Gov. Harry Hughes' $68 million tax and spending packages, proposed only four days ago as a way of bolstering sagging state revenues and funding a pay increase for state employes, was shredded and all but declared dead today by committees in both the House and Senate.
The legislative actions, if sustained, will force Hughes to chose between hastily revising or resubmitting his fiscal package to the General Assembly or abandoining his hope of giving each of the state's $65,000 employes a $500 raise.
At the same time, today's events indicated that, with only two weeks remaining in the legislative session, the governor is trapped between opposing interests in the House and Senate, further complicated by factional and regional disputes, that may prevent him from winning support for any broad fiscal measures.
Hughes' press secretary, Gene Oishi, said late today that the governor had made "no definite decisions" on whether to submit another plan. "We'll be exploring alternatives and meeting with the legislative leadership," Oishi said. "The main objectives remain the same -- increasing transportation funds and improving the general funds situation by transferring [revenues]. We will try and find some ways of meeting the [legislators'] objections."
Amid all the bad news, Hughes did win several victories tonight on the Senate floor where major cuts in the budget proposed by the House and the Senate budget committee were restored. After intensive personal lobbying by Hughes, the Senate voted to reverse a $15 million deferment in Medicaid funds that administration officials said would take 10,000 poor people out of the program.
The Senate also voted to restore dozens of jobs cut from state departments and a $500,000 cut from the University of Maryland. The actions meant that the budget will now likely go to a House-Senate conference committee with most of Hughes' priorities intact in the Senate version.
The governor's major troubles came when the Senate Budget and Taxation Committee first failed today to approve a proposed increase in the gasoline tax, then voted to reject all of the spending measures in Hughes' program, including the $25 million pay raise and $12 million in education aid.
Committee members said they could not accept Hughes' method of financing the new appropriations, which would involve transferring $30 million from the state's special transporataion fund to the general program account. They called for a new package that would pay for the raises and aid with other new revenues. Late tonight the panel's action was upheld on the Senate floor with little objection.
Meanwhile the House, at the direction of Speaker Benjamin L. Cardin, took a different approach, dismantling Hughes' tightly woven system of bills and appropriations rather than rejecting it. The Ways and Means Committee considered legislation drawn up under Cardin's supervision that would separate the two education aid programs from the employes' pay raise and the major tax proposals and provide them with their own independent funding.
Cardin's plan would double a $7 million one-time revenue measure in Hughes' package that would require banks to turn over abandoned accounts to the state. This $14 million would be dedicated solely to the funding of $8 million in "targeted" education aid to needy local school districts and $5 million in funds for state community colleges.
The move by Cardin, the acknowledged master of fiscal politics in the legislature, was widely viewed as an attempt to save the education funds -- a high priority of the Baltimore City delegation -- from the factionalism and controversy that so far is destroying the rest of Hughes' package.
The Ways and Means Committee also voted 21 to 1 to pas one of the two major taxes in the governor's package, a surcharge of up to six cents a gallon on the gasoline taxes paid by trucks that use state roads. The panel, which initially developed the revenue measure and was widely expected to vote for it, nevertheless reduced the proposed new tax so that it would raise only $12 million next year -- $6 million less than Hughes planned.
By the end of the day, Senate leaders were flatly declaring that Hughes' package, announced as a solution to severe funding problems for state transportation and general fund programs both next year and for years in the future, was dead. "I don't think there's any question that it won't go," said Budget and Taxation Committee Chairman Laurence Levitan (d-montogmery). "I think he's got no choice but to come up with something else if he's going to do something for employes."
Levitan said he still expects his committee to approve a rise in the state gasoline tax, but insisted Hughes would not be allowed to transfer revenue from it to provide employes' pay raises. Budget panel members believe Hughes should not make such a transfer because all the new revenues are needed for state and road construction projects, and because they do not want the gasoline taxes to be linked, even indirectly, with state employes' pay.
Levitan, who proposed the increased gasoline levy earlier this year after Hughes initially backed away from such a move, was one vote short of passage in his panel today, and said he hoped to pick up that vote in overnight negotiations.
However, the Senate's philosophy on the gasoline tax issue has long been opposed by Cardin and House Ways and Means members, a gas tax increase that is not linked to increased general funds "might be unacceptable" in the House, Cardin said today.