ANNAPOLIS – Public school construction took center stage Thursday as two House committees reviewed bills that tie increased building dollars to new taxes.
One bill would generate about $50 million next year by closing a corporate tax loophole, while the other would implement task force recommendations that include optional county sales taxes.
“This is the most significant issue that we’ve put forward in the Maryland House of Delegates,” Speaker Michael E. Busch, D-Anne Arundel, said at a morning news conference.
Gov. Robert Ehrlich’s fiscal year 2005 capital budget included $101.5 million for public schools, about 27 percent of the $378.2 million counties had requested.
A bill sponsored by Busch and Delegate Anne Healey, D-Prince George’s, is expected to generate $200 million over four years for new schools by forcing corporations to pay transfer and recordation taxes, which are part of residential sales, on the transfer of property worth at least $500,000.
The measure passed the House but has died in the Senate every year since 1990. This is the first time funds would be earmarked for school construction and the greatest share of the dollars would aid seven economically distressed jurisdictions — Allegany, Caroline, Dorchester, Garrett, Somerset and Worcester counties and Baltimore City.
“This is a bill that benefits everyone,” Busch said in the hearing before the House Ways and Means and Appropriations committees. “It would create an equity in our tax system.”
County executives Doug Duncan of Montgomery, Jack Johnson of Prince George’s and Jim Robey of Howard, as well Baltimore Mayor Martin O’Malley, said they supported the bill.
“It is the golden rule that those who have the gold rule,” O’Malley said.
But Ira Cooke of the National Association of Industrial and Office Properties called the bill a “draconian venture” that would hurt business because it taxes corporations twice.
The transfer tax would not be on real property but on shares of stock, which are already charged with capital gains or income taxes, and would be passed on to consumers, Cooke said.
“It is bad policy,” he said. “Don’t delude yourselves.”
The other school construction bill is based on proposals by a task force created as part of the landmark Thornton school reform plan. It met for two years and in November submitted its final report, which found that counties need about $3.9 billion to bring their schools up to current safety and design standards.
The bill allows the state to “move forward into the future without having to revisit (construction needs) every couple of years,” said Delegate George Edwards, R-Garrett, a member of the task force.
The legislation calls for generating new funds for capital school projects, including by county sales and property taxes, county-issued bonds and public-private partnerships.
“We cannot meet our need of having additional schools in place for excellent programs with $100 million a year,” said Treasurer Nancy Kopp, chairwoman of the task force.
Delegate Sheila Hixson, D-Montgomery, chairwoman of the Ways and Means Committee and task force member, said she will propose an amendment that eliminates the option of some local taxes.
In addition, the bill includes establishment of state and local cost share formulas, creating a $2 million emergency repair fund, earmarking $1 million for portable classrooms and giving additional responsibilities to the Board of Public Works.
Most county representatives said they supported the bill, though with amendments to remove cost share adjustments that would reduce their state aid.
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