A package of tax increases on high-income earners and a measure to build a full-fledged casino in Prince George’s County collapsed in stunning fashion late Monday in the Maryland General Assembly.

The failure to bring the tax bill to a vote all but assured that for the first time in two decades work related to Maryland’s annual spending plan would continue beyond Monday’s scheduled end to the legislature’s 90-day session.

Without passing any further instructions on spending or revenue, the state would be required to make more than $512 million in funding reductions to schools and state programs beginning July 1.

Cuts to classrooms, libraries and police in Prince George’s would top $65 million, adding 50 percent to the county’s projected shortfall. Montgomery County would lose over $41 million, exacerbating its budget gap by a similar margin.

The implosion of weeks of negotiations over the tax package, as well as another key budget measure that failed to pass, sent the General Assembly into uncharted territory.

“I’ve been here since 1966 and it’s never happened,” said Senate President Thomas V. Mike Miller Jr. (D-Calvert), referring to his earliest days in Annapolis as a legislative staffer. “We have an agreement; we just ran out of time.”

The House of Delegates attempted an unprecedented maneuver to continue the year’s 90-day session, immediately at midnight, to keep alive the scores of pieces of legislation that never received a final up or down vote. But Miller refused to have his chamber go along , saying it was of “dubious constitutionality.”

Instead, with hundreds of onlookers crowded in the State House, and bags of balloons and confetti on hand for a customary final-night celebration, the two chambers instead quietly adjourned and said they would wait in Annapolis for instruction from Gov. Martin O’Malley (D).

At a hastily assembled news conference before 1 a.m., as lawmakers shuffled out of the State House, O’Malley blasted the two chambers, led by members of his own party, for endangering spending on education, among other priorities.

“I think the people of our state have reason to expect more of our elected officials,” O’Malley said.

He gave no indication if or when he might call the General Assembly back to work.

But lawmakers on both sides of the aisle said it was simply a matter of when.

A special session looms

The last time the state failed to reach a budget deal was in 1992. It went into an extended session limited to the budget and passed a spending plan four days later.

But this year’s scenario is much different, and in ways far more complex. The legislature passed a spending plan, but without a companion revenue package or another bill that has been used since the beginning of the economic downturn to tweak spending formulas on hundreds of state initiatives and keep the budget balanced.

Technically those bills — first introduced in January, vetted in public hearings, and massaged in dozens of negotiations since — died Monday and would have to be redrafted, introduced and debated. But early Tuesday, it was unclear what the process would be to reconstitute the measures, and how close lawmakers could pick up from where they left off.

House Minority Leader Anthony J. O’Donnell (R-Calvert) warned that going into a special session would only be an opportunity for “mischief” by the legislature’s majority.

Miller said he hoped a new timeline would be an opportunity for the General Assembly to revive O’Malley’s moribund plan to raise the gas tax and to reach a deal to allow the casino in Prince George’s.

“Does this mean things like gasoline sales tax, sales tax increase could come up again? “It does mean that. It means the governor, who’s been talking about these various things for the past several days will have an opportunity to propose whatever he wants to propose.”

But at his middle-of-the night news conference early Tuesday, O’Malley became visibly angry as he addressed the gambling measure he’d already derided as a “distraction” before Monday night’s developments.

“Look, the Republic was not built on gambling gimmicks, on bingos, or on bake sales,” O’Malley said, pointing his finger toward a crush of news cameras, and microphones. “The future is not a gift, it’s an achievement. And on two important scores, the General Assembly failed to protect the important priorities that allow us to achieve a better future for our kids. One of those is education, the other is affordable college.”

As it is, the budget the general assembly passed late Monday would cut 10 percent, or more than $60 million from higher education, likely necessitating higher tuition increases at state universities and local community colleges.

Funding for grade school students would also be reduced by $111 per pupil. And grants to the state’s largest school districts would be cut entirely, accounting for nearly $129 million.

Stem cell research, bio-tech tax credits, and local law enforcement grants would be eliminated. Over 500 state jobs would be eliminated and all state agencies would have to cut expenses by 8 percent.

Republicans cheer divide among Democrats

Monday night’s implosion was a dream scenario for Maryland Republicans. Realizing Democrats were running out of time, they attempted to filibuster a measure to authorize a new set of environmental fees to offset pollution from storm-water runoff.

