ANNAPOLIS, JAN. 30 -- Maryland Gov. William Donald Schaefer will seek higher taxes on income, sales and personal property as part of an $800 million tax-restructuring plan that he will send to the General Assembly by early next week, aides said today.
Schaefer will meet with top aides and Lt. Gov. Melvin A. Steinberg today to put the final touches on legislation derived from the report of his Commission on State Taxes and Tax Structure, led by Montgomery County lawyer R. Robert Linowes, according to Steinberg and administration officials.
After weeks of debating whether to seek the entire package and when to propose it to lawmakers, Steinberg, who is Schaefer's lieutenant on the tax issue, said he decided to move this week to avoid a feud with legislators over their approaching deadline for introducing legislation.
Steinberg said he hopes to win approval of enough of the Linowes plan to begin school and road improvements and bolster the financially strapped state's budget. A proposed 2 percent tax on the "blue book" value of boats and cars is perhaps the plan's most unpopular recommendation.
From Maine to California, state legislatures are wrestling this winter with budget problems similar to Maryland's.
In deciding to push for higher taxes, Schaefer is choosing to do what many other governors, such as Virginia's L. Douglas Wilder, have shied away from.
Facing revenue shortfalls and program cuts, Schaefer is hoping lawmakers will swallow a tax increase to maintain the quality of state and local services.
The Linowes proposal is the second major tax package being offered this year by Schaefer, who is asking for a 5 percent sales tax on gasoline to replenish the state's transportation trust fund. Maryland already taxes gasoline 18.5 cents a gallon.
The Linowes proposal is controversial not only because it would raise taxes but also because it would shift wealth from richer suburban jurisdictions, particularly Montgomery County, to underwrite school and government programs in poorer parts of the state.
Steinberg said the bill will contain all the recommendations of the Linowes Commission, which studied the state's taxes for three years. "We're not adding anything and not taking anything away," the lieutenant governor said. "It's important we walk out of this session with financial relief . . . . If there wasn't a financial crisis, a bill like this should have at least a year's study."
Although Schaefer will be seeking passage of the entire $800 million tax package, gubernatorial adviser Daryl Plevy said the administration "recognizes parts of it are politically unpopular." She added that the governor intends "to work with the legislature" toward a compromise.
If approved by lawmakers, the legislation would raise the state's sales tax from 5 to 5.5 cents on the dollar, extend the sales tax to an array of services such as lawn care and shoe repair, raise $100 million through tax increases on upper-income people and families and impose an annual 2 percent tax on the value of cars and boats. It also would provide at least temporary property tax relief for homeowners.
The bulk of the additional revenue, about $800 million, would be used to bolster schools and roads, particularly in Baltimore and poor rural counties. All county governments would receive additional revenue, but Baltimore would be the biggest winner, receiving $150 million more.
Since the Linowes plan was released last fall, Schaefer and other top officials have been conducting a quiet but increasingly aggressive campaign to build support for a proposal they say would make Maryland's tax code fairer.
But legislators, particularly those from the Washington area, have been skeptical of raising taxes during a recession and on the heels of an election that many read as reflecting discontent with government spending.
Plevy and Steinberg said they have sensed a gradual shift, with some lawmakers now debating not whether to raise taxes but which ones to increase.
Steinberg said the administration had considered withholding the latest tax legislation until lawmakers had a chance to debate the governor's upcoming budget proposal, a document the governor's aides say proves a tax increase is needed to avoid deep spending cuts. There also was talk of seeking only part of the Linowes plan this year so its major components could be studied longer.
But after a failed attempt to start informal talks with House and Senate leaders this week, Steinberg said, it was decided to introduce the entire plan.
"The legislative process is a double-edged sword," Steinberg said. "They have to act responsibly, and I accept that. At the same time, we have to raise additional revenue."