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Political battle brewing over school construction

February 23, 2005|by TAMELA BAKER

tammyb@herald-mail.com

ANNAPOLIS - Take one part school construction, add one part tax loophole and one part controversial gambling proposal, stir in a dash of party politics and you've got a recipe for a stew that could either simmer until April or boil over this week.

At first glance, a bill to close a loophole allowing purchasers of certain commercial properties to avoid paying the state's transfer tax, and using the money collected for school construction, seems simple enough.

But the "Public School Construction Assistance Act of 2005" has stirred the pot of political acrimony from the start, and on Tuesday, Del. Christopher B. Shank, R-Washington, placed himself smack in the middle of the kitchen.

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Democratic members of the House of Delegates announced early this month that by imposing recordation and transfer taxes on real property valued at $1 million or more, or the sale of "controlling interest" in specified businesses, the state could raise millions for school construction.

Only one or two problems with that, according to House Republicans who don't necessarily object to closing the loophole.

One is that transfer taxes traditionally have been applied to Program Open Space. The other is that the Republicans believe they have a better way: legalizing slot machine gambling.

Gov. Robert Ehrlich, the state's leading slots proponent, said back then that the revenue from the loophole "doesn't even scratch the itch" for school construction needs. He hinted that House Democrats were attempting to deflect attention from slots, which he has tied to providing money for school construction.

Accordingly, Shank last week offered an amendment to the school construction bill that would put transfer tax money back into Open Space. The amendment was rejected unanimously by a House subcommittee, according to Del. Anne Healey, D-Prince George's, one of the bill's sponsors because, she said, it placed mandates on local governments for use of their share of the tax.

But on Tuesday, a House Democrat offered a similar amendment, putting the state's portion of the transfer tax back into Open Space while mandating the local share go to school construction for four years.

That amendment was accepted by the House Ways and Means Committee on Tuesday morning. Shank cried foul.

Shank pointed out that the new amendment also mandated local governments to use their share of the tax for a specific purpose, that purpose being school construction.

He asked that a vote by the full House on that amendment be postponed for a day for further consideration. "This is a significant policy change," he said, noting that the Departments of Agriculture and Natural Resources had "asked for something larger in scope."

If the committee were truly concerned about the diversion of funds from Program Open Space, he said, it would have accepted his amendment.

It made little sense to rush the vote on this bill when it was possible another bill dealing with school construction - the slots bill - would be forthcoming, he said.

But he lost that bid.

The discussion then turned to whether local governments should have to require contractors to pay prevailing wages for work on school projects, which is more difficult for the state's more rural counties, but an amendment exempting such projects from any prevailing wage laws was rejected.

In the end, the bill that emerged would allow the state's portion of the money collected from closing the loophole to go to Program Open Space, while the county's portion would be used for school construction for at least four years.

Although he lost the floor fight, Shank said afterward that "imitation is the cheapest form of flattery."

"I'm flattered," he said, that House Democrats had decided to follow his lead in giving money back to Program Open Space.

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