Unity Is Urged as Assembly Convenes
O'Malley Gives Case To Plug Budget Gap

By John Wagner
Washington Post Staff Writer
Tuesday, October 30, 2007

Gov. Martin O'Malley urged lawmakers to "move beyond conflict to find consensus" as they convened last night for a high-stakes special session on Maryland's projected $1.7 billion budget shortfall.

Appearing before a joint session of the General Assembly, O'Malley (D) made a somber case for his proposals to close the gap through tax increases and revenue from the legalization of slot-machine gambling, an issue so divisive that he is asking lawmakers to let voters resolve it in a referendum next year.

"We now face one of the toughest fiscal challenges in our state's 373-year history," O'Malley said during an address in which he appealed for civil discourse in the days ahead. "The storm is upon us, and this looming shortfall threatens to do grave damage to the very quality of life that our neighbors have elected us to defend. . . . Further delay will only compound the difficulty of correcting the half-actions and inactions of our recent past."

The session, which legislators expect to last at least two weeks, is extraordinary for its scope and its potential consequences. Special sessions are typically convened for quick action on a single issue; O'Malley is pushing the largest overhaul of Maryland's tax code in four decades.

He has proposed raising the sales tax, the corporate income tax, the tobacco tax, the titling tax on vehicles and income taxes on upper-end earners. The governor is also seeking a modest income tax cut for most other people, as well as a reduction in the state property tax rate.

O'Malley has also asked lawmakers to pass a health-care plan and to set aside nearly $400 million a year in extra money for transportation priorities, in addition to approving his proposal to hold a referendum legalizing slot-machine gambling at five locations.

"This is the most comprehensive special session that's taken place in Maryland in at least a century," said House Speaker Michael E. Busch (D-Anne Arundel), who was among those who had suggested waiting to address the budget until the legislature's regular session in January. "I think we're going about this in as judicious a fashion as possible, given the circumstances."

Senate President Thomas V. Mike Miller Jr. (D-Calvert) credited O'Malley with being "very bold" in calling a session with an uncertain fate.

"The task is . . . bringing the divergent interests of the Democratic Party together to pass these plans," Miller said. "It's going to be very difficult. It's going to be very trying. . . . It's a daunting task, but I think he's up to it."

Republicans, who are in the distinct minority in the House and Senate, were far less charitable in their assessments of O'Malley's chances for success and his remarks.

"There obviously is no enthusiasm for raising taxes," said Senate Minority Leader David R. Brinkley (R-Frederick). "He's taking a tremendous gamble."

House Minority Leader Anthony J. O'Donnell (R-Calvert) dismissed O'Malley's speech as containing "some platitudes, but no real substance."

The Democrats' plans to raise taxes were also the target of a rally outside the State House earlier in the day in which some in the crowd of about 250 held signs calling for O'Malley's impeachment and deriding "Socialist Politicians Posing As Democrats."

"What we're witnessing today is the flight of common sense from Maryland," Del. Warren E. Miller (R-Howard) told the crowd.

During his address to a packed House chamber, O'Malley appealed for the cooperation of both parties and said the challenge facing lawmakers was "as timeless as the human condition itself."

"Will the circumstances we've inherited change us, or will we change our circumstances?" O'Malley said. "It's time for us to correct our course. It is time for us to pass a long-term budget solution that's fairer to middle-class families."

House Majority Leader Kumar P. Barve (D-Montgomery) praised O'Malley for providing "clear goals" last night. "But it's the details that are going to be complex," Barve said. "The call to action is always the easiest part of these endeavors."

The governor argued that the shortfall will only grow if his call is not heeded during the special session.

To balance the budget in the 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 has said he will be forced to propose more than $500 million in additional spending cuts or tax increases.

The governor's proposal for a slots referendum appears to have significantly improved the prospects for resolving an issue that paralyzed Annapolis during much of the tenure of Gov. Robert L. Ehrlich Jr. (R).

Under O'Malley's plan, the state would authorize up to 15,000 machines if voters approve a measure on the 2008 presidential ballot. A state commission would award licenses to operate slots parlors in Baltimore and in Allegany, Anne Arundel, Cecil and Worcester counties.

. O'Malley last night blamed Maryland's budget problems largely on an income tax cut initiated a decade ago and passage of a landmark education plan in 2002 without new revenue to pay for it.

He 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 Ehrlich.

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

Staff writers Philip Rucker and Ovetta Wiggins contributed to this report.