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Assembly passes budget

Corporate tax increases, deep cuts make up plan.

Corporate tax increases, deep cuts make up plan.

April 07, 2003|by LAURA ERNDE

laurae@herald-mail.com

The Maryland General Assembly on Saturday approved a $22.4 billion spending plan balanced by deep budget cuts and significant increases in corporate taxes.

Gov. Robert L. Ehrlich has vowed to veto the tax bill, which would force him to cut an extra $135 million from the budget or send lawmakers scrambling in overtime to come up with an alternative. The Senate was one vote shy of the number needed to override Ehrlich's veto.

"He's in complete control of the situation and the Republicans get the best of all possible worlds," said Senate President Thomas V. Mike Miller, D-Prince George's.

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Washington County lawmakers were split on their support of the budget but voted overwhelmingly against the business taxes.

The legislature approved a 2 percent tax on managed care health insurance premiums and a 10 percent surcharge on the corporate income tax. They also voted to close corporate tax loopholes, a measure that would raise $35 million.

"Folks, this is bad business, this is bad policy. This rapes the corporations. It is wrong," said Sen. J. Lowell Stoltzfus, R-Eastern Shore.

The 28-19 vote came after Republican senators led a 90-minute filibuster.

Stoltzfus said Republicans wanted to send a message that the corporate tax increases will drive jobs out of Maryland.

Sen. Alex X. Mooney, R-Frederick/Washington, said he knocked on more than 10,000 doors during the campaign and no one asked him to raise their taxes.

Senate President Thomas V. Mike Miller, D-Prince George's, said the move reflected the will of newly elected Republicans who are concerned that they'll be challenged in a primary for not standing by their conservative ideals.

"They want to stand up and shout even if it doesn't accomplish any more than sitting in their seats and saying 'no,' " Miller said.

The House voted 87-50 to approve the tax package, with local Republicans opposed.

"I think the citizens of Maryland, especially those in my district, didn't send me here to raise taxes," said Del. Robert A. McKee, R-Washington.

Del. Christopher B. Shank, R-Washington, accused Democrats of sabotaging Ehrlich's plan to raise money by legalizing slot machines at racetracks.

"It's going to lead to more pain and suffering in the next three years," Shank said.

Democrats said the slots plan was not a complete budget solution because it would have raised just $15 million next year.

And it would have raised only about half the money that the so-called Thornton Commission recommends for education spending, said House Appropriations Committee Chairman Howard P. Rawlings, D-Baltimore city.

"We are leaving a hell of a lot undone. Now it is a problem we will all have to face next year or later this year if the economy doesn't improve," Rawlings said.

Del. John P. Donoghue, D-Washington, said he supported the budget and the tax plan in order to have a balanced budget.

"I took a tough vote and I feel that I looked out for my people back home," Donoghue said. "You can't have it both ways. You can't promise people services and not have the money to pay for them."

A House and Senate conference committee cut about $200 million from Ehrlich's budget, further reducing aid to local government.

The University System of Maryland was cut by about $5 million, far less than the nearly $40 million cut proposed by the House.

Grants to local school districts to help pay for teacher raises will be phased out early to save the state $30.6 million.

The budget relies on a 5-cent property tax increase proposed by Ehrlich that would cost the average Washington County homeowner about $70 a year.

Del. Clarence Davis, D-Baltimore city, criticized Republicans for "spitting venom" when the budget problems require a bipartisan solution.

"At some point we're going to have to put all this ideological hogwash on the sidelines and come together," he said.

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