Md. Tax Package Nears Approval

Slots Legislation Squeaks Through

Maryland lawmakers were on the verge last night of passing about $1.4 billion in annual tax increases and a public referendum on legalizing 15,000 slot machines as a far-reaching special session of the General Assembly hurtled to a close.

Passage of the bills would resolve two long-festering issues: chronic budget problems created by passing a landmark education law five years ago without funding to pay for it and the perennial debate over slot machine gambling.

By midnight, two bills needed to execute a referendum on slots had been sent to Gov. Martin O'Malley (D), and the House had approved part of a tax package. The Senate was still to consider that measure, while deliberations continued on a bill to offer health insurance to 100,000 poor and uninsured adults without Medicaid coverage.

With the actions, O'Malley was expected to get most of what he wanted when he called the session to close a projected budget shortfall of at least $1.5 billion and raise revenue for transportation and health-care priorities.

"You've got to give Governor O'Malley a lot of credit for going out and, in essence, leading with his chin," said House Speaker Michael E. Busch (D-Anne Arundel), who advised against holding the high-stakes session. "The governor took it all on his shoulders, and the legislature pretty much followed. . . . We've basically, in my estimate, taken a full legislative year of work and condensed it into 20 days."

Republican leaders said the session was more likely to remembered for its frantic pace and for what would arguably be the largest tax increase in Maryland history. Legislation expected to be given final passage before adjournment included increases in sales, corporate income, tobacco and vehicle titling taxes, as well as an overhaul of the personal income tax system that would result in high-end earners paying more.

"Common sense and reason went out the window just to give the governor a victory," said Senate Minority Leader David R. Brinkley (R-Frederick). "I think this whole thing has been a debacle, and taxpayers are stuck holding the bill."

Although the increase in tax revenue would be the state's largest in terms of total dollars, taxes were raised by a far greater percentage in the late 1960s. From 1967 to 1968, taxes paid by Marylanders went up by more than 30 percent; the legislation expected to pass last night would increase taxes less than 10 percent, legislative analysts said.

Lawmakers were also expected to approve legislation before adjourning to direct O'Malley to trim spending in next year's budget by about $550 million, including slowing the growth in education spending.

Major bills pushed by O'Malley cleared the Senate more than a week ago, but House leaders struggled to round up votes for several bills, and at times last week, the session seemed close to unraveling.

Momentum emerged in recent days, however, as the House passed a pair of bills needed to execute a proposal by O'Malley to hold a referendum next November on legalizing slots at locations in Baltimore and in Allegany, Anne Arundel, Cecil and Worcester counties.

The second bill, which provided details needed to implement a slots program, passed at 1:40 a.m. yesterday, garnering 71 votes, the minimum needed for passage in the House.