Tax Bills Passed, Bargaining Begins

By John Wagner and Ovetta Wiggins
Washington Post Staff Writers
Monday, November 12, 2007

Leaders of the Maryland House of Delegates offered one another congratulatory embraces early yesterday morning after passing two tax bills that would raise $1.4 billion a year to help close a budget shortfall and pay for transportation and health-care priorities. But lawmakers predicted several more long days ahead as they try to bring a special session called by Gov. Martin O'Malley (D) to a close this week.

The House, which wrapped up a six-hour debate on its tax bills shortly after 1 a.m. yesterday, must reconcile its legislation with that of the Senate, which passed a comprehensive tax bill Friday. The Senate and House plans differ on a number of issues, including the top income tax rates and expansion of the sales tax.

And the House has yet to take up a measure supported by O'Malley and the Senate that could prove even more challenging to push through the chamber: a bill calling for a referendum next year on placing up to 15,000 slot machines at five locations in Maryland.

House Majority Leader Kumar P. Barve (D-Montgomery) said he is confident that the session, which enters its third week today, will come to a successful end.

"There are differences," Barve said. "But we haven't come this far not to accomplish this."

Besides the slots legislation, the House plans to take up bills this week to expand access to health care and to direct O'Malley to cut at least $500 million from the budget next year.

Versions of both measures passed the Senate last week in a special session called to close a projected budget shortfall of at least $1.5 billion next year.

Senate President Thomas V. Mike Miller Jr. (D-Calvert) predicted that deliberations would "get more difficult" this week as the two chambers try to reconcile their bills.

After several delays this weekend, 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 two bills would increase the taxes on corporate income, tobacco and vehicle titling.

Republican leaders blasted Democrats for both the magnitude of the tax increases and for a rushed process.

"We don't know what this bill is," said House Minority Leader Anthony J. O'Donnell (R-Calvert). "We've got taxes in, taxes out. We don't know what the bill does."

Democrats countered that they were passing fiscally responsible measures that would fix a long-festering problem in Annapolis: spending more on programs than the state raises in revenue.

Del. Dereck E. Davis (D-Prince George's) said he was "proud" to vote for the tax bills. "I'd rather lose this seat, knowing I did what's right," he said.

The fate of the bill containing the income tax changes hung in the balance for several hours Saturday, in large part because of reservations voiced by Montgomery County lawmakers. Their jurisdiction is home to more high-income residents than any other in Maryland.

Under the House bill, most filers would pay less in income taxes under restructured brackets and exemptions. But about 7 percent of higher-end taxpayers statewide would pay more, House Speaker Michael E. Busch (D-Anne Arundel) told reporters.

A "whip count" taken Friday night by House leaders showed that a majority of Montgomery's 24 delegates opposed the bill and that support in the chamber fell short of the 71 votes needed for its passage.

Nineteen members of Montgomery's all-Democratic delegation wound up voting for the bill, however. Only four, including Del. Brian J. Feldman, the chairman of Montgomery's House delegation, voted against the legislation. One delegation member was absent.

Some Montgomery lawmakers suggested that the shift was driven by an alternate proposal to balance the budget that was floated Saturday afternoon by House leaders. That plan withdrew $460 million in new transportation spending, a major priority for the Washington area.

The alternative also would have capped the income tax rate that county governments could impose on residents, a move that would have hit Montgomery particularly hard. Also absent from the plan was funding for the so-called geographic cost of education index, a formula designed to send additional dollars to counties, including Montgomery, where the cost of education is more expensive.

As the House turns its attention to slots this week, several lawmakers said it was difficult to predict where the debate will lead. The House has been far less friendly to slots legislation in recent years than the Senate.

The Senate has endorsed O'Malley's plan to place slot parlors in Baltimore City and in Allegany, Anne Arundel, Cecil and Worcester counties, pending approval of voters next November. Under the legislation, two horse-racing tracks would be among the sites eligible for but not guaranteed licenses.

"I think there will be a lot of debate with people wanting to switch areas," said House Speaker Pro Tem Adrienne A. Jones (D-Baltimore County).

Among the alternatives being pushed by lobbyists engaged in the debate is a Baltimore County site.

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