Montgomery Legislators Struggle to Serve Two Masters

O'Malley's Tax Plans Put Democrats Between Him and Voters

On the campaign trail, Gov. Martin O'Malley played up his roots in Montgomery County, a jurisdiction that provided one of every five votes he received in last year's election. But as he pushes a plan to close Maryland's $1.7 billion budget shortfall, some of the stiffer resistance is coming from fellow Democrats in his old stomping grounds.

O'Malley's proposal to make the state income tax more progressive would hit more upper-end taxpayers in Montgomery than in any other jurisdiction, and many of the county's lawmakers have been at odds with the former Baltimore mayor's plans to legalize slot-machine gambling.

Those proposals have divided the legislative delegation, and some members say they are feeling conflicted as they try to reconcile their liberal leanings with the economic interests of Maryland's wealthiest jurisdiction.

"He stresses that he grew up here, but the way he has treated the county in the budget suggests that he didn't have a happy childhood," Del. Luiz R.S. Simmons (D-Montgomery) said of O'Malley (D), who moved from the county to Baltimore when he entered law school.

Under O'Malley's income tax plan, most Montgomery residents would get at least a modest break, but high-end earners would pay thousands of dollars a year more.

O'Malley said yesterday that Montgomery lawmakers have voiced some "legitimate concerns" in the weeks since he announced his proposals. He said he is open to "massaging" his income tax plan, a key part of the budget package on which he is seeking quick action in a special session, which could start as soon as Oct. 29. He also said that "the vast majority of Montgomery households would see their income taxes reduced under our proposal."

The governor stressed that his idea to gradually reduce the property tax by 3 cents per $100 in assessed value would benefit Montgomery more than any county. And he said that any state income tax increase for upper-end earners would still be less than federal tax cuts made under President Bush.

Philosophically, Montgomery's legislators -- all Democrats -- agree with O'Malley's desire to overhaul the income tax system to make it more "progressive," meaning those who earn more would pay a higher percentage.

But under new rates proposed by O'Malley, Montgomery residents earning more than $500,000 would pay a combined rate of almost 10 percent -- 6.5 percent in state taxes and the existing 3.2 percent county levy. That surpasses Virginia's top rate of 5.75 percent and the District's 8.5 percent. Maryland's current top income tax rate is 4.75 percent.

Moreover, more than 80 percent of the $163 million expected to be generated by the governor's income tax plan would come from Montgomery taxpayers, according to an analysis by the Comptroller's Office. The state would collect less in income taxes from many other jurisdictions, including Prince George's.

Montgomery County Executive Isiah Leggett (D) and Senate delegation leader Rona E. Kramer (D) have said they fear that such a burden and the sticker shock from the combined rate could hurt the county's ability to compete with its neighbors in Northern Virginia and the District. Although a family on, say, River Road is unlikely to pack up and leave Potomac for McLean, opponents of the tax plan say that newcomers to the area might choose not to live in Montgomery.

Others in the delegation have downplayed such concerns and credit O'Malley for devising a fairer structure.