Closing the budget gap

March 14, 2003

On Wednesday Gov. Robert Ehrlich asked some of Maryland's corporate leaders to tell his team "what you can and can't live with" when it comes to balancing the state's budget. But those wondering whether Ehrlich was considering higher business taxes will have to wait, because he didn't reveal many details of his plan to raise $450 million to plug the large hole in the state's budget.

House Speaker Michael Busch did not offer many details either, but said he felt the governor's proposal would be "very welcome in the legislature."

One item that was discussed is a proposal to raise the state's share of property taxes from 8 cents per $1,000 of assessed value to 13 cents.

According to an Associated Press analysis by State House veteran Tom Stuckey, Maryland's constitution requires the state property tax to be set high enough to cover the cost of repaying bonds sold to finance capital construction costs.


But to keep the rate at 8 cents, elected officials have been using other revenue for bond repayments. Setting the rate at 13 cents would raise an estimated $160 million, according to Busch.

Busch also said that the governor's staff raised the possibility of increasing the corporate income tax in lieu of boosting other business-related taxes and ending some tax exemptions now available to businesses.

Not taking some action - whether it's passing the governor's slot-machine proposal, raising taxes or cutting state programs - is not an option. Comptroller William Donald Schaefer and the state's Board of Revenue Estimates this week forecast a $100 million-plus drop in state revenues in 2003 and 2004.

To help, we suggest that the governor revisit his decision to cut slot machine licensing fees for the states' race tracks by $230 million. We continue to believe that while track owners may whoop and holler about the higher fees, in the end they would accept them, knowing they'd make the money back in the future.

In the current economy, elected officials should worry more about the finances of average taxpayers and small businesses than about race track owners.

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