Election over, talk of taxes begins

O'Malley says he will not propose increases, but lawmakers could

  • Newly re-elected Gov. Martin O'Malley and Lt. Gov. Anthony Brown.
Newly re-elected Gov. Martin O'Malley and Lt. Gov. Anthony… (Kim Hairston, Baltimore…)
November 07, 2010|By Annie Linskey and Julie Bykowicz, The Baltimore Sun

With the gubernatorial election over, the campaign rhetoric has quieted, but the problem of Maryland's billion-plus budget shortfall remains — and with it, the discussion of higher taxes.

Former Gov. Robert L. Ehrlich Jr. and Republican leaders in the General Assembly warned that the re-election of Gov. Martin O'Malley and the Democrats would mean tax increases. Indeed, O'Malley refused to join Ehrlich in a campaign pledge against raising taxes.

After defeating Ehrlich last week, O'Malley said the budget he proposes in January will not contain tax increases. But he did not address what would happen if lawmakers adopt a tax package and sent it his way as a means of paying for preferred programs or filling a gap between revenues and expenses.

Legislative leaders continue to say the fragile economy cannot withstand additional taxes, with House Speaker Michael E. Busch, a Democrat, saying, "People are going to have to deal with the budget in front of them" without new revenue sources.

Still, business groups are marshaling their lobbyists, out of concern that lawmakers will change their tune if the budget shortfall turns out to be larger than expected. This week, budget analysts will brief House leaders on the size of the gap, which some have estimated will be as much as $1.7 billion.

And conventional wisdom holds that the first year or two of a four-year term is the time for politicians to make unpopular decisions — such as increasing taxes.

That's what happened in 2007, O'Malley's first year in office, when he called a special session of the Assembly and steered a plan that contained the sales tax increase, a slots gambling plan and some income tax cuts through the legislature, in what he hoped would be a long-term solution.

Could Year One of O'Malley II hold the prospect of a similar plan? Here are some areas on which advocates and officials have focused in the search for new tax revenue:


For years, health advocates have pitched lawmakers on the idea of raising taxes on alcoholic beverages.

The "dime-a-drink" campaign, which reflects about how much more each beverage would cost, is a sophisticated staple in Annapolis. Advocates have armed themselves with opinion polls showing broad support for the idea and studies that indicate a higher tax would save lives and reduce underage drinking.

During the election season, more than 140 candidates for office pledged to support an alcohol tax increase tied to health care and community outreach on drinking. Seventy-five of them won and will take their seats in January in the General Assembly.

"We're poised," said Vincent DeMarco, president of the Maryland Citizens' Health Initiative. DeMarco lobbied successfully for a tobacco tax increase, which he frequently cites as a comparison.

Raising the tax by 10 cents per drink would generate $214 million in new annual revenue, the coalition says, and cut health care costs by $250 million by reducing drinking.

Maryland has some of the lowest alcohol taxes in the country. The levy on liquor hasn't gone up since 1955, and on wine and beer since 1972.


Fixes to Maryland's roads and rails are supposed to be funded by the state's so-called transportation trust fund, but in recent years O'Malley has raided that pot of money to prevent cuts elsewhere. That's left critics saying that the state's transit infrastructure is in dire need.

One source of revenue for the trust fund is Maryland's 23.5-cents-per-gallon tax on gasoline. Twenty-seven states, including neighboring Pennsylvania and West Virginia, have higher rates. Gas taxes in Delaware and Virginia are lower; the rate in Washington is the same.

Senate President Thomas V. Mike Miller, a Democrat, has been a vocal advocate of raising Maryland's gas tax. Sen. Edward J. Kasemeyer, the Baltimore County Democrat who will head the budget and tax committee during next year's session, said he favors more frequent and incremental changes to the tax rate, which has not changed significantly in nearly two decades.

"We fall into this pattern of always putting off things that are not pleasant to do," Kasemeyer said. But he stressed that the time still might not be right, given that a commission studying the way the state funds transportation will not be finished by the next legislative session.

Unlike most tax increases, this one has support from some in the business community. Donald C. Fry, president of the Greater Baltimore Committee, said better state infrastructure is "an essential element of economic growth."

Fry said that any increase should come with some type of assurance that the money would be used to develop and maintain roads, bridges, trains and other transportation needs.

"We'd have to restore trust in the trust fund," he said.


Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.