By Rolando Garcia
ANNAPOLIS – While Gov. Robert Ehrlich remains steadfast in opposing new taxes, Democratic lawmakers are rushing forward with a host of tax hikes they say will fix the state’s long-term budget woes.
A bill to raise income taxes for the wealthiest Marylanders, introduced by House Speaker Pro Tem Adrienne Jones, D-Baltimore County, has already garnered a dozen co-sponsors.
Jones proposed a 3 percent tax on income above $500,000, which she said would affect only the richest .4 percent of taxpayers and would bring in another $400 million in revenue annually.
“We’re just asking millionaires to give back a small portion of the massive federal tax cut they received,” Jones said.
In his $23.8 billion budget proposal, Ehrlich closed the $800 million shortfall with spending cuts and one-time revenue sources while increasing funding for education and health care. But Democrats say Ehrlich’s stop-gap measures leave a projected shortfall of $1 billion for 2006, and that new revenue sources are needed to fix the state’s structural deficit.
Although Ehrlich has pledged to veto tax hikes, Jones said Marylanders favored this “millionaires’ tax” to solve the state’s chronic budget shortfalls, pointing to a December poll conducted by Gonzalez Research & Marketing Strategies that showed 58 percent favor such a tax, and 33 percent oppose it.
“(Ehrlich) will have trouble explaining why millionaires shouldn’t have to sacrifice a little,” Jones said.
The well-heeled are also the target of a bill proposed by Delegate Justin Ross, D-Prince George’s, to expand the state’s 5 percent sales tax to dozens of services. Ranging from escort services to pay-per-view television to golf course membership fees to landscaping and maid services, Ross said the bill targets amenities that the affluent enjoy tax-free because the sales tax focuses on tangible goods.
Those services Ross targets are taxed in several other states, he said, and the bill would reap the state an additional $50 million in revenue each year.
“We’ve got to find innovative ways to pay for public education without hurting the average Joe,” Ross said, however the bill does not commit the new revenue to schools funding.
Another bill would ask voters to approve a 1-cent sales tax hike.
Luiz Simmons, D-Montgomery, wants to put the matter to a referendum and, if approved, the additional $600 million in revenue generated by the tax would be earmarked for public school funding.
Simmons said he hopes some Republicans, who oppose raising taxes, will at least support letting voters break the gridlock between the Democratic Assembly and Republican governor.
Last year, Alabama voters overwhelmingly shot down a proposed tax hike in a referendum, Simmons said. However, he said he believes Marylanders are willing to pay more to support public schools.
“The people of Maryland don’t want an Alabama-style education, they want a quality education,” Simmons said.
Assembly Republicans, however, remain unyielding.
Sen. J. Lowell Stoltzfus, R-Somerset, Senate GOP leader, said new tax measures will find no support in his ranks.
Delegate Jean Cryor, R-Montgomery, a member of the House Ways and Means Committee, said Democrats should not doubt Ehrlich’s resolve to veto any tax hikes.
“It’s early in the session and (Democrats) are testing the waters, but they need to understand that the governor will not back down on this,” Cryor said.
Raising taxes when Maryland’s economy is just beginning to recover from a recession would be a mistake, Cryor said.
There is still no consensus among Democrats about which tax to raise, and despite veto-proof majorities in both houses, many Democrats are reluctant to take up the tax fight in the face of continued Republican opposition.
House Speaker Michael Busch, D-Anne Arundel, said the only realistic solution to the budget crisis is for Ehrlich and the Assembly to hammer out a compromise tax measure and that it was unlikely the Assembly would vote to raise taxes without reaching an agreement with Ehrlich.
Approving tax hikes without Republican cooperation could extract too severe a political cost, said Sen. Ida Ruben, D-Montgomery: “We’re not going to jeopardize some of our vulnerable delegates by giving (Republicans) a campaign issue to use against them at election time.”