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Analysts See Shades of Virginia as Glendening Rival Calls for Tax Cuts
By Charles Babington
With Maryland Republicans calling for new tax cuts, Gov. Parris N. Glendening's main Democratic rival added to the chorus yesterday, raising the likelihood that tax reduction will be a central issue in next year's race for governor.
Harford County Executive Eileen M. Rehrmann (D), who hopes to deny Glendening his party's renomination, called yesterday for eliminating a state tax on real estate that generates nearly $240 million a year. Several analysts said she appeared to be borrowing a campaign page from Virginia Gov.-elect James S. Gilmore III (R), who called for eliminating that state's unpopular personal property tax on automobiles -- a tax Maryland does not have.
Some moderates and liberals, however, already are condemning tax-cut fervor, saying school construction and other needs are more justified. And political analysts warn that Maryland voters may not embrace the cutting of a little-known property tax with the fervor Virginia voters embraced elimination of a hated car tax.
Noting reports this week that Maryland expects a budget surplus of $311 million next year, Rehrmann said some tax relief is appropriate.
"This surplus is burning a hole in the governor's pocket," Rehrmann said. "I urge the governor to resist the temptation to spend every dime of available revenue on election-year politically popular programs."
Rehrmann, who is portraying herself as a fiscal conservative, called for eliminating the state tax of 21 cents per $100 assessed value on real estate. Local governments assess a much higher rate, and Maryland is one of only nine state governments that tax real estate, Rehrmann said. Without the state levy, a taxpayer with a home valued at $125,000 would save $105 a year, she said.
The state tax, which is earmarked for debt reduction, is set annually by the governor and the Board of Public Works, which he heads. Rehrmann said the governor could stop collecting the tax immediately, without legislative action.
Glendening declined to address the details of Rehrmann's plan but said in a statement that he is preparing a 1998-99 budget that will be "prudent" and "respond to statewide needs in the areas of education, children's health and job training."
Glendening noted that the 1997 General Assembly, with his support, enacted a 10 percent cut in the personal income tax, to be phased in over five years. That cut, which will cost state coffers about $1 billion over five years, "was done in a responsible, affordable manner," Glendening said.
Rehrmann isn't the only Maryland gubernatorial challenger calling for a new round of tax relief. Ellen R. Sauerbrey, the 1994 Republican nominee who championed deep cuts in the income tax, called on Glendening this week to accelerate the tax reduction already approved by the legislature.
Some campaign analysts, however, warn that tax-cut proposals can backfire if voters think a candidate is being irresponsible or deceptive.
"People realize that you're going to pay for services somewhere," said pollster Del Ali, of Mason-Dixon Political/Media Research Inc., of Columbia. He said that Virginia is considerably more conservative than Maryland and that Rehrmann may be deluding herself if she thinks Gilmore's blueprint will succeed in Maryland.
Ali added, however, that Glendening could sharply undermine Sauerbrey, Rehrmann and other 1998 challengers if he crafts a new tax cut that appears responsible.
"I think Glendening and the Democrats should carefully examine a tax cut," Ali said. He said that Glendening "took the tax-cut issue away from Ellen Sauerbrey" by endorsing the 10 percent income tax reduction and that "he could do an absolute slam dunk" by using Maryland's bright budget forecast to rationalize a new tax cut.
Such talk infuriates liberals and moderates who have chafed as Maryland has trimmed health benefits for the poor and demanded that more welfare recipients find jobs. Some have other designs on the budget surplus, like using it for school construction.
Proposing a new tax cut "is like the hucksters of the 19th century saying snake oil is the cure for whatever ails you," said state Sen. Brian E. Frosh (D-Montgomery). "Now, it's tax cuts that will cure everything."
"Eileen has built a reputation as a fiscal conservative, but this [proposal] is anything but that," Frosh said. Maryland should keep a healthy budget surplus in case the stock market plunges or other economic conditions sour, he said.
Rehrmann's tax-cut proposal could cause a problem for Democrats such as Montgomery County Executive Douglas M. Duncan, who has feuded with Glendening and hinted that he might support a challenger. Her tax-cut plan would make it harder for Montgomery and other counties to get the extra school construction money they want.
The usually voluble Duncan declined to comment on Rehrmann's proposal last night.
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