A Belated but Mighty Lobbying Effort Against the New Computer Services Tax

Thomas C. Carpe, a 33-year-old information technology contractor with a ponytail, was among several dozen strangers to Annapolis who temporarily took over the foyer of a Senate committee room yesterday as lawmakers convened for a long afternoon of unrelated hearings.

The intended message was simple: The computer services industry might have been "asleep at the switch," as Carpe put it, when the legislature passed a tax on computer services during its special session in the fall. But this session, the propeller heads are paying attention -- and in large numbers -- as lawmakers consider repealing the tax.

"I hear this kind of turnout is not typical," Carpe told a reporter. "This is my first time to Annapolis, so I'm not sure what's normal."

Yesterday's show of strength outside the Budget and Taxation Committee room was part of a full day of lobbying that organizers estimated brought as many as 300 computer services industry executives and their employees to the capital.

Also on the itinerary was a news conference featuring sympathetic legislators in what many acknowledged is an uphill battle in a 90-day session that just passed the halfway mark.

"I'm shocked, actually, about how many people are here," Sen. Robert J. Garagiola (D-Montgomery) told a crowd in a hotel meeting room that spilled out down the hall and up a nearby flight of stairs. "We have a lot of time between now and the 90th day."

The new levy -- an extension of the state's 6 percent sales tax to computer services -- is set to take effect July 1 and is estimated to yield $200 million a year in revenue for the state. And therein lies the rub.

Because of a soft economy that is resulting in lower-than-expected tax collections, lawmakers are talking about cutting $200 million to $300 million from next year's proposed budget. Even some legislators who question the wisdom of taxing an emerging industry such as computer services are reluctant to dig an even deeper hole by repealing the tax.

And there isn't much appetite for finding other things to tax instead after last fall's special session, during which lawmakers raised taxes by $1.4 billion a year.

"We can't afford to cede to businesses $200 million in revenue without an alternative," Senate President Thomas V. Mike Miller Jr. (D-Calvert) said yesterday.

Garagiola told the assembled industry representatives that it might take a combination of cuts and new revenue to make up for the missing $200 million, but he conceded: "I'm still searching to try to find that combination."

As he stood outside the Senate committee room yesterday, Carpe was more focused on how to make ends meet for his family than for the state.

The "poorly thought out" tax, he suggested, could cause the small establishment he runs in Baltimore to slump if businesses in the state cut back on their use of computer services after the tax takes effect.

"Now I'm talking with my wife about whether we should sell our house and move to another state," Carpe said.

He said he remains cautiously optimistic that the legislature will recognize it made a mistake in the haste of a special session and repeal the levy. But if not, Carpe said he's prepared to hold candidates who do not help the industry accountable in the next election.

"I'm going to have a long memory about this," he said.