ANNAPOLIS – Land preservation and a nearly $4 billion backlog in school construction would get much needed boosts from the end of a corporate tax loophole, under a bill passed by the Maryland House of Delegates Thursday.
The bill, the top priority this year for House Speaker Michael E. Busch, passed 107-22, in an unofficial tally. It was changed in committee to include both Busch’s original beneficiary, school construction, and a new priority, Project Open Space.
The proposal is expected to raise $57 million by altering tax rules that allowed limited liability companies and some wealthy individuals to avoid paying a transfer tax paid by most homeowners and businesses when real estate changes hands.
Land preservation would get about $12 million a year, while $45 million would be devoted to school construction in the 17 counties that have the transfer tax.
Legislators have attempted to close the tax loophole for nearly 15 years. Versions of HB 1 have passed the House at least four times during that time, but all failed to get out of the Senate Budget and Taxation Committee.
Delegate Elizabeth Bobo, D-Howard, who sponsored the amendment to add land preservation to the bill, said she was “very hopeful” that the bill will pass the Senate.
Delegate Carolyn Howard, D-Prince George’s said that “this is the year” for the bill to pass.
“There’s no reason for the Senate to reject it,” she said.
Members of the Senate Budget and Taxation Committee want to see the bill before they can comment on what will happen to it in the Senate.
“I did not support it in its original form,” said Sen. Verna Jones, D-Baltimore. “I would need to see the amendments.”
Sen. Rona Kramer, D-Montgomery, said she was not in favor of the bill in the previous session because the bill is more complex than it appears.
Proponents argue the need for the bill is great.
Schools are $3.8 billion behind in funding construction needs, and need $250 million a year to clear the backlog, a 2003 task force concluded. Gov. Robert Ehrlich has earmarked $157 million for school construction for fiscal year 2006.
Ehrlich also has diverted $515.8 million from land preservation during his administration, according to the Department of Legislative Services.
Sen. Ulysses Currie, D-Prince George’s, Senate budget chairman, has previously said he supports the bill, but does not know what will happen this year.
“Until the committee hears the bill, we won’t know whether or not we have the votes to past it,” he said. “But I do plan to vote for the bill.”
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