The president of the Maryland Senate called on Gov. Robert L. Ehrlich Jr. yesterday to abandon his pledge to veto a major tax increase, saying Ehrlich's plan to legalize slot machines would raise far too little cash to plug a growing hole in the state budget.
Senate President Thomas V. Mike Miller Jr., Ehrlich's most influential ally in the battle to push slots legislation through a reluctant General Assembly, said that even if it passes, "we're still going to have to come up with a tax to deal with our budget shortfall."
Miller (D-Prince George's) said his "preferred tax" would be a temporary "surcharge on people with extremely high incomes," a proposal that could raise as much as $300 million in the fiscal year that begins in July.
But Miller said he is open to other tax increases, including a plan pushed by slots backers in the House to raise as much as $580 million next year by adding a penny to the sales tax.
Ehrlich (R) has vowed to veto any increase in the sales or income tax. Asked whether he would sign a bill that temporarily raises taxes on the wealthy, he said, "Obviously, that's nothing that would excite us very much."
But he did not make his usual veto threat. Asked to clarify, spokeswoman Shareese DeLeaver said: "This is Act Three of the legislative session, and deals are being made. But Governor Ehrlich has a predisposed opposition to sales or income taxes."
Until yesterday, Miller also had ruled out the idea of major new taxes.
But in the past few days, the Senate has patched together a new version of Ehrlich's slots bill that backers believe will pass the Senate this weekend.
Now a growing band of slots supporters is pushing Ehrlich to accept a major tax increase to win support for the gambling proposal in the House, where Speaker Michael E. Busch (D-Anne Arundel) is fighting to block slots and advocating new taxes as an alternative source of revenue.
"The speaker has got his heels dug in. The governor has got his heels dug in. To solve this situation, everyone has got to come together and not just speak, but listen, and put a plan of action into effect," Miller said.
With just over two weeks remaining before lawmakers' scheduled April 7 adjournment, the Senate yesterday opened debate on Ehrlich's slots bill, which has been heavily rewritten by Miller and other Senate leaders.
Like the original proposal, the new bill would legalize slot machines at Pimlico racetrack in Baltimore, Laurel Park in Anne Arundel County, Rosecroft Raceway in Prince George's County and a track yet to be built in Western Maryland.
Except for Western Maryland, which would have 1,000 machines, each of the sites would be authorized to install 3,500 slots.
Two major changes from Ehrlich's bill: The rewritten legislation would require each track owner to pay a $5 million application fee, rather than a $100 million licensing fee, dramatically reducing the amount of money available to help with the current budget crisis.
In addition, the new bill would require track owners to comply with local zoning laws, meaning the new slots facilities would be unlikely to open until 2005.
According to preliminary legislative estimates, the state could count on only about $60 million from slots in 2005 and about $350 million in 2006 under the new bill, compared with revenue shortfalls expected to approach $1 billion each year.
"I'm not making a clarion call for [new taxes]," Miller said. "But there has to be something else for next year."
Despite the shifting fiscal outlook, House Minority Leader Alfred W. Redmer Jr. (R-Baltimore County) urged Ehrlich to resist compromising his no-major-taxes pledge.
"The Republican caucus is going to hold firm," Redmer said. "We're willing to do slots. But other than that, we want to see budget cuts."
Meanwhile, a divide over slots deepened in the legislative black caucus, a critical bloc of swing voters.
Two days after influential black lawmakers tried to sway their colleagues with a poll showing that their constituents support slot machine gambling, U.S. Rep. Albert R. Wynn (D-Md.) sent a letter to Prince George's lawmakers urging them to vote against the slots bill.
Wynn argues that the county would benefit far more from a full-blown "resort casino" with "upscale retail and quality dining options" at National Harbor than from "a slots barn" at Rosecroft Raceway.
Slot machines at racetracks are expected to produce an estimated $1.5 billion a year, with the bulk of the money -- 46 percent -- going toward a massive increase in state aid to public schools.
About 39 percent -- or nearly $595 million a year -- would go to track operators, who would be required to spend at least $150 million to build a slots facility and create at least 500 full-time jobs.
Staff writer Craig Whitlock contributed to this report.