O’Malley upsets lawmakers with talk of sales tax increase

January 11, 2012

Maryland lawmakers returned to Annapolis on Wednesday, girding for battle over Gov. Martin O’Malley’s plans to raise taxes on gasoline and sewer bills — only to get wrapped up in a new flap over whether the governor wants to raise the sales tax as well.

Just hours before the General Assembly convened at noon, O’Malley (D) floated the idea of raising the sales tax from 6 to 7 percent, suggesting that the additional revenue would help address shortfalls in Maryland’s operating and transportation budgets.

“That’s what I’d like to do,” O’Malley said in a taped radio interview, also stressing that he is not the only player in Annapolis with a say on the issue.

O’Malley and his aides scrambled to clarify his intentions, later suggesting that the governor’s budget proposal, due to the legislature next week, is unlikely to include a sales tax increase, largely out of fear that the higher levy would be rejected by lawmakers.

Still, O’Malley’s comments — which caught senior aides and top lawmakers off guard — proved a major distraction on a day traditionally dominated by legislative ceremonies and welcome-back receptions hosted by lobbyists.


Senator James N. Mathias Jr. Democrat, District 38, Somerset, Wicomico & Worcester Counties(L) talked with Senator Roger Manno-Democrat, District 19, Montgomery County(R) on January 11, 2012 in Annapolis, Md. (Photo by Mark Gail/The Washington Post) (Mark Gail/THE WASHINGTON POST)

This year’s opening day also included a milestone: With his reelection as speaker of the House of Delegates for a 10th straight year, Michael E. Busch (D-Anne Arundel) became the longest-serving speaker in Maryland history.

Busch’s counterpart, Senate President Thomas V. Mike Miller Jr. (D-Calvert), was among those who criticized O’Malley for talking about a sales tax increase — an idea that Miller branded “a non-starter” and that he said O’Malley had not discussed with him recently.

“I don’t know why he said it,” said Miller, who was reelected Wednesday to lead his chamber for a 26th consecutive year. “I think it’s a sign to his far left that he hasn’t forgotten them, to say he doesn’t like cutting the budget and would like to do more.”

Senate Minority Leader E.J. Pipkin (R-Cecil) was more forceful.

“It’s repulsive, and I mean that sincerely,” Pipkin said. “The pain for working-class families is palpable, so the fact the governor would even float the idea of a sales-tax increase as a possibility is unbelievable. What universe is he living in?”

If O’Malley’s political allies and opponents agree on one thing, it is that his performance over the coming 90 days will be under a microscope, perhaps more so than at any point since his first year in office.

He is pushing an ambitious and complicated agenda.

O’Malley would like lawmakers to invest more in transportation projects and is expected to detail a funding plan in coming days that will probably include a gas-tax increase. He is also expected to call for more funding to upgrade wastewater treatment plants through an increase on the state’s “flush tax.”

Several other controversial measures are on the governor’s agenda, including legislation to legalize same-sex marriage and to provide incentives to jump-start the state’s wind-power industry. O’Malley has scheduled an announcement Thursday on an affordable housing measure.

To succeed on so many fronts at once — while he is also taking on a greater role nationally for Democrats — will require near flawless execution this session, lawmakers suggest.

The legislature last raised the states sales tax in 2007, bumping it up from 5 to 6 percent at O’Malley’s request during a special session called to address chronic budget problems.

Legislative analysts say increasing the rate by another percentage point would yield more than $600 million a year in additional revenue.

That kind of money could go a long way toward closing a looming shortfall in the state’s $14 billion operating budget, O’Malley told radio personality Marc Steiner during a taping Wednesday before a live audience in Annapolis.

O’Malley also suggested that some of the sales tax proceeds could be directed to transportation projects and reduce the need for additional gas tax revenue.

Speaking to reporters a few hours later, O’Malley said he had mentioned a sales tax increase, “by way of illustration,” as an example of a measure that could help close the state’s budget gap.

He acknowledged that there is not much “political will” to raise the tax but did not take it off the table as a possibility.

“If all else fails, I think we should remember one penny on the sales tax is a pretty good yield,” O’Malley said. “I think we should remember that no one in our state lost their house, lost their job or lost a business because of an additional penny on the sales tax.”

O’Malley’s prospects for pushing a gas-tax increase through the legislature appear better, although success is hardly guaranteed.

Miller said he is confident such an increase can pass his chamber to pay for a backlog of transportation projects. Busch said its chances in the House would rest in large part on the ability of county executives in large jurisdictions, including Montgomery and Prince George’s counties, to convince state lawmakers that an increase is needed.

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