Montgomery Tax Anxiety Makes Mark In the Senate

Senate President Thomas V. Mike Miller Jr. (D-Calvert), Gov. Martin O'Malley (D), Lt. Gov. Anthony G. Brown (D) and House Speaker Michael E. Busch (D-Anne Arundel) at the opening of the special session.
Senate President Thomas V. Mike Miller Jr. (D-Calvert), Gov. Martin O'Malley (D), Lt. Gov. Anthony G. Brown (D) and House Speaker Michael E. Busch (D-Anne Arundel) at the opening of the special session. "Both the House and the Senate are obviously going to massage the governor's bills and change them around," Busch said. (By Nikki Kahn -- The Washington Post)

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By John Wagner and Philip Rucker
Washington Post Staff Writers
Tuesday, November 6, 2007

The Maryland Senate is angling to pass a budget package that includes fewer tax increases and more spending reductions than Gov. Martin O'Malley (D) has proposed to close a potential shortfall of at least $1.5 billion, the chamber's leader said yesterday.

Senate President Thomas V. Mike Miller Jr. (D-Calvert) told reporters that Democrats who control his chamber are interested in accommodating Montgomery County leaders who have said O'Malley's proposed new top income tax bracket could be too onerous.

The Senate is also likely to scrap an O'Malley plan to periodically raise the gas tax to reflect the rising costs of highway and transit construction, Miller said. Instead, he said, senators are interested in steering a portion of the proceeds from a proposed sales tax increase of 1 cent per dollar to transportation projects.

And on budget cuts, "we're not even to first base now," Miller said without elaborating.

His comments came as the Senate's budget panel prepared to take its first votes today on parts of O'Malley's deficit-reduction package. Yesterday's maneuverings in both chambers underscored how much work remains in a special session that is more than a week old.

"Both the House and the Senate are obviously going to massage the governor's bills and change them around," House Speaker Michael E. Busch (D-Anne Arundel) said in an interview in which he also expressed a willingness to look at alternatives to O'Malley's income tax proposal and an interest in substituting sales tax revenue for an increase in the gas tax.

O'Malley's six-bill package also calls for a public referendum on legalizing slot-machine gambling.

Senators indicated yesterday that they anticipate some changes in that proposal as well, including an increase in the share of proceeds that slot-parlor operators would be allowed to keep. Miller said he expects the share retained by operators at the five sites authorized by the bill would increase from 30 to 33 percent.

Potential bidders for slots licenses have expressed concern that O'Malley's figure would not allow them to operate the same quality of facilities as in neighboring states, where operator shares are higher. O'Malley is seeking to legalize 15,000 machines to raise money for education and to subsidize the state's horse-racing industry.

Busch, meanwhile, convened private meetings yesterday with several of the largest county delegations, including those of Montgomery and Prince George's, to gauge lawmakers' concerns as the House prepares to alter O'Malley's package as well.

Legislators from Montgomery, home to more high-income earners than any other county, raised concerns about O'Malley's proposed overhaul of the state's income tax brackets. The governor's plan, aimed at making the brackets more progressive, would provide a modest tax break to most households but require the state's top income earners to pay several thousand dollars a year more.

Many members of the Montgomery delegation told Busch that they would not support the governor's proposal unless a compromise is reached to reduce O'Malley's proposed 6.5 percent rate for the top bracket, said Del. Brian J. Feldman (D), chairman of the Montgomery House delegation, the state's largest.


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