O'Malley Summons Special Session
On the Budget, Governor Says, 'The Time for Delay Has Passed'

By John Wagner
Washington Post Staff Writer
Tuesday, October 16, 2007

Gov. Martin O'Malley (D) yesterday ordered the Maryland General Assembly into a special session starting Oct. 29 to consider his proposals to resolve a $1.7 billion budget shortfall by raising several taxes and legalizing slot-machine gambling.

"The time for delay has passed," O'Malley said at a news conference at which he acknowledged he is still working to ensure passage of his proposals. "We have the ability to come together, and we have the ability to forge a consensus."

O'Malley's proposals include overhauling the state's income tax so that upper-end earners would pay more but most taxpayers would get a modest break; gradually reducing the property tax; and raising sales, tobacco, corporate and vehicle titling taxes.

But the governor's toughest sell, it appeared yesterday, will be his plan to generate $550 million for the state from the legalization of slot-machine gambling at racetracks and other locations -- an issue that has paralyzed the legislature in previous years.

O'Malley signaled last week that he was open to putting his slots plan to a public vote if that would make passage more likely in the House of Delegates.

"I'm inclined that way," O'Malley said yesterday, suggesting a referendum might be the only way "to put to rest the thorny issue of slots. . . . I think there's a lot of support for letting the people decide."

But Senate President Thomas V. Mike Miller Jr. (D-Calvert) again expressed opposition to a referendum yesterday, saying O'Malley is well short of securing the necessary votes in the Senate.

"I counseled him not to call a special session until he has the votes, but he's determined to go forward anyway," Miller, a leading slots proponent, told reporters.

Putting slots on the ballot -- most likely in November 2008 -- would give opponents a year to mobilize, Miller said. And gambling interests in West Virginia, Delaware and Pennsylvania, where slots are already legal, would likely be among those pouring money into efforts to oppose slots in Maryland, he said.

O'Malley "threw his plan under the bus by agreeing to a referendum before we even started," Miller said.

O'Malley has said he will propose slots legislation "very similar" to a failed 2005 plan that sought to legalize 9,500 machines at tracks and other locations in Allegany, Anne Arundel, Frederick and Harford counties.

Until last week, Miller had been an outspoken supporter of a special session, an idea that House Speaker Michael E. Busch (D-Anne Arundel) has resisted. Republican leaders in both chambers have said they believe convening before the start of the legislature's annual 90-day session in January is a mistake.

O'Malley said that he was hopeful the special session would end by Thanksgiving but that he is not inclined to rush the legislature. "We do not want this to be a slap-dash process," the governor said.

House leaders who had opposed the session said yesterday that they are prepared for a full airing of O'Malley's proposals and are looking forward to public input.

"It's been called, so we need to move forward," Speaker Pro Tem Adrienne A. Jones (D-Baltimore County) said.

O'Malley said his proposals would generate nearly $400 million a year for transportation priorities in addition to closing the projected $1.7 billion shortfall in fiscal 2009, which starts in July.

O'Malley argued yesterday that the shortfall will grow if the legislature does not act this fall.

To balance the budget in coming years, O'Malley is counting on increased collections from income, sales, corporate and tobacco taxes starting in January. If the legislature waits until next year to raise those taxes, O'Malley said he will be forced to propose more than $500 million in additional spending cuts or tax increases.

"The alternatives are pretty damaging to the quality of life that all of us cherish as Marylanders," O'Malley said.

Maryland's budget problems are largely the result of an income tax cut initiated a decade ago and an education initiative passed by lawmakers in 2002 without new revenue to pay for it. At its current pace, Maryland is projected to spend about $1.10 for every $1 the government collects in taxes.

O'Malley balanced this fiscal year's budget by using nearly $1 billion from the state's "rainy-day" fund, a move he said would provide time to search for long-term solutions and to let wounds heal after four years of partisan battles between lawmakers and former governor Robert L. Ehrlich Jr. (R).

As a result, Maryland's budget is projected to remain in balance until June, when the current fiscal year ends.