The budget was expected to be an earth-shaker this year, with legislators nervous about Reaganomics and the state's ability to respond. But here the assembly departed radically from tradition. Instead of performing major surgery on the governor's $6.2 billion budget, as is their custom, the appropriations committees barely made a minor incision. And they left some key election-year spending in place, including a 9 percent salary increase for state employes whose wages had been frozen for two years.
Reaganomics made its presence felt in other ways, however. Wary of the state's shrinking share of federal revenues, some legislators came up with a proposal to allow Maryland to vary from federal tax law and continue to collect certain corporate depreciation taxes that can be deducted under new Reagan-backed tax laws. These measures, known as "decoupling," would have ensured that hundreds of millions of corporate tax dollars would flow into the state treasury during the next five years.
Hughes spent several weeks trying to decide his own position on decoupling and finally supported it, although cautiously. Other proponents argued more vocally that, while raising the gasoline tax and interest-rate ceilings for consumers, the least the legislature could do was shift some of the burden to corporations. But the fiscally conservative Senate Budget and Taxation Committee was unenthusiastic and conference committees failed to reach a compromise on the issue. Hughes did not intervene.