ANNAPOLIS – The two chambers of the Maryland General Assembly took opposite tacks on legalizing slot machines Tuesday, with a Senate panel forwarding the idea to the full membership and the House introduction of a budget that replaces slots revenue with new taxes and spending cuts.
The Senate Budget and Taxation Committee voted 11-2 in favor of a plan to close the state’s deficit and give $690 million for education each year through a heavily amended version of Gov. Robert Ehrlich’s controversial slot machine proposal, which would put the gaming devices at several race tracks.
“If you look around there’s not another state in this union that has a better product to fund education,” Currie said. “This is a good bill,” he said, quoting Senate President Thomas V. Mike Miller Jr., “because nobody out there likes the bill.”
The Senate measure gives education 46 percent of the expected $1.5 billion in annual slot machine revenues, while the tracks would get 39 percent. Local jurisdictions with slots gaming will receive 4.75 percent and breeders will receive between 5 and 6 percent, with 5 percent going to the Lottery Commission’s administrative costs.
Ehrlich’s plan gave education 42 percent and the tracks 43 percent.
Miller, D-Calvert, said the Senate will pass a slots bill to the House by the weekend and asked the House to “show me the money,” if they won’t buy into Ehrlich’s plan.
The House has made its opposition to slots abundantly clear, voting overwhelmingly last week to study the issue for a year.
The budget the lower chamber revealed Tuesday replaces slots revenues with $100 million in cuts and $75 million in new taxes and fees on corporations.
“It’s a tough budget, but it accomplishes the task of balancing with cuts and revenue,” said Majority Leader Kumar Barve, D-Montgomery. “It was hard work to make the cuts and I applaud the committee.”
But the delegate whose job it is to sell the proposal to other members, Appropriations Chairman Howard P. Rawlings, D-Baltimore, called the budget “a failure” at providing a remedy to the state’s long-term needs.
Rawlings, an ardent slots proponent, said his panel’s budget leaves “a hell of a lot undone.”
“We failed at the task of putting our house in order fiscally,” because of a lack of new revenue, he said.
Borrowing money from funds each year is not the road to fiscal responsibility, Rawlings said. The state needs to address the long term because it has solved deficits by borrowing from one-time funds three years in a row, he said.
The House budget drains $300 million from the Transportation Trust Fund, $106 million from the Rainy Day Fund, $75 million from the Workers Insurance Fund and another $250 million from other funds. That does not address the state’s financial problem, he said.
Using the long-term as a need for slots this year is “irresponsible and illogical,” said Delegate Peter Franchot, D-Montgomery. “Every time you hear `structural deficit,’ substitute `slots,'” he said.
The state faces expected deficits of $5.5 billion through 2008 without any new programs.
“We are in big trouble,” Rawlings said.
The House budget gave small businesses a victory. They forestalled an attempt to rescind the portion of the sales tax they get for collecting it.
Corporations weren’t so fortunate.
Businesses will have to spend four times the current amount, $100, for filing fees, and the budget closes a controversial Delaware holding company loophole.
Even affiliated companies or chains will have to file jointly in Maryland – bearing tax responsibility for all their dealings in the state.
Businesses said the proposal will make Maryland a worse place compared to other states.
Eventually, the House and Senate will have to agree on a budget to send to Ehrlich, something Miller said may take well beyond the scheduled April 7 end of this General Assembly session.
Getting House members to buy into the Senate version of the budget, said House Majority Leader Kumar Barve, D-Montgomery, will be a struggle.
“Ask me if it gets out of the Senate.” Capital News Service reporter Kristin Sette contributed to this report.