Slots Foe Says He's Willing to Negotiate
But Busch Opposes A Gas Tax Increase

By John Wagner and Lisa Rein
Washington Post Staff Writers
Wednesday, May 16, 2007

House Speaker Michael E. Busch (D-Anne Arundel) said yesterday that he would not rule out a modest slot-machine gambling plan as part of a broader solution to Maryland's financial problems, but he suggested it could be a difficult sell at the same time lawmakers are proposing tax increases.

He also expressed concerns about the possibility of increasing the gas tax to pay for transportation projects, an idea Gov. Martin O'Malley (D) said this week he is considering supporting.

Busch, who has been among the legislature's most ardent foes of expanded gambling, left the door open to compromise, saying that "any expansion of gaming should be limited."

"I don't rule out anything," he said at a lunch meeting with Washington Post editors and reporters.

With a nearly $1.5 billion budget shortfall looming in Maryland's $15 billion general fund, Busch also suggested that legislators consider raising corporate income tax and sales tax rates and applying the sales tax to services now exempt, such as automobile repairs and health club memberships.

But Busch said he opposes a gas tax increase because it would unfairly burden lower-income people. Senate President Thomas V. Mike Miller Jr. (D-Calvert) has proposed a 12-cent increase in the gas tax.

"None of this is going to be easy, none of it," said Busch, who ascended to his leadership post in 2003, the same year that former governor Robert L. Ehrlich Jr. (R) took office.

Busch spent much of the subsequent four years at odds with Ehrlich and Miller over slots, which could yield as much as $800 million a year for the state under some proposals.

The issue has reemerged as O'Malley and lawmakers confront a deficit in the state fiscal year that starts in July 2008.

Miller has vowed that legalization of slots is "something that's going to happen" in the coming year. O'Malley has expressed support for an unspecified but "limited number" of slot machines at horse racing tracks as a means to help the industry survive. But at O'Malley's behest, lawmakers shelved debate over the issue during his first legislative session, which ended April 9.

Even with the support of O'Malley and Miller, Busch said he believes slots are "going to be a tough sell to a lot of people."

Busch suggested GOP support for slots could erode with Ehrlich no longer in office. And he questioned whether lawmakers will have the appetite to simultaneously seek two major controversial initiatives -- tax increases and expanded gambling.

"If the idea is somehow that you think you'll go into places like Prince George's and Baltimore and ask them to vote for . . . taxes and fees and turn around and say, 'We're going to put these gaming facilities in,' it becomes a burden they're not going to take up," Busch said.

Busch did not say what he considers an acceptable slots plan. But he has signaled that it would probably be far more restrictive than Miller's proposal this year to put 15,500 machines at seven locations, including four horse tracks.

Busch argued that Maryland could increase the corporate tax and sales tax and "stay competitive" with nearby states.

Maryland's corporate tax rate is 7 percent, roughly 2 percentage points lower than Delaware, the District, Pennsylvania, New Jersey and West Virginia. Virginia applies a 6 percent tax but also taxes personal property for business.

Raising Maryland's sales tax from 5 percent to 5.5 percent, Busch said, would still leave Maryland with a lower tax than the District and most other nearby states.

Busch also pointed to a 2005 national study showing that Maryland applied its sales tax to 39 of 168 possible services, whereas some states taxed more than 160.

Busch said the state should increase vehicle titling taxes and earmark a greater share of corporate income taxes for transportation projects rather than raise the gas tax. He said those initiatives could boost transportation spending by about $20 million a year, less than the $400 million to $600 million that Transportation Secretary John D. Porcari has recommended.

Busch also acknowledged that he has limited control over the coming budget debate, even in his chamber, which has 141 members. "None of these people work for me," he said. "I try to bring them together through the persuasion of argument."