When Maryland Gov. Harry Hughes unveiled his $6.4 billion budget for 1984 to the General Assembly two weeks ago, the Montgomery and Prince George's county lawmakers were somewhat relieved. Though the budget included some tax increases that might be unpopular, the expected cutbacks did not materialize. All of the region's "sacred cows," particularly Metro funding and education aid, escaped relatively unscathed.
"We've been trying to maintain the status quo," said Sen. Howard A. Denis, the only Republican senator from the two counties. "The status quo is what we wanted, and I don't think there's anything damaging there."
The area jurisdictions were able to hold the line this year because the governor's budget is slightly over last year's budget. Also, most state aid to this region is dispersed through set mathematical formulas that the governor chose not to alter this year. For example, both counties will lose school aid because the formula is based on wealth and pupil enrollment, and both counties saw declining enrollment. But Montgomery's per-pupil allotment of state aid increases from $229 to $233, and Prince George's increases from $627 to $648.
Per capita state aid to Montgomery and Prince George's also shows modest increases under the Hughes' proposed budget. Total per capita aid to Montgomery will increase by about $24, to $294, and to Prince George's by about $21, to $357, according to the governor's figures. Local officials confirm that state aid should increase slightly.
State and local officials agreed that Washington-area residents should continue to receive about the same return on their state tax dollars. For six years, from 1977 through 1982, Montgomery has averaged a return of about 60 cents on each tax dollar paid, according to the Department of Fiscal Services. Prince George's residents have averaged about 91 cents on each dollar paid into state coffers; Baltimore City, about $1.36.
This year's relief, however, was tempered somewhat by the fear that the future may not be quite so generous. Next year, those state funding formulas for education, police and transportation aid money are all scheduled to be renegotiated in Annapolis.
The amount each jurisdiction receives for its tax dollar is expected to figure prominently in the debate when those aid formulas come up for review. Montgomery County is already trying to build its case that Baltimore City gets more than its fair share.
More pressing on the minds of local legislators now is the so-called "hostage list." Hughes, in his 1984 fiscal year's budget, included $51 million worth of programs that will be slashed if the governor doesn't get his proposed tax package through the General Assembly. Among the items is $700,000 for the mentally retarded and $8 million in Social Security grants for librarians and community college employes. That latter item alone would cost Montgomery $1.5 million to make up.
Local lawmakers are also swallowing hard at some of the governor's proposed tax increases, which may fall disproportionately on area residents.
For example, Hughes has proposed a 3-cent increase in the state's property tax, to bring in an estimated $15 million. Montgomery, with its higher-than-average property values, pays about 20 percent of the state's total property taxes; Prince George's pays about 14 percent.
Hughes has also proposed a series of alcohol taxes that could hit hard on this area. Residents in Prince George's, with the state's second-highest alcohol sales, now pay about 17 percent of the state's alcohol taxes.
Residents in Montgomery, fifth in the state in terms of alcohol sales, now pay about 8.2 percent of alcohol taxes.
Wholesalers bear the brunt of any liquor tax increases, as well as retailers who sell alcohol in large quantities. The average consumer could see slight increases of about a penny a bottle on individual purchases, unless retailers choose to absorb the increase themselves to avoid the headache of changing all their prices.
The alcohol tax proposal has drawn fire from some Prince George's delegates, who think the added tax will put liquor outlets in the county at a competitive disadvantage with liquor stores in the District of Columbia.
The stores, especially near the District line, say they have already lost business because Maryland raised its legal drinking age to 21 and the District instituted a lottery that attracts Maryland and District residents.
The problem of losing liquor business to the District is also a problem for Montgomery, where the county government maintains a monopoly on liquor wholesaling, and directly runs 20 of the county's liquor stores. In Montgomery, any lost business means lost revenue to the county, and County Executive Charles W. Gilchrist is already grappling with tight department budget ceilings and layoffs to ease a projected $11 million revenue shortfall.
Montgomery County generates about $9 million from its liquor sales each year, and John McGraw, the county's chief of retail operations, said the increased tax could cause a corresponding drop in sales.
"It could pose a tremendous problem," McGraw said.
He noted that Baltimore City, Montgomery and Prince George's account for most of the state's liquor sales, but that this region, so close to Washington, and Virginia, is highly sensitive to slight price changes. When the D.C. City Council raised its liquor tax two years ago, he noted, a sharp drop in sales forced a repeal of that tax.
"If Maryland wants to put itself in that same position, this is the way," McGraw said.
But Sen. Frank J. Komenda, chairman of the Prince George's Senate delegation, said any drop in sales would be partly offset if Prince George's and the other big liquor-selling jurisdictions get a fatter share of the tax revenues.
Currently, alcohol tax collections are disbursed proportionately among the various jurisdictions, based on how much of the tax they pay in through alcohol sales. Since the new tax bill has yet to be formally drafted, it is still not known whether the money from any increase would be similarly disbursed, or whether it would be earmarked directly to the general fund to help ease the state's projected deficit.
Some local legislators are also balking at Hughes' proposal to transfer $29 million into the general fund from the transportation trust fund, a special account used to build and repair the state's roads and bridges. Under the formula for disbursing money from that trust fund, Montgomery fares particularly well, meaning the county will be disproportionately hurt if the trust fund money is transferred.
"This whole matter of transferring $29 million out of the trust fund will not help Montgomery County," said Sen. Stewart Bainum. "We do better out of the trust fund than out of the general fund."