O'Malley To Stump For Tax Increases

By John Wagner
Washington Post Staff Writer
Wednesday, September 19, 2007

Gov. Martin O'Malley will start making the case publicly this morning for a wide-ranging revenue package that includes increases in the sales, corporate income and tobacco taxes but forgoes a significant increase in the gas tax and includes a cut in property taxes.

Today's scheduled appearance in Baltimore County follows two days of closed-door meetings with lawmakers in which O'Malley (D) has shared the outlines of a politically risky plan to close a budget shortfall now projected to be about $1.7 billion next year while raising close to $400 million a year for transportation needs.

The package, O'Malley has told lawmakers, also includes higher income taxes on upper-end earners but provides relief to lower- and middle-income families. And it seeks to raise more than $500 million a year from slot-machine gambling.

"There's a little bit of everything in it," House Speaker Michael E. Busch (D-Anne Arundel) said yesterday after emerging from an hour-long breakfast at the governor's mansion.

The meeting was part of an attempt to build enough consensus for the plan to hold a special legislative session by early November. Senate President Thomas V. Mike Miller Jr. (D-Calvert) has been supportive of O'Malley's efforts, whereas Busch and other House leaders have questioned the wisdom of a special session, suggesting that the package can be debated in January, when lawmakers return to Annapolis for their annual 90-day session.

Lawmakers at the breakfast said O'Malley -- who has largely avoided reporters in recent days -- spoke forcefully about his desire to call a special session, which his press secretary later confirmed. "He feels we need to move forward quickly and get this behind us," O'Malley spokesman Rick Abbruzzese said.

Although most components of O'Malley's plan have been publicly floated or leaked to the media in recent weeks, several new details came to light yesterday.

O'Malley told lawmakers that he would like to raise the corporate income tax from 7 percent to 8 percent. Half the additional revenue, lawmakers said, would go toward higher education, and the other half would be steered to the transportation trust fund.

That fund is separate from the state's $15 billion general fund, in which there is a projected shortfall of about $1.7 billion for fiscal 2009, which starts in July. But the transportation fund faces problems of its own.

Transportation Secretary John D. Porcari told a separate gathering of lawmakers yesterday that revenue flowing into the fund, including the gas tax, has not kept pace with Maryland's growing transportation needs. That is in large part, Porcari said, because the revenue is not pegged to inflation. The gas tax, the largest source of transportation revenue, was last raised in 1992.

O'Malley said this year that he would consider support for a significant increase in the gas tax, which is now 23.5 cents a gallon. Some lawmakers have suggested increases as large as 12 cents.

O'Malley told lawmakers yesterday that the state should not impose a large, one-time increase but that it should start adjusting the tax for inflation -- a move that could result in annual increases at the pump of 0.7 cents to 0.8 cents a gallon each year, Porcari said.

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