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Maryland General Assembly opens with fanfare, revenue realities

January 11, 2012|By ANDREW SCHOTZ | andrews@herald-mail.com
  • Washington County delegates John P. Donoghue, center, LeRoy E. Myers, Jr., left, and Andrew A. Serafini talk during opening day of the Maryland General Assembly in Annapolis on Wednesday.
By Colleen McGrath/Staff Photographer

ANNAPOLIS — Word of a possible state sales-tax increase added a dose of reality Wednesday to the fanfare of the opening day of the Maryland General Assembly’s 2012 session.

Gov. Martin O’Malley said that he’s considering proposing another penny on the state’s sales tax, increasing it from 6 percent to 7 percent.

O’Malley, a Democrat, said the state has to figure out how to fill gaps in the state’s operating budget, its Transportation Trust Fund, and water and wastewater infrastructure.

Many legislators are expecting the governor to propose increases in the state’s gasoline tax and the tax on sewer and septic use this year. The state has a structural deficit in its budget of more than $1 billion.

The Maryland General Assembly raised the sales tax from 5 percent to 6 percent as part of a package of tax increases during a 2007 special session.

Conceding that “there’s not very much public will” for another sales-tax increase, O’Malley said the state needs to make “the modern investments that a modern economy requires in order to create jobs.”

A sales-tax increase might be more palatable than other proposed taxes, he said.

“No one in our state lost a house, lost a job or lost a business, because of the additional penny on the sales tax,” O’Malley said.

Senate President Thomas V. Mike Miller, D-Calvert, said he believed he could get a gas tax increase through his chamber, but he described the sudden sales tax idea as “a non-starter.”

House Speaker Michael Busch, D-Anne Arundel, also said he had not heard of the sales tax proposal before, and that a gas tax hike will depend on local officials from Maryland’s larger jurisdictions such as Prince George’s, Montgomery and Howard counties as well as Baltimore City expressing their support.

O’Malley already has proposed devoting more than $370 million toward school construction this year, the second-highest amount ever in Maryland.

Sen. E.J. Pipkin, R-Caroline/Cecil/Kent/Queen Anne’s, the Senate minority leader, called a possible sales-tax increase “insane.”

“Maryland families are struggling,” he said. “The fact is they’re angry, and they’re angry because they keep thinking the state demands more and more .... I just wonder what universe this governor’s on.”

Del. Neil C. Parrott, R-Washington, said a sales-tax increase would compound Maryland’s hostile environment for businesses.

He said he talked this week to a Washington County business that wants to expand by 50 employees, but considers Maryland too expensive and might move to another state. He declined to name the business or the category of industry.

“When Maryland continues to increase taxes and make it less desirable to do business in the state, businesses start looking elsewhere,” Parrott said.

However, another Republican, Hagerstown Mayor Robert E. Bruchey II, said he’d support a tax increase, whether on gasoline or general sales, if it would help his city.

As long as the government where the tax is generated gets “a guaranteed percentage of that, they won’t get any argument from me,” said Bruchey, who was at the State House in Annapolis for the legislature’s opening day.

If, however, money from a gas-tax increase pays for mass transit in the state’s urban counties, Bruchey said he’ll vigorously oppose it.

Hagerstown has lost close to $5 million from the state in the last two years for road maintenance and projects, he said.

“The only ... alternative I have left is to raise taxes to cover infrastructure cost,” Bruchey said. “I’d rather have everybody paying (for) a portion of the infrastructure that they use as opposed to just my citizens funding the infrastructure that everybody uses.”

The Associated Press contributed to this story.

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