Glendening's Tobacco Tax Plan Permeates Budget Discussions
By Daniel LeDuc
When Gov. Parris N. Glendening proposed increasing Maryland's tax on a pack of cigarettes by $1, he said it would discourage teenagers from smoking. In an effort to persuade squeamish legislators to go along, he balanced his $8.6 billion operating budget on revenue the increased tax would raise.
The proposal has become the General Assembly's most contentious fiscal issue this year, permeating budget deliberations and vexing lawmakers, many of whom don't want to raise taxes while the glowing economy has filled the state's coffers to overflowing. The dilemma has pitted delegates against senators, health advocates against tax opponents, suburban liberals against rural lawmakers who represent tobacco farmers and cigarette merchants Virginia and Pennsylvania, which have lower taxes.
At a hearing yesterday, the Maryland Farm Bureau's Emily Wilson said that "tobacco is an engrained part of Maryland culture." She and other opponents said a tax increase would hurt tobacco farmers and wasn't necessary because there already were laws on the books forbidding minors to purchase cigarettes.
Health advocates, however, insisted that a higher tax could discourage teenage smoking significantly. And one proponent who testified, Joel Lapin, whose wife and father died of smoking-related illnesses, said, "Tobacco companies deliberately target young people."
Yet for all the debate about the tax's possible effect on teen smoking, the issue facing lawmakers has become largely a financial one.
Glendening has twice before advocated raising the tobacco tax only to see his efforts fail. This year, he used the Maryland governor's enormous budget powers -- by law, legislators can only cut his budget, not add or move money around -- to force his case.
Here's how it works: The governor's proposal would increase the tax on a pack of cigarettes 50 cents this year and 50 cents next year. That would raise about $155 million this year and, with an expected decline in smoking brought about by the tax increase, $90 million next year.
Glendening earmarked next year's money for a half-dozen building projects at state colleges and universities. If lawmakers don't pass the tax, those buildings won't be built, said Glendening's budget secretary, Frederick Puddester. That's a visible, bricks-and-mortar reminder of what not passing the tax would mean.
It's even tougher this year: Glendening poured the $155 million the tax would raise into the state's main pot of operating funds. That's a big chunk of money, and legislators would have to cut programs if they don't raise the tax.
That would compound the money juggling already facing lawmakers, because Glendening's spending proposal is about $170 million higher than a legislative cap meant to control state spending. So the legislature already is looking for ways to trim the governor's budget into compliance with the limit.
The political dilemma -- how to sell a tax increase when the state is awash in money -- is expected to deepen next month when new revenue projections are released. Most state fiscal specialists expect figures will show even more money rolling in this year than was expected in January, when Glendening released his budget. The rub is, by law, that additional money -- from the state's income, sales and other taxes -- can't be spent this year. It must be banked.
So, despite some polls showing public support for a tobacco tax increase, many legislators are squirming because of what they expect will be a hard sell to taxpayers that a new tax is needed to make ends meet while all that money is pouring in.
Political fights within the legislature add to the concern. The House of Delegates does not want to pass the tax first unless it is certain that the Senate will join on. Senate President Thomas V. Mike Miller Jr. (D-Prince George's) opposes a tobacco tax increase, though he has given some sign that he might be open to negotiation.
Meanwhile, Glendening has continued to promise additional funding to hire new teachers, boost higher education and reduce the strain on county courts. Lawmakers have submitted requests for an additional $170 million in special projects, so the financial nut that legislative budget negotiators must crack is only growing larger.
"I don't think it's a health issue anymore," said Sen. Thomas McLain Middleton, a Democrat from Charles County, where tobacco farms are plentiful. "Here we are awash with money, and yet we're talking about raising taxes and we can't get the budget under control."
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