The Maryland General Assembly voted yesterday to raise taxes on business to help balance the state's $22.4 billion budget, beating back a Republican effort to talk the tax bill to death in the final hours of the 2003 session.
The House and Senate gave overwhelming approval to the bulk of the budget package, which also would trim spending and rely on one-time accounting maneuvers to keep the state afloat in a sagging national economy.
But a partisan battle broke out over the tax bill, which would raise about $135 million by taxing HMO premiums, increasing the tax rate on corporate income for three years and closing a loophole that allows some companies to avoid paying Maryland taxes by registering in Delaware.
Gov. Robert L. Ehrlich Jr. (R) has vowed to veto the bill and make deeper cuts to state government. Senate Republicans nonetheless attempted to mount a filibuster, talking for more than an hour before Senate President Thomas V. Mike Miller Jr. (D-Prince George's) mustered the 32 votes needed to halt the debate.
In the end, not a single Republican in either chamber voted for new taxes, saying the bill punishes business while doing little to resolve the state's long-term fiscal problems. Although the budget is balanced for the coming year, the fiscal package leaves an estimated $700 million shortfall to greet lawmakers when they return to Annapolis next January.
House Minority Whip Kenneth D. Schisler railed against the Democrats who control General Assembly for choosing taxes over Ehrlich's plan to raise millions for the state by legalizing slot machines.
"You could like slots or not like slots, but if you voted against them, you gotta have a plan, and this House has no plan," said Schisler (R-Talbot).
Senate Minority Leader J. Lowell Stoltzfus (R-Somerset) argued that the tax package would cost the state thousands of jobs at a time when Maryland can least afford it. "This rapes the corporations," he said. "It is wrong."
Democrats fired back that new taxes are critical to help the state through its worst fiscal crisis in at least a decade. Republicans and their governor had better face that reality, Democrats argued, or prepare for budget cuts that would be devastating to higher education, health care and the state's neediest residents.
"It's very difficult to compromise when all we get is ideological venom coming from one side or the other," said Del. Clarence Davis (D-Baltimore) "It's time to put all this ideological hogwash to the sidelines and come together."
The House approved the tax measure 87 to 50, and the Senate vote was 28 to 19. With the budget approved, lawmakers are free to adjourn as scheduled at midnight tomorrow. But the mood in the State House was dominated more by a sense of frustration than of celebration.
Senate budget committee chairman Ulysses Currie (D-Prince George's) said the decision by Republican senators to filibuster a tax bill their governor had vowed to veto marks the beginning of a highly partisan "Newt Gingrich era" in Annapolis.
As lawmakers prepared for a final marathon meeting starting tomorrow morning, a weary-looking Miller pronounced the 2003 session something of a bust. "It's very frustrating," he said. "We had high hopes for a better session. But with the elements we have on the table right now, it's not possible to be labeled a success."
The budget includes the first general increase in taxes since 1992, when a national recession prompted Maryland lawmakers to broaden the sales tax, raise the gas tax and temporarily increase income taxes on the wealthy. Since then, Maryland has raised the levy on cigarettes, but has cut most other taxes, lowering the income tax rate, for example, by 10 percent.
Concern over the tax package grew throughout the week as Ehrlich repeatedly threatened a veto. It reached a fever pitch yesterday morning as Senate Republicans began plotting their filibuster. A lengthy filibuster would have held up work on dozens of other issues and prevented the General Assembly from approving a balanced budget, forcing lawmakers to extend the session.
As the Senate convened, its leaders stalked the floor, rounding up votes to block a lengthy debate. Republican senators, meanwhile, caucused repeatedly with administration officials and tried to bargain with Miller, offering to drop their filibuster if Democrats would approve Ehrlich's charter schools bill and kill proposals to expand the use of red-light cameras and allow Montgomery County officials to raise taxes for transportation.
The Senate president rejected those offers.
At one point, Miller summoned all 14 Republican senators into a private lounge and ordered the sergeant at arms to lock the doors. He emerged about 15 minutes later, looking tired but calm.
"We're trying to work together to bring the session to a successful close," he said. "Republicans don't want a tax increase of any kind. But the Democratic position is that taxes are the dues you pay to belong to society."
Staff writer Jo Becker contributed to this report.