eliminating about 500 more state work force positions - most of them vacant - than the governor suggested. The position cut will help reduce the cost of rising health insurance and prescriptions for state employees, legislators say.

The Senate's version cuts $138 million from the governor's initial spending plan to meet a legislative affordability guideline, while the House would cut $161 million.

But there are enough differences in specific areas that were cut, such as aid to private colleges and electricity generating equipment property tax breaks, that top legislators predict contentious negotiations that likely will stretch into the weekend.

Political tension between the two chambers has produced a "climate [that] is the most difficult I've seen," Currie said.

Legislative rules require that a final budget be passed by Monday.

Republican senators had considered offering an amendment to a separate bill that helps balance the budget to offer a property tax break, a vote that could have been uncomfortable for Democrats in the Senate, who are hoping to hold a unified position as they enter negotiations.

But Republicans abandoned the idea, instead offering an amendment to make Maryland's estate tax similar to the federal government's, which offered a reduction recently. The amendment failed.

Under the House plan, state property taxes - which are much less than county or city taxes - would drop $48 per $100,000 of assessed property value.

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