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Tough choices ahead on O'Malley's budget plans

September 27, 2007

When it comes to Maryland Gov. Martin O'Malley's proposal to close the state's budget gap, the only good news is that there is a plan. How that plan will affect Washington County is something that's not yet certain.

In last week's announcement of the package that he hopes to take to a special session of the General Assembly in November, O'Malley began by saying that the gap between state spending and expected revenues was not $1.5 billion, but $1.7 billion.

To close it, the governor proposes to do the following:

· Increase the state's sales tax from 5 percent to 6 percent.

· Begin charging sales tax for health clubs, tanning parlors, massage services and real estate property management services.

· Double the state's cigarette tax from $1 to $2 per pack.

· Reduce the state's property-tax rate, now set at 3 percent per $100 of assessed value.

· Legalize slot machines, although where those machines would be located is not yet settled.

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· Leave the state's gasoline tax at its present level.

There will also be some budget cuts, but what those will be are uncertain now.

On slots, The (Baltimore) Sun reported on Wednesday that the governor plans to use as his model a 2005 House of Delegates bill.

Under that framework, there would be 9,500 slots in four areas - Anne Arundel, Harford, Frederick and Allegany counties. The 2005 bill calls for slots at the Laurel Park Racetrack.

However, that bill did not include slots for Pimlico, home of the Preakness, the second leg of horse racing's Triple Crown. It would be unthinkable that the new bill would not include slots for Pimlico.

House Speaker Michael Busch, who sucessfully blocked slots for the entire four years Republican Gov. Robert Ehrlich was in office, sounded no more enthusiastic when interviewed by the Sun this week.

However, Busch said he would make a final decision after seeing O'Malley's plan and whether it was part of a "comprehensive budget solution."

State Sen. Donald F. Munson and Del. Christopher Shank have already opposed the idea of tax increases, noting that the state budget would increase by 8 percent under O'Malley's plan, while the GOP would hold that to 3.5 percent.

But as both men know, Maryland governors, with their vast power over the state budget, have ways of changing lawmakers' minds.

Some call it negotiation, while others characterize it as blackmail, but the bottom line can be that how a lawmaker votes in Annapolis might determine whether or not projects back home get funded.

"No new taxes" is a catchy slogan, but Washington County has needs that state dollars can help with.

They include:

· Upgrades of local roads and other infrastructure. A bridge between Eastern Boulevard and the new hospital site at Robinwood might not be needed now, but we predict that in a few years, there will be a clamor for it.

· School construction. Housing prices will eventually drop to more reasonable levels once everyone realizes that the house they purchased for $100,000 is not really worth $275,000 or $300,000 now.

At that point, the market will heat up again and commuters seeking a more rural lifestyle will come here, along with their children.

· Upgrades of local sewer plants. Without newer technology to reduce nutrient discharges that damage the Chesapeake Bay, local growth could be stalled.

Our point is not that new taxes are inevitable or desirable. But there are expenses associated with growth and without state help, local taxpayers must shoulder the entire burden.

Whether the trade-off is worth making is something local lawmakers must decide in November.

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