When Maryland Gov. Robert L. Ehrlich Jr. climbed aboard a tall ship moored in Annapolis Harbor yesterday and signed into law his landmark initiative to reduce pollution in the Chesapeake Bay, he used the moment to proclaim his administration's first environmental triumph.
The bill-signing ceremony did nothing, however, to point onlookers to what might be the most surprising element of the law: how the state will pay for it. To undertake a massive overhaul of the state's wastewater treatment plants, Ehrlich will impose a $30-a-year surcharge on virtually every Maryland homeowner.
Branded the "flush tax" by Democrats, the sewage and septic tank charge represents the latest in a growing list of taxes and fees imposed by a governor who has repeatedly told Marylanders he believes they already pay too much in taxes. Last year, Ehrlich raised $165 million by adding 5 cents to the property tax rate. This year, legislative analysts say, the governor's initiatives include $200 million in increased user fees, which will be felt in some fashion by every resident who registers a car, files a tax appeal or pays a sewage bill.
The increased burden under the Republican governor has already outpaced those of the past two Democratic administrations. In 1992, Gov. William Donald Schaefer approved $306 million in sales, cigarette and income tax increases to help weather a recession. Parris N. Glendening took advantage of a robust economy during the next eight years to reduce the annual tax burden by $575 million, according to an analysis by the state Department of Legislative Services.
Ehrlich's supporters say that although those numbers might be correct, understanding the full story requires looking at both sides of the ledger. They point to Ehrlich's efforts to cut state spending, which escalated under Glendening, and to Ehrlich's campaign pledge to hold the line on income and sales taxes.
Maryland Budget Secretary Chip DiPaula Jr. said Ehrlich has long believed that there is a right time and place for certain taxes and, more often, for user fees.
"Some people lump them together, but there's a tremendous difference between the two," DiPaula said. "A user fee only funds the specific service being provided."
That fact, he said, blunts the sense that taxes are being sucked into a bureaucratic black hole and instead lets residents know their money is being put to a specific enterprise -- such as cleaning up the Chesapeake Bay -- that, presumably, they will support.
George W. Liebmann, executive director of the Baltimore-based Calvert Institute for Policy Research, a conservative think tank, said there is another reason that "you're seeing a conscious effort by this governor to go the user fee route," and that has to do with politics.
"Clearly, I think he's doing something that is politically convenient," Liebmann said. "But it also is good policy."
From a political standpoint, user fees are just about "the only thing fiscally conservative people can stomach," said Sen. J. Lowell Stoltzfus (R-Somerset).
He said that is the case with the environmental initiative Ehrlich signed yesterday. The measure is expected to raise $70 million a year to finance upgrades to the state's 66 largest sewage treatment plants. The new technology is expected to significantly reduce the amount of nitrogen dumped into the bay.
"There was such strong support for this -- I think polling showed it was more than 80 percent of Marylanders -- that I don't think there will be significant ramifications," Stoltzfus said.
Democrats, though, say there will be political consequences for Ehrlich's user fee strategy.
Josh White, the Maryland Democratic Party's executive director, said the steady succession of increases have at a minimum cost the governor his right to campaign as an anti-tax candidate.
"If he does, he's a fraud," White said. "Marylanders are being nickeled and dimed to death under this governor."
The nickels and dimes are coming by way of an increase to the state's vehicle registration fee, under which drivers would pay an average of $128 every other year to register their cars, up from $81. Truck and sport-utility vehicle owners would pay $180 every two years, up from $108. There are also new fees for owners of rental properties with lead paint, for health clubs, for various services at the Motor Vehicle Administration and for those filing cases with the state's Office of Administrative Hearings.
White said the new costs that may carry the most insult to Maryland residents are ones that lighten the burden facing businesses and corporations and shift it to residents.
Ehrlich's decision to grant amnesty to corporations that the state's highest court ruled had been dodging taxes by shifting profits to holding companies in Delaware will relieve those companies of $90 million in back taxes owed -- and provide refunds of about $8 million to some firms that had paid up.
And his decision to veto a measure that would have raised corporate income taxes by 10 percent to help hold down tuition costs at state universities has stirred strong words from Democrats.
Sen. Brian E. Frosh (D-Montgomery) said that when the governor was forced to choose between parents and corporations, he went with the businesses. "It's either a tax on students, or it's going to be a small increase in the corporate income tax," Frosh said. "How he could make that decision, I just don't know."
White said Democrats don't believe taxpayers will appreciate the distinction between taxes and fees in the manner predicted by Republicans. And Steve Hill, director of the nonpartisan Maryland Budget and Tax Policy Institute, agreed.
He said that although policymakers want to keep their pledges of no new taxes, "people aren't fooled when they see their car registration fees go up."
Moreover, he said, Ehrlich's contention that Maryland residents are already taxed too much doesn't match findings in a state-by-state comparison of the tax burden facing the average resident. Based on census data, Hill said, Maryland's tax rates have consistently ranked as one of the least burdensome in the country.
"The truth is that when taxes are increased, or are cut, as happened under Glendening, I don't think any of us really noticed or cared all that much," Hill said.
Nevertheless, Liebmann said, he expects Ehrlich to continue making use of fees to bring in more money. Toll lanes have become a focus of several Ehrlich transportation initiatives, tuition has become a means to finance higher education and, Liebmann said, a number of other smaller fees are ripe for an increase.
And, of course, there is the ultimate user fee, Liebmann said, referring to a tax Ehrlich would like to impose on the proceeds of slot machine gambling, if he can win legislative approval to make the machines legal.
"There you're talking about a tax on the imprudent for the benefit of the prudent," Liebmann said. "Now who could possibly be opposed to that?"