O'Malley Outlines The Losers if He Can't Hit the Slots Jackpot

By John Wagner
Wednesday, October 31, 2007

There is a lot more riding on the outcome of a potential slots referendum than whether Marylanders will get to gamble closer to home.

Yesterday, aides to Gov. Martin O'Malley (D) outlined proposals that he would scrap if the legislature fails to authorize a public vote on the legalization of slot machines -- or if voters do not approve the 2008 ballot measure.

O'Malley would shelve his plan to roll back the state property tax rate from 11.2 cents to 8.2 cents per $100 in assessed value.

About $300 million a year in dedicated school construction funding would not materialize. Nor would $60 million a year in dedicated funding to universities that could be used to hold down tuition costs.

O'Malley's proposal to expand access to health care would help fewer people, becoming a $100 million-a-year initiative rather than a $250 million-a-year initiative once fully phased in.

"We have to make sure that all of this fits together," O'Malley told reporters, echoing testimony given by administration aides at the first hearing of the special session of the General Assembly. "We don't want to fall back into the same trap that got us here."

That trap, aides said, was cutting taxes and increasing spending without a way to pay for such actions.

O'Malley's slots plan, which would eventually be expected to yield more than $700 million a year for the state, is a significant part of his long-term revenue package, though it would have no immediate impact on next year's projected $1.7 billion shortfall, given the timing of a referendum.

Just How Deep Is the Budget Hole?

A divide emerged yesterday over just how large the shortfall is.

Aides to Gov. Martin O'Malley continued to refer to next year's budget gap as $1.7 billion during hearings taking place on the special session's second day.

But the legislature's chief fiscal analyst, Warren G. Deschenaux, told lawmakers that the Department of Legislative Services now projects a $1.5 billion shortfall.

Deschenaux said that "$1.5 billion is the new $1.7 billion," referring to revised spending and revenue projections for fiscal 2009.

O'Malley spokesman Steve Kearney said later that the governor's office will continue to use $1.7 billion. "It's a matter of their estimates being a little different than our estimates," Kearney said.

Actually, the two branches are closer than they seem, because of rounding. O'Malley puts the figure at $1.667 billion. The legislature has it at $1.523 billion, a difference of $144 million.

On Gym Tax, Legislators Feel the Burn

A proposal to apply the state sales tax to health club memberships has exercised fitness buffs in Maryland.

As the result of a lobbying campaign orchestrated by health clubs, lawmakers are getting a raft of e-mail protesting Gov. Martin O'Malley's plan to start collecting sales tax on gym memberships. The sales tax rate is 5 percent but would rise to 6 percent under a separate proposal.

"I AM FAT AND TRY TO WORK OUT," a Silver Spring resident wrote to Senate President Thomas V. Mike Miller Jr. (D-Calvert), threatening to cancel his gym membership if lawmakers pass O'Malley's plan. "IF YOU TAX, I COULD DIE BECAUSE I WILL NOT PAY THIS TAX."

House Speaker Michael E. Busch (D-Anne Arundel) received an appeal from a mother of two in Arnold who joined a gym after her husband was deployed to Iraq.

"On a military salary, we can barely afford to add the gym to our lifestyle," she wrote. "It has, however, changed our lives. I now set a good healthy example for my kids. The gym has led us to better eating habits and a more active lifestyle."

Miller recently predicted that the proposal, which is the subject of a hearing tomorrow, would not survive legislative scrutiny. O'Malley has also proposed applying the sales tax to tanning salons and property management services.

© 2007 The Washington Post Company