O’Malley will seek budget without tax increases but urges ‘an open mind’

February 26, 2011

Maryland Gov. Martin O’Malley said he and legislators should keep an open mind about raising taxes in the 90-day session that starts Wednesday, even as he repeated a pledge to propose a budget balanced entirely with spending cuts.

With the state facing a shortfall of about $1.3 billion next year, O’Malley (D) said Tuesday that the budget he submits to lawmakers next week should be viewed as “the first word, rather than the last word” on taxes and spending cuts.

“I think it’s important that all of us, whatever our starting points are . . . keep an open mind,” O’Malley told reporters after an annual presession luncheon in Annapolis hosted by the Maryland Democratic Party.

He called the budget proposal the most difficult he has crafted since taking office in 2007 and acknowledged that it will likely include cuts to education.

“Will we be able to shield it totally from any cuts?” O’Malley said. “That’s probably impossible. But we will be able to protect it as a priority.”

O’Malley also used his address to the partisan gathering to preview some of his initiatives for the session, including legislation intended to spur investment in offshore wind farms and to create $100 million in venture capital for emerging businesses.

Several other bills are expected to be vigorously debated this session, including legislation to legalize same-sex marriage and provide in-state college tuition rates to children of illegal immigrants.

Lawmakers are also planning to make changes to the state’s pension programs, and they will debate several gambling issues, including whether to legalize table games at Maryland’s slots casinos.

Despite O’Malley’s stand on taxes, some leading lawmakers are advancing plans to raise additional revenue, both to offset anticipated cuts to programs and new initiatives.

During Tuesday’s luncheon, Senate President Thomas V. Mike Miller Jr. (D-Calvert) continued to push his plan to raise the gas tax to fund transportation projects, noting that it has remained unchanged since 1992.

More lawmakers have also signed onto a plan to raise the state’s alcohol taxes by a “dime a drink” to pay for health-related priorities.

No tax proposals are likely to garner support from Republicans, who met Tuesday for a series of policy briefings from administration officials as Democrats convened for lunch.

With gas prices approaching $4-per-gallon in some parts of the state, Senate Minority Whip David R. Brinkley (R-Frederick) called the idea of a gas tax increase “insane.”

Like the tobacco tax, which the legislature raised in 2007, Brinkley said higher gas prices would send residents in remote regions of Maryland across state lines to fill up their tanks.

In tough economic times, lawmakers have repeatedly tapped the state’s account reserved for transportation projects to help balance the operating budget.

“Their argument would have more credibility,” Brinkley said, “if the fund were sacrosanct.”

House and Senate Republicans, who met jointly Tuesday, also pressed the governor’s aides about talk of merging state agencies.

O’Malley’s chief legislative officer, Joseph C. Bryce, said the governor was having ongoing discussions about combining the Department of the Environment and the Department of Natural Resources. Bryce said the object would be not necessarily to save money but to streamline state services.

Under O’Malley’s InvestMaryland initiative, which the governor touted at the luncheon, large insurance companies operating in Maryland would be invited to pay their next five years in tax liabilities in advance at a discounted rate.

Those funds would be pooled and put in a “venture fund” for use by start-ups in emerging industries, including bioscience companies, O’Malley said.

O’Malley told reporters to “stay tuned” for more details of legislation he plans to introduce to spur development of offshore wind farms. The aim, he said, would be to take advantage of “the tremendous potential Maryland has to harness offshore wind.”

wagnerj@washpost.com

marimowa@washpost.com

John Wagner has covered Maryland government and politics for The Post since 2004.
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