ANNAPOLIS – The House approved about $260 million in new taxes and fees Wednesday, moving the budget’s most controversial aspects from the back rooms to the Senate chambers.
Voting 89-47, the General Assembly’s lower body approved the revenue measures along mostly party lines. They will begin debating the remainder of the $2 billion deficit-closing proposals in the budget Thursday.
“We’re in a deficit. We need money,” said Delegate Michael Gordon, D- Montgomery, chairman of the subcommittee that brokered the bill.
The package of new corporate filing fee increases, controversial loophole closings, a 2 percent tax on HMOs, and new tax compliance regulations were measures of both fairness and revenue, said Ways and Means Vice Chairwoman Anne Healey, D-Prince George’s.
Opponents charged that the bill harms small businesses, big businesses and “Ma and Pa.”
Keeping the family metaphor going, Minority Leader Al Redmer Jr., R- Baltimore County, said his family will face a $400 corporate filing fee for the rental property purchased last fall under a limited liability corporation, hurting his ability to break even on the deal.
Meanwhile, the new fees can run from $400 to as much as $20,000 for companies with more than 500 employees, up from a flat $100. The increase is expected to raise $125 million.
Another controversial measure would impose a 2 percent tax, providing $45 million for the state, on HMO insurance provider premiums. The tax is already collected on other forms of health insurance, bill supporters say.
“This is an issue of fairness. This is an issue of treating all different agencies the same,” Healey said. “It is an issue whose time has come.”
Taxing HMOs is a “nonstarter,” Gov. Robert Ehrlich said Tuesday, while his spokesman later called it “unacceptable.”
Preparing to fight the vote, Redmer brought a handful of amendments to weaken the impact on business — and a white handkerchief to use when defeat was at hand.
After losing four consecutive amendment votes by nearly 2-to-1, Redmer shelved the rest of his proposed amendments, waved the white handkerchief and told fellow lawmakers, “I know when I have been defeated . . . so on behalf of Maryland taxpayers, I surrender.”
Loophole closings garnered $35 million, a move Majority Leader Kumar Barve, D-Montgomery, hailed as a “no-brainer.”
Minority Whip Kenneth Schisler, R-Talbot, called them the worst provisions of the bill and said the $35 million in taxes threaten to severely damage Maryland’s standing in the business community.
But he and Redmer looked on the bright side: The approval will make electing more Republicans next election season easy, they said.
The bill passed with a veto-proof majority, but Ehrlich might test the lawmakers resilience. “He would certainly consider (a veto),” Ehrlich spokesman Henry Fawell said. Passing it without a veto could hurt Ehrlich. Two anti-tax groups that strongly supported his campaign have blasted him for proposing a property tax, and threatened to abandon him if he signs on to further taxes.
Now the fight with the Senate – which, like Ehrlich, wants to use slot machine revenue to help balance the budget – begins in earnest, said Speaker Michael Busch, D-Anne Arundel.
But some paused to celebrate before the battle. “We balanced the freaking budget,” Barve said. “That is not a trivial matter in these times.” Capital News Service reporter Tom LoBianco contributed to this report. – 30 – CNs-3-19-03