By Philip Rucker and Ovetta Wiggins
Washington Post Staff Writers
Friday, November 2, 2007
Maryland Gov. Martin O'Malley's plan to close an expected budget shortfall evoked passionate responses from constituencies from across the state yesterday, underscoring the challenge lawmakers face in reaching consensus as they move into the fifth day of a special session.
Legislators heard a stream of testimony from lobbyists, local officials and citizens on increasing the sales tax and overhauling the personal income tax structure, two of the more controversial measures introduced by O'Malley (D) to eliminate a projected deficit of at least $1.5 billion.
Hearings also were held on legislation to reduce the property tax and double the tobacco tax, as well as the governor's initiative to extend health care insurance to 100,000 uninsured adults.
In a hearing on O'Malley's income tax proposal -- which would raise taxes on the state's wealthiest residents while providing a modest break for others -- Montgomery County figured prominently. The governor's plan would affect the state's largest and most affluent county more than any other jurisdiction.
In testimony before lawmakers yesterday, Montgomery County Executive Isiah Leggett (D) said O'Malley's proposed top tax rate of 6.5 percent is too high. Leggett, who is pushing an alternative plan with a top rate of 5.5 percent, said Montgomery's tax burden would be greater than Virginia's and the District's under the plan.
"Just like the governor, I believe strongly in progressivity," Leggett told lawmakers. But, he added, "I am very concerned about the long-term effect it will have on Montgomery County's role as the economic engine of the state."
Karen Syrylo, a state taxation consultant and a member of the Maryland Chamber of Commerce, said that O'Malley's proposal has led some business owners to voice a desire to relocate to Northern Virginia.
But a slew of interest groups testified in favor of O'Malley's progressive income tax proposal.
"Government should raise revenue on an ability-to-pay basis," League of Women Voters President Lu Pierson said. "We are a wealthy nation. We can do better."
Maryland Association of Counties Vice Chairman James T. Smith Jr., the Baltimore County executive, said failure to adopt the governor's plan would force county governments to raise property taxes.
O'Malley's proposal to raise the sales tax from 5 to 6 percent and extend it to service areas, including real estate management and health club fees, also elicited strong feelings.
Realtors and health club owners rallied outside the hearing room in Annapolis yesterday, saying the state sales tax should not be applied to their services. "The consequences of our members not being able to work out because of expenses will be that obesity will increase," said Bob Seaman, who runs health clubs in Prince George's and Anne Arundel counties.
Also yesterday, O'Malley's health care package drew fire from Republican lawmakers, who said the initiative should not be part of a special session to close a budget deficit.
Under the governor's plan, Medicaid would expand over four years, first covering parents with incomes of less than $20,000 for a family of three, which is 116 percent of the federal poverty levels.
In testimony to lawmakers, Health Secretary John Colmers said access to health care for Maryland's Medicaid population is "abysmal."
"We're not going to solve every health care problem in this bill, but it's a first step," Colmers said.
O'Malley's proposal also suggests offering a subsidy to employees who earn less than $50,000 at companies with less than nine workers that don't offer health insurance benefits. The state would also lower deductibles for employees who sign up for wellness programs, such as weight loss or smoking cessation programs.
Since there is no dedicated funding for the program, enrollment and benefits can be capped if money falls short in the future.
Sen. John C. Astle (D-Anne Arundel) asked if the health care expansion included dental services for the poor. Colmers responded that it is not part of the bill, but he created a committee to find ways to provide dental care to people on Medicaid.
"We had a tragedy in this state that should never be repeated with the death of Deamonte Driver," Colmers said, referring to the 12-year-old boy from Prince George's who died this year because his family could not afford dental care.
Some Republicans said O'Malley's $675 million plan -- which includes $250 million in state funding -- should not be heard during a special session. "I have tons of stuff to look over right now," said Senate Minority Whip Allan H. Kittleman (R-Howard). "How can I give this the scrutiny it deserves?"
Sen. E.J. Pipkin (R-Queen Anne's) said introducing the plan now appeared to be a way make it easier for some lawmakers to swallow raising taxes.
"It has a lot less to do with children, than getting the tax package passed," he said.
In defending the timing of the plan, Carolyn Quattrocki, O'Malley's deputy legislative officer, told lawmakers that initiative would be funded by a $1-a-pack increase in the cigarette tax, part of the governor's overall budget package.
At a separate hearing, lawmakers also started examining $760 million in possible cuts they could make to the budget next year. Among the cuts was a planned 2 percent raise for state workers.
Staff writer John Wagner contributed to this report.
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