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Senate completes its work on taxes, slots

Focus now shifts to the House of Delegates

Alan Brody

November 9, 2007

Gazette Newspapers

The Senate wrapped up its work Friday afternoon on amended versions of Gov. Martin O'Malley's tax and slots bills, narrowly approving increases to the sales, titling, tobacco and personal and corporate income taxes.

Senators also passed measures to expand health coverage to 100,000 Marylanders, recommended $470 million in spending reductions and paved the way to let voters break the impasse over legalizing slot machines. The health care bill also included money to help keep the ailing Prince George's Hospital System afloat.

‘‘We're at the 50-yard line. The game is halfway over and we've got to see what the House does and then whether we can get the ball across the goal line," said Senate President Thomas V. Mike Miller Jr. (D-Dist. 27) of Chesapeake Beach.

O'Malley, who called the special session to resolve the state's projected $1.5 billion budget deficit, scored a big victory with the 24-23 Senate vote on his tax proposal, which came over sharp objections from Republicans that it had not been adequately vetted and would hurt residents and businesses. Nine Democrats joined the 14-member GOP caucus in opposing the plan.

‘‘When you rush 90 days work or 60 days work through in 48 hours, I don't want a surgeon operating on me in that type of fashion," said Senate Minority Leader David R. Brinkley (R-Dist. 4) of New Market. ‘‘I want them to take their time and make sure it's done right and the numbers here are so immense.

Despite the close tally, Brinkley conceded that the outcome was never in doubt. Republicans attempted a filibuster, but debate was cut off after about two hours.

Some Democrats who opposed the bill were upset about a provision that expanded the sales tax to computer services and the lack of spending reductions.

Several liberal senators were able to add progressive components to the measure late Thursday night that made it more palatable.

One amendment redefined a Maryland resident to mean someone who lives in the state three months out of the year, rather than the current six months. The so-called ‘‘snow bird" amendment requires part-time Marylanders to pay income taxes, a provision that opponents said would disproportionately burden retirees.

The Senate also scrapped a plan to extend the sales tax to landscapers.

Other maneuvers pumped an extra $100 million toward public schools and higher education in the fiscal year that begins July 1. Under the Senate plan, a school funding formula that gives more to jurisdictions where the cost of education is higher would be phased in over two years. The Geographic Cost of Education Index would be funded at 60 percent in fiscal 2009 and fully funded beginning the following year.

‘‘I think it's a very good plan that ensures we will be able to keep our vital commitments for education, transportation and health care," said Sen. Richard S. Madaleno Jr. (D-Dist. 18) of Kensington. ‘‘It is a plan to keep Maryland strong and prosperous."

But as the House continued work Friday afternoon on a drastically different revenue-raising plan, senators wondered if the gap between the chambers would be too wide to reconcile.

Miller said some senators would not accept the House proposal, which would expand the sales tax to different services than listed in the Senate version, radically restructures the income tax, sharply increases the corporate income tax and includes a provision stripped in the Senate to ensure multistate corporations pay their full share of taxes.

‘‘I'm hoping they can look at our package and say it looks pretty good because if [theirs] is much different, we're going to be here a very long time," he said.

Brinkley agreed that the package is not a done deal.

‘‘I think the outcome as a whole of this special session is still up in the air," he said. ‘‘The expectation is the hurdles may be so immense that a responsible outcome and resolution to this should wait until we can come in the regular session."

The troubled Prince George's Hospital System got a boost in the Senate health expansion bill, which provides $10 million a year between 2011 and 2013

The money is contingent on a long-term comprehensive solution through an act of the General Assembly or a memorandum of understanding between the Prince George's county executive and the County Council.

The solution should include a plan to transfer the county's facilities now operated by Dimensions Healthcare Inc. to a new operator and steady revenue to support the hospital.

The money was added to the Senate's health care bill through an amendment offered by Sen. Nathaniel Exum (D-Dist. 24) of Capitol Heights.

Republicans were also quick to condemn the health care expansion bill, which they said does little to address the number of uninsured Marylanders.

‘‘If the last bill was a tax increase in steroids, this one is on quaaludes..." said Sen. E.J. Pipkin (R-Dist. 36) of Stevensville. ‘‘If we want true health reform in Maryland, this bill is not it."

However, Sen. Delores G. Kelley (D-Dist. 10) of Randallstown maintained that it is ‘‘a humane measure" to help small businesses offer employee health coverage.

Earlier Friday, the Senate approved a bill designed to reduce spending by about $470 million beginning July 1. The suggested cuts to O'Malley's fiscal 2009 spending plan include changes to the way education aid is calculated, eliminates a $30 million utility grant and saves about $28 million a year by not filling 1,000 vacant state jobs.

Republicans griped that the recommendations are not binding and that more cuts should have been made to forestall tax hikes.

The slots proposals won approval late Thursday night at the end of a long day of debate and failed Republican amendments, including an effort to swap Ocean Downs in Worcester County with Rosecroft Raceway in Fort Washington as one of five venues where the 15,000 machines will be placed. The other sites are in Allegany, Anne Arundel and Cecil counties and Baltimore city.

The 31-15 vote to authorize a referendum was two votes more than needed for a constitutional amendment. The proposal needs 85 votes to pass the House and be placed on the November 2008 ballot. Slots could yield $700 million a year to boost education aid and prop up the state's foundering thoroughbred industry.