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Tax Hike Squeaks Through Md. Senate

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By John Wagner and Philip Rucker
Washington Post Staff Writers
Saturday, November 10, 2007

A sharply divided Maryland Senate approved a $1.4 billion annual tax increase yesterday, the largest component of a plan to close a gaping state budget shortfall that Gov. Martin O'Malley is pushing lawmakers to adopt in a special legislative session now two weeks old.

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The bill calls for raising the sales, tobacco, corporate income and vehicle titling taxes and overhauling the state's income tax brackets. High-income earners would pay more, but in a nod to concerns raised by Montgomery County officials, the Senate scaled back two top income tax rates proposed by O'Malley (D).

The spotlight turns to the House of Delegates, which plans to pass its own versions of the tax bill and several others muscled through the Senate in recent days, with the aim of closing a shortfall of at least $1.5 billion and raising more money for transportation and health care.

That will leave the two Democratic-led chambers several significant differences to sort out next week. But leaders from the House and Senate said they hope to bring a session that many predicted would end in chaos to a successful close.

Republican senators, who sought to kill the tax bill through a filibuster, warned that the public would long remember what one characterized as "an orgy of taxation." Democratic supporters said the bill, approved 24 to 23, would allow lawmakers to balance next year's budget without deep cuts to education, health care and other crucial services.

Nine Democrats joined all 14 of the chamber's Republicans in voting against the tax bill, which prompted some of the session's most vitriolic debate.

"This reaches into everybody's pockets," said Sen. Andrew P. Harris (R-Baltimore County), who called the bill "the largest tax increase in Maryland history."

Sen. James C. Rosapepe (D-Anne Arundel) said he was voting for the legislation "with pride" because he thinks it would help working families maintain their quality of life. "It was designed to protect funding for local public schools, hold down tuition for college students, clean the Chesapeake Bay," he said.

Senators also voted 32 to 15 yesterday to direct O'Malley to trim $515 million from next year's budget -- in part by slowing planned growth in education spending and deleting 1,000 vacant jobs. They voted 30 to 17 for a bill to broaden access to health care.

That legislation would expand Medicaid coverage for adults and offer subsidies to encourage small businesses to provide insurance benefits for employees. Sen. E.J. Pipkin (R-Queen Anne's) accused Democrats of "fiscal insanity" for passing a measure that would cost the state $250 million a year when it faces a budget shortfall.

Senators passed two bills late Thursday that would allow 15,000 slot machines at five locations if voters approve the measure in a referendum next November. The slots plan could eventually yield $650 million a year for the state, legislative analysts have said.

In an e-mail distributed by his office yesterday, O'Malley credited the Senate with "moving us closer to solving a problem the state has ducked for years."


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