Senate Panel Supports Plan to Split Energy Fund Proceeds

ASenate committee backed a proposal from Gov. Martin O'Malley (D) yesterday to split the proceeds of a multimillion-dollar energy fund between electricity credits for customers and incentives to coax them to use less power.

The committee reversed a vote Tuesday that had directed the money that Maryland hopes to receive from an auction of carbon credits this fall toward relief from high electricity prices. Senators and advocacy groups said devoting all of the money to rate relief would be shortsighted because energy-efficiency programs save customers money in the long run.

Earlier this week, the committee approved another of the governor's bills, to set a statewide goal of reducing electricity use by 15 percent by 2015. Much of the reduction would come from utility programs designed to conserve power during peak times.

The full Senate and a House of Delegates committee are expected to take up the energy efficiency bills this week or early next week.

-- Lisa Rein

Senate Backs Tax Credit for Scholarship Sponsors

The Senate voted yesterday to allow Maryland businesses that sponsor scholarships for private school students to receive a state income tax credit on 75 percent of their contribution.

The credit would kick in only if the governor allocates funding in the state budget. Innovative public school programs also would qualify. But the bill, backed by the Maryland Catholic Conference, generated a heated floor debate over whether it amounts to a public subsidy of private schools. Senators quashed several attempts to weaken it before passing it, 30 to 17.

Supporters said the bill makes an existing tax incentive, a charitable deduction, a tax credit to encourage donations to programs that benefit students in public and private schools.

"This is a little tax credit," Sen. J. Lowell Stoltzfus (R-Somerset) said. "I think it's time we support them." But Sen. Delores G. Kelley (D-Baltimore County) called the credit a "sham that would chip away at public education in Maryland."

The state Department of Education could approve up to $5 million in tax credits. The bill now goes to the House of Delegates.

About 136,000 Maryland children attend non-public schools.

-- Lisa Rein

Hotel Tax for Gaithersburg Gets Senate Approval

The city of Gaithersburg could adopt a local tax of up to 2 percent on hotel rooms under legislation passed by the Senate yesterday.

Sen. Nancy J. King (D-Montgomery), the bill's lead sponsor, said city officials requested the extra revenue source to pay for police coverage and road maintenance, including snow removal, around Gaithersburg's 12 hotels, many of them newly built. Three hotels are proposed.

"It's a big thing for Gaithersburg," King said. The tax could be collected only by hotels with more than 10 rooms. It would apply to Somerset County if officials there chose to impose it.

The vote was 31 to 16, with opponents saying they were wary of tax increases.

-- Lisa Rein

House Panel Defeats Plan to Change Credit Rules

A House committee narrowly killed a proposal that would have changed the laws governing the credit industry to prohibit companies from adjusting interest rates for what critics say are arbitrary reasons, such as a customer opening additional credit accounts.

The House Economic Matters Committee voted 12 to 10 this week to reject the bill, which was introduced by Del. C. William Frick (D-Montgomery).

When consumers open lines of credit -- for example, signing up for credit cards at retail stores to qualify for discounts -- their other credit card companies are allowed to increase interest rates without telling them. The bill would have prohibited such actions.

Frick said the committee was influenced by the state attorney general's office, which wrote an opinion suggesting that such a state law could be overturned at the federal level.

"We had broad bipartisan support for the idea," Frick said. The only reservations expressed to him, he said, were over the attorney general's opinion.

If credit companies do not change their practices or if Congress does not enact federal laws regulating them, Frick said, he will introduce similar legislation again next year.

-- Philip Rucker