Groups propose ideas on deficit

Plans under way to present them to O'Malley, public

August 05, 2007|By Andrew A. Green | Andrew A. Green,Sun reporter

As Maryland leaders search for solutions to the state's $1.5 billion budget shortfall, liberals and conservatives, business groups and labor unions are all offering unsolicited plans for how to fix it -- and attempting to sell them to the public.

Liberal groups, which have formed the Alliance for Tax Fairness, have gotten the quickest start. With the help of like-minded state senators, they have sparked debate on closing corporate tax loopholes and making the income tax structure more progressive. So far, they seem to have the ear of Democratic Gov. Martin O'Malley, who has also mentioned the possibility of adding a penny to the state sales tax and legalizing slot machines.

But he'll soon be hearing from business groups such as the Maryland Chamber of Commerce, which are putting together ideas for how the state can raise revenue without hurting the economy. The Maryland Association of Realtors is running radio ads warning against tax increases that could make homeownership more expensive, and Republican lawmakers say they will soon unveil their own plans.

"What's important is for us to have the voters realize there is an alternative," said Republican Sen. David R. Brinkley, the minority leader from Frederick County.

O'Malley has cut spending -- enough to improve next year's budget picture by $213 million and subsequent budgets by about $100 million -- but revenue-raising discussions have gone on largely behind the scenes.

The governor floated some potential ideas for tax increases in a recent meeting with The Sun's editorial board.

He mentioned making the income tax more progressive and closing corporate loopholes, as the liberal groups advocate, but also legalizing slots, an idea backed by many Republicans and some business groups, as well as raising the state's sales tax from 5 cents to 6 cents, which some Democratic lawmakers support.

O'Malley has also signaled that he's receptive to raising the gasoline tax, but he has said he doesn't want to increase the state property tax rate, noting that homeowners are already being hit by rising tax assessments.

Previous Maryland governors often impaneled commissions to study the state's revenue structure and recommend solutions. The idea is to take the issue out of the political realm -- while also building a consensus for tax increases the governor will later propose.

It hasn't always worked that way, though. More than a decade ago, a commission headed by Montgomery County attorney R. Robert Linowes proposed a package of spending cuts and tax increases to boost state and local revenue by $800 million a year. Then-Gov. William Donald Schaefer championed the plan, but it fell flat in the General Assembly, handing him one of his biggest political defeats.

O'Malley said he considered convening a commission but decided that direct negotiations with legislators would be a more effective strategy.

"This is a representative government," he said. "We need to do our job as the people's representatives to overcome these obstacles."

But outside interest groups are making sure their voices are heard.

The Alliance for Tax Fairness released the results of a poll recently that members said demonstrated broad-based support from Marylanders for enacting tax increases sufficient to increase spending on education, health care and the environment, not just to fill the budget hole. They said the results prove Marylanders want to see higher taxes on the wealthy and corporations to pay for such programs.

"We're pleased that [O'Malley] agrees that Maryland's unfair individual income tax should be more graduated and that Maryland should close corporate tax loopholes," said Sean Dobson, director of Progressive Maryland, an alliance member. "But we're not kicking back, even though it's summer. The lobbyists for BGE, Comcast and other corporate special interests are pushing hard to maintain their privileged status, so we need to push even harder."

Poll, radio spots

The alliance also includes the Maryland League of Conservation Voters; Maryland State Teachers Association; Service Employees International Union; League of Women Voters; American Federation of State, County and Municipal Employees; 1000 Friends of Maryland; and Association of Nonprofit Organizations.

The alliance used savvy media tactics to get the public's attention. The group unveiled its poll results outside an Annapolis firehouse -- representing the kind of public service that could suffer if the budget is balanced by cuts alone, members said -- and included testimonials by a nursing assistant and a college student.

A group of Democratic lawmakers led by Sen. Paul G. Pinsky of Prince George's County is advancing many of the same ideas as the alliance, and one of the member groups, the League of Conservation Voters, plans to unveil its ideas to "green the state budget" this week. The group said its plan "includes detailed strategies to reduce spending and raise revenue to protect our environment."

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