Tax Cut Fever Grips Maryland Lawmakers

At the top of nearly every legislator’s list for the upcoming session in Annapolis is not surprisingly — a tax cut. In 1997, the General Assembly approved a 10 percent tax cut spread out over five years. But there’s mounting bipartisan support to speed up the reduction by a year or two, thereby saving Maryland taxpayers as much as $310 million.

“In these times of economic plenty, we should go ahead and implement the entire tax cut now,” says Republican Senator Martin Madden.

Not so fast, says Governor Parris Glendening, a Democrat. Every tax dollar returned to citizens is a dollar shifted away from his budget priorities. Instead, Glendening prefers that the surplus “go to one-time expenditures, because you can’t expect or project we’ll have prosperous times ahead,” says Glendening spokeswoman Michelle Byrnie.

The nation’s booming economy has been very good to Maryland. State coffers are bursting at the seams with an unprecedented $1 billion budget surplus. The question, of course, is how to spend it before the economic bubble bursts.

Take education, for example. Glendening’s four-year, $1 billion plan for new school construction calls for an annual appropriation of $250 million. This year, the governor would like to see more than half those funds come out of the surplus.

A legislative tug-of-war over how to use the surplus appears inevitable. Sen. Madden predicts “spirited debate” on the issue. And indeed, there is no shortage of spending suggestions including the notion put forward by Maryland’s Common Cause director, Kathleen Scullney, that the state seize this golden opportunity to set aside $35 million to publicly fund legislative campaigns. In any case, dividing up the spoils is by no means the only battle facing lawmakers this session. Among the issues likely to generate heat this session are:

• Gun Control. The governor wants the state to prohibit the sale of guns after 2003 that are not technologically advanced and certifiably child-proof, and to require ballistics fingerprinting on all new handguns prior to sale. These and other measures will encounter strong opposition from conservatives and Maryland’s strong anti-gun control lobby.
• Smart Growth. Maryland is considered progressive when it comes to limiting sprawl and controlling development density. This year’s Smart Growth centerpiece is a Smart Code bill, which would make it easier and cheaper to rehab and preserve aging buildings in older neighborhoods. Democratic Senator Brian Frosh predicts local governments will oppose the measure. “They view this stuff as their purview, their jurisdiction, and they guard it jealously.”
• Health Care Reform. HMOs are under fire (again), this time for contracting with third-parties, like physician groups, to provide patient care. Trouble is, several third-party providers have failed recently, leaving physicians and even patients liable for huge bills. The Health Care Providers Risk Exposure Protection Act part of House Speaker Casper Taylor, Jr.’s leadership package proposes to regulate these third parties more closely. But physician groups bitterly oppose the measure because it shifts the risk away from HMOs and insurers. “We want the [HMO or insurer] to be responsible for payment to physicians,” says Gene Ransom, associate counsel with the Maryland State Medical Society.

Also on the docket this session: several bills aimed at the working poor and their children. Despite dramatic declines in state welfare rolls (down 65% since 1995), one in six Maryland children still live in poverty, and many have no health insurance coverage. There is strong bi-partisan support for several related measures, including:

• Job training and education for low-income parents;
• Substance abuse treatment for all parents of children who risk having to leave the home;
• Broader family eligibility standards for Maryland’s Children’s Health Insurance Program;
• Expansion of the Children’s Health Insurance Program, which adds 12,000 children to the rolls of the insured.

Lawmakers clearly hope to give the working poor a hand up. It remains to be seen, however, whether they can refrain from pushing through too many hand-outs, given the riches now at their disposal.

There is a saying in the Maryland Senate that all lawmakers and the governor might wish to heed: “You don’t get yourself in financial trouble during bad times…only during good times.”