Ehrlich Vetoes Tuition Bill
Governor Rejects Plan To Tax Corporations
By Matthew Mosk
Washington Post Staff Writer
Wednesday, May 26, 2004; Page B01
Maryland Gov. Robert L. Ehrlich Jr. announced last night that he has vetoed a bill that would have used corporate taxes to hold down tuition costs at state universities, calling the measure "irresponsible and haphazard."
Ehrlich (R) said the temporary increase in corporate taxes would put jobs at risk for students graduating from Maryland universities.
"If our economy is not producing quality jobs when these students graduate . . . the students will leave to pursue careers in other states," Ehrlich said in a letter explaining his veto. "In effect, Maryland taxpayers will be subsidizing the workforce for other states and countries."
The measure was one of 16 bills he announced last night that he would strike down. Several had passed the General Assembly this year in spite of aggressive opposition from the business community, and those vetoes appeared to be aimed at better defining him as a business-friendly governor. One was the so-called living wage bill, which would have required companies with state contracts to pay employees at least $10.50 an hour.
Another would have allowed state officials to consider -- before awarding a contract -- whether a contractor would be outsourcing labor to workers in another country. And, he vetoed a measure that would have set up a commission to study wage disparities.
The governor did not, however, veto two measures dealing with a loophole that has enabled large Maryland corporations to transfer profits to holding companies chartered in Delaware, where the money is not taxed. Both will become law without his signature.
Though the so-called Delaware loophole will now be closed, Ehrlich's move grants amnesty to dozens of corporations that would have been forced to pay almost $90 million in back taxes as a result of recent court decisions.
A spokesman for Maryland Comptroller William Donald Schaefer (D), who had led a quest to recoup the unpaid corporate taxes, said the governor has "completely undermined" Schaefer's effort.
"It just pulls the rug out from under him," Michael Golden said. "It's saying to him, he shouldn't have bothered."
Among key Democratic lawmakers, the biggest disappointment appeared to be reserved for the tuition bill, which they believe would have helped blunt a steady rise in the cost of a state college education. Tuition at the University of Maryland, for instance, rose 21 percent in a single year.
House Speaker Michael E. Busch (D-Anne Arundel) said the veto sends the wrong message to Marylanders with children in public schools.
"The vast majority of people out there are struggling to make their tuition payments," he said. "This was an effort to give them a little help."
State Sen. Brian E. Frosh (D-Montgomery) had led an 11th-hour lobbying effort to persuade the governor to let the measure stand. Last night, upon learning of the veto, he expressed deep disappointment.
"What he didn't seem to understand was, it's a tax either way you do it," Frosh said. "It's either a tax on students, or it's going to be a small increase in the corporate income tax. How he could make that decision, I just don't know."
© 2004 The Washington Post Company