Democratic leaders in the Maryland House of Delegates backed away from a penny increase in the sales tax yesterday, saying they will seek to rely on budget cuts and more politically palatable taxes to balance the state budget.
House Ways and Means Committee Chairman Sheila Ellis Hixson (D-Montgomery) said she drafted a bill to increase the sales tax from 5 percent to 6 percent, but that she would not include the bill in a package of tax proposals she intends to present Friday.
Raising the sales tax is "certainly a fallback position," Hixson said. "But if the governor wants to veto it, we'd hate to balance the budget on that."
The move comes less than a week after Republican Gov. Robert L. Ehrlich Jr. blasted Democratic lawmakers for what he called "tax and spend" policies that have allowed state spending to spiral "out of control."
House Speaker Michael E. Busch (D-Anne Arundel), who opposes Ehrlich's plan to erase a record budget shortfall by expanding legalized gambling, had planned to introduce an array of tax options. They included an increase in the sales tax, an alternative way to raise the $450 million Ehrlich has said the state would get from slots.
Ehrlich has vowed to veto any increase in the sales or income taxes. After the governor's comments last Thursday, House leaders put the brakes on their tax package. Yesterday, they said it will move forward but without the sales tax bill.
"We're going to have a briefing on taxes," Busch said yesterday. But "I'm not going to ask the Democrats to vote for a tax that the governor is going to veto."
Still on the table, Hixson said, are proposals to raise the tax on gasoline, to tax HMO premiums and to close "corporate loopholes" in current law.
Yesterday, House leaders began reviewing a list of potential budget cuts that provide an alternative for plugging the gap Ehrlich would fill with revenue from slots.
The list, which mirrors one being circulated in the Senate, includes proposals to slash some of Ehrlich's top priorities, such as Medicaid funding, aid to local governments and aid to historically black colleges.
"There are two very different approaches in Annapolis today to fixing this problem. Here's theirs: It guts local government and slashes student aid," said Ehrlich spokesman Paul E. Schurick. "These are unacceptable cuts, and they're unnecessary cuts when there is a far more logical alternative in video lottery terminals," known as slot machines.