By Rolando Garcia
ANNAPOLIS – The House of Delegates approved a $1 billion tax package late Wednesday despite a veto threat from Gov. Robert Ehrlich and fear among some Democrats of political repercussions.
After the second night of debate, the tax plan crafted by Speaker Michael Busch, D-Anne Arundel, passed 75-65, with almost two dozen Democrats bucking their party leadership to oppose the measure. The number falls short of the 85 needed to override Ehrlich’s promised veto.
But supporters said the House had made a bold move to improve public education and solve the state’s structural long-term deficit.
“Today, we can finally say we have found a funding source for public schools and that every child in Maryland can have an equitable and excellent education,” said Delegate Anne Healey, D-Prince George’s.
Republicans said the massive tax hikes would hamper the state’s economic recovery and was unnecessary since the budget for 2005 could be balanced without new revenues.
Moderate and conservative Democrats opposing the measure said it was out of step with their constituents.
Delegate John Arnick, D-Baltimore County, said the tax hikes were excessive and would imperil Democrats representing rural areas and moderate districts.
“This will hurt (vulnerable Democrats) terribly,” Arnick said.
Ehrlich showed no signs Wednesday of wavering from his anti-tax stance.
“Here we are with a plan that won’t survive the Senate, let alone my veto,” Ehrlich said.
Senate President Thomas V. Mike Miller Jr., D-Calvert, has declared the plan dead on arrival in his chamber and said pushing it forward without a veto-proof majority was an “exercise in futility.”
The tax plan includes a 1-cent sales tax increase earmarked for public schools, an income tax rate boost from 4.75 to 6 percent on Marylanders with incomes above $200,000 and an increase in vehicle excise taxes from 5 to 6 percent.
It also expands the sales tax to health clubs and tanning services.
The tax plan provides about $350 million in tax relief, lowering the state’s property tax rate from 13.2 cents to 5 cents per $100 assessment, and increases the earned income tax credit for poor taxpayers.
The biggest beneficiaries of the tax plan would be middle-income homeowners. A family of four making $100,000 and living in a $300,000 home would pay only $10 more in taxes, according to legislative analysts. But a family making $275,000 living in a $700,000 home would fork over an extra $319, and a family making $30,000 that does not own a home would pay an extra $36.
Republicans argued higher sales taxes would hurt Maryland businesses by driving shoppers to neighboring states and the Internet. The income tax increase, they said, targeted the most successful and entrepreneurial Marylanders.
Legislative analysts have estimated the sales tax hike would cost the state $600 million in retail sales.
Democrats defended the tax package as a better way to fund public schools and fix the state’s long-term budget woes than legalizing slot machines, which Ehrlich has proposed.
The House was also set to give preliminary approval Wednesday night to a $23.7 billion spending plan similar to the one submitted by Ehrlich in January and passed by the Senate last week.
The budget closes an $800 million shortfall mostly through tapping one-time revenue sources and closing tax loopholes. The Senate passed a smaller $227 million tax package that includes a 5-cent sales tax on salty snack foods, which had been exempt since 1997. The House package does not include the snack tax.
The House trimmed $175 million from Ehrlich’s budget and left a $250 million surplus to cover unexpected expenses in Medicaid, mental health and special education programs.
The House also Thursday approved a bill to give in-state tuition at Maryland public colleges and universities to undocumented immigrants who meet academic and tax requirements.
The mostly party-line 88-53 vote came after two days of passionate debate on the bill, which opponents said would reward illegal behavior and hurt U.S. citizens applying to college. But the bill’s supporters called it an investment in the state’s future.
“It’s about us and who we are and who Maryland will be in the nation,” said Delegate Jean Cryor, R-Montgomery, a sponsor and one of five Republicans voting for the bill.
Ehrlich vetoed a similar bill last year, but has not yet decided what he will do should it come to his desk this year, a spokesman said Wednesday. Maryland would join seven other states with similar laws if the bill is approved by the Senate and the governor.
– 30 – CNS-3-25-04
