O'Malley floats sales tax increase

But legislative leaders discount idea

January 12, 2012|By Annie Linskey and Michael Dresser, The Baltimore Sun

Gov. Martin O'Malley on Wednesday floated the idea of adding one cent to the sales tax to address Maryland's budget problems, saying the money would give the state "flexibility" to pay for programs and to borrow more for road projects.

"If I had my druthers, I'd rather do the one penny on the sales tax," O'Malley said during a radio interview before an audience in Annapolis. "That's what I'd like to do. … That one penny could solve the problem."

A 7 percent rate would give Maryland the second-highest sales tax in the country, along with five other states. California's is the highest at 8.25 percent.

State officials need to close a projected budget shortfall of $1.1 billion in the fiscal year that begins July 1. Increasing the sales tax from the current six cents on the dollar to seven cents would raise about $600 million a year.

General Assembly leaders promptly dismissed the idea, and an aide to O'Malley later told reporters that the governor's spending plan — which will be unveiled next week — does not include increasing the sales tax.

But the discussion underscored the extent to which raising taxes is likely to dominate the 90-day General Assembly session that began Wednesday. And it highlighted just how difficult it is — even within the ruling Democratic Party — to achieve a consensus on taxes.

Most of the talk about more revenues has focused on raising the state's 23.5 cents-per-gallon gas tax, though it's unclear by how much, and doubling the "flush tax," the annual $30 fee on water bills. The money would pay for public works projects including road repairs and for upgrades to sewage treatment plants. Democratic leaders are selling the increases as revenue for a jobs program that would stimulate the construction industry.

House Speaker Michael E. Busch, who met with reporters after being re-elected to lead the House for a 10th year, dangled a carrot to delegates who would vote for a gas tax increase: Lawmakers who supported it would get transportation projects that their jurisdictions want.

For many delegates to support a gas tax hike, Busch said, "they will to have to take home a project that shows the community benefit that they are going to receive from it."

He named Prince George's, Montgomery and Howard counties, along with Baltimore City, as four large delegations that would need to push hard for the tax. Those four areas send 71 Democratic delegates to the House of Delegates — exactly the number needed to pass a bill.

But supporters of raising the levy have work to do. Several Democratic lawmakers from Baltimore have said they will not support an increase or would have strong reservations about doing so.

House Republican Leader Anthony J. O'Donnell said none of the 43 members of his caucus will support a gas tax increase. "The last thing we need to do is raise taxes," O'Donnell said. "We want to be sure the General Assembly doesn't do any harm."

Senate President Thomas V. Mike Miller repeated yesterday that his chamber would deliver a gas tax increase. He took a somewhat different approach on where projects would be located.

On Wednesday, in an expansive mood after being elected president of his chamber for the 26th year, he vowed to deliver money for a replacement bridge in a Republican senator's district, whether minority lawmakers cast votes for a higher gas tax or not.

Miller told the Republicans his "first order of business" will be to secure financing for a new Dover Bridge on Route 331 on the Choptank River between Talbot and Caroline counties. The condition and capacity of the drawbridge has been the subject of concern for more than a decade.

Miller said his support for the project doesn't depend on getting help from tax-averse Republicans. "You can sit there and vote red [no], but I'm still going to get that damn bridge built," Miller said.

Senate Minority Leader E. J. Pipkin, an Eastern Shore Republican, said he welcomed Miller's announcement but still will oppose any gas tax increase because he believes too much of the money would be spent on urban transit projects.

Despite the tax talk, the session's opening day had the jovial feel of the first day back to school, with lawmakers from far ends of the state embracing one another and catching up. O'Malley briefly addressed both chambers, telling House members that he hopes they are "strong enough to make the right investments."

Del. Michael D. Smigiel Sr., an Eastern Shore Republican, said it was a day to enjoy the "pomp and circumstance" before it gives way to clashes over tax increases and property rights.

"There's plenty of time left for that in the next 89 days," he said.

The most substantive legislative action of the day came from O'Malley, who unveiled the final version of his map that redraws the state's General Assembly districts. His plan was very similar to the one that a committee he appointed proposed last month.

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