After 11 p.m., Senate Democrats moved to cut off the delay tactic, but the unlikely outcome of the night was already becoming apparent.

Jubilant Republicans shared their thoughts via Twitter following the midnight adjournment. “Great ending. Session falls apart no income tax increase. Spending increase cut in half,” read one tweet, from Del. Michael Hough (R-Frederick). Another, from Del. Michael Smigiel (R-Cecil), declared success: “We saved taxpayers $600 mill tonight as failure to pass a funding source means we revert to doomsday budget.

Monday’s ignominious end came after a day of grinding progress in the State House on the tax package and gambling bills.

Before 9 p.m. House and Senate negotiators reached a deal with Gov. Martin O’Malley’s office to limit tax increases to those making above $100,000.

Maryland’s tax rate on singles making at least $100,000 and couples earning at least $150,000 would rise to 5 percent from 4.75 percent. With local add-ons, the combined state-local rate would increase to 8.2 percent.

The rates would inch up for those in higher brackets and tie the District for the fourth-highest nationwide at a combined top rate of 8.95 percent for singles earning above $250,000 and couples making $300,000.

A point of contention — reducing personal deductions for those making below $100,000 — was scrapped in favor of a plan to have O’Malley cut as much as $60 million from the budget later.

But the bill was never voted on by either chamber.

A casino cliffhanger

Instead, the Senate and House seemed to spend more time in the legislature's final hours working out the day’s biggest cliffhanger — gambling.

That issue also appeared to have gained momentum Monday afternoon, when a key House committee voted to allow a Prince George’s casino at National Harbor to open by mid-2016 if voters in both the state and county approved the measure at the ballot.

The bill would have also authorized Las Vegas-style tables games at all Maryland gambling venues, pending voter approval.

Despite a 15-to-4 vote by the Ways and Means Committee, the gaming bill languished through the evening and never came to a vote in the full House.

Miller, one of the legislature’s leading gambling proponents, told his chamber that he hoped the issue would be among those debated in a special session called by the governor.

The Senate had passed two gaming bills prior to Monday, both in an effort to authorize a sixth Maryland gambling site in Prince George’s.

In recent weeks, county delegations expressed varied interests, with some lawmakers in jurisdictions with previously authorized casinos rising to protect their interests.

In a nod to those concerns, the Ways and Means Committee plan would have limited the Prince George’s casino to 3,000 slot machines — fewer than at planned facilities in Anne Arundel County and Baltimore.

Prince George’s County Executive Rushern L. Baker III (D) vigorously lobbied lawmakers, both from his county and elsewhere, for a “high-end” casino at National Harbor, called the committee vote a victory.

A mixed bag on environmental agenda

Amid the scramble over gambling and the budget, the remainder of O’Malley’s agenda met with mixed results.

Legislators passed a bill that will double the state’s “flush tax” to fund improvements to wastewater treatment systems.

O’Malley had sought to make the fee progressive, based on water consumption. But lawmakers concluded that would have strained small businesses, and they instead settled on a flat doubling of the fee to $60.

That was one of two parts of O’Malley’s environmental agenda that received final passage. Lawmakers also voted to limit developments that rely on septic systems. However, a more forceful attempt by O’Malley to curb septic use by inserting the state into local land-use decisions was watered down significantly.

O’Malley’s agenda failed in other areas. His second attempt to construct an elaborate — albeit scaled back — subsidy to fund private development of offshore wind power remained stuck in the Senate.

And the governor’s unpopular idea to add 20 cents or more to the tax on each gallon of gasoline to replenish the state’s nearly bankrupt transportation trust fund remained moribund, having never received an up-or-down vote by a committee.

The legislature also failed to pass an O’Malley bill that would have had Maryland join a little-noticed wave of Democratic states gravitating toward using public-private partnerships to run state facilities – a practice once anathema to blue states and their often-powerful public employee unions.

As much as it was a finale to the General Assembly’s session, Monday marked a return to power struggles among Maryland Democrats — a party that has long loomed so large in the state that its members can hold fiercely different views on an array of issues, not the least being gambling and taxes.

House Speaker Michael E. Busch (D-Anne Arundel) and Senate President Thomas V. Mike Miller Jr. (D-Calvert), the titans of the legislature, began the session three months ago congratulating one another on their record-long tenures. They ended it Monday in a battle of wills.

Staff writer Greg Masters contributed to this report.