House Passes Income, Sales Tax Bills After Struggle

The Maryland House of Delegates passed two major tax bills early this morning that would together raise $1.4 billion a year to close a yawning budget shortfall and pay for transportation and health-care priorities.

The Democratic-led House voted 82 to 55 for one bill that would overhaul the state's income-tax brackets. The vote was 80 to 56 on a second bill that would raise the sales tax from 5 to 6 percent. Other provisions in the legislation would increase the corporate income, tobacco and vehicle titling taxes.

Together, the two bills would raise roughly the same revenue as a bill passed Friday by the Senate. But several differences between the two chambers' plans would need to be resolved for the special session initiated by Gov. Martin O'Malley (D) two weeks ago to come to a successful close.

House Majority Leader Kumar P. Barve (D-Montgomery) said the tax bills that were passed were "highly progressive" and would protect working-class families even as the measures helped close a budget shortfall of at least $1.5 billion next year and raise $460 million a year for transportation priorities.

Republicans blasted their Democratic colleagues for pushing "massive tax increases" through the chamber in a rushed process.

"This bill will do untold damage to the economy of the state of Maryland," said House Minority Whip Christopher B. Shank (R-Washington) as debate entered its fifth hour at 11 p.m.

The start of a rancorous late-night debate was delayed for several hours as Democratic House leaders struggled to round up votes needed to pass the bills.

Montgomery County delegates, usually some of the most reliable for Democratic leaders in the House, were among the holdouts earlier in the day on a plan to overhaul the state's income tax brackets.

Although most Montgomery residents would pay lower income taxes, many in the delegation continued to express concerns about the plan's effects on high-income earners.

House leaders ran into broader opposition with a proposal to apply the state sales tax to automobile repairs, which are exempt from the levy. That provision was deleted from the legislation, along with plans to tax several other exempt services.

A plan to double the state's hotel tax was also scaled back in an effort to win support. Delegates said they heard from several hotel owners concerned about their ability to compete for convention business with other states.

Barve told reporters that Democrats were "very short" of the votes needed for both bills when the day started.