"House OKs tax plan, narrowly...," The Baltimore Sun, March 26, 2004 <p>The Baltimore Sun March 26, 2004 Friday <p>Copyright 2004 The Baltimore Sun Company <br>All Rights Reserved <br>The Baltimore Sun <p>March 26, 2004 Friday FINAL Edition <p>SECTION: TELEGRAPH, Pg. 1A <p>HEADLINE: House OKs tax plan, narrowly; $670 million package likely to lose in Senate; panel to negotiate change; 'An exercise in futility'; 75-65 vote falls short of enough to counter veto threat from Ehrlich <p>BYLINE: David Nitkin and Michael Dresser <p>The Maryland House of Delegates narrowly approved a $670 million sales- and income-tax package last night that ranks among the largest in state history, but Democrats leading the effort failed to garner enough votes to overturn a veto promised by Gov. Robert L. Ehrlich Jr. <p>Adoption of the tax plan came on a 75-65 vote just four days after it was introduced by House Speaker Michael E. Busch, a Democrat who opposes the Republican Ehrlich's initiative to pay for education through expanded gambling. <p>The proposal now heads to the state Senate, which is expected to reject the taxes. Senate President Thomas V. Mike Miller had called the package "an exercise in futility" without the 85 votes needed for a veto override in the 141-member House. <p>Differences between the two chambers on taxes and the budget - and possibly slot-machine gambling - will be settled by a small committee of negotiators, whose high-stakes work will dominate the final 2 1/2 weeks of the General Assembly session. <p>House Democrats congratulated themselves for agreeing to a revenue formula to cover the mandates of a 2002 plan to equalize school spending between richer and poorer districts that will eventually cost $1.3 billion yearly. <p>"This is the day we say we have found that funding source," said Del. Anne Healey, a Prince George's County Democrat and vice chairman of the House Ways and Means Committee. "Maryland is the only state in the United States that took up this challenge without a court telling them they had to do it." <p>But Republicans, who voted in a bloc against the plan, countered that the House was needlessly rushing through a massive increase while ignoring a preferable gambling alternative from Ehrlich. <p>"We really don't need to do this this year," said Del. George Edwards, the House minority leader from Garrett County, noting that the state budget for the fiscal year that begins July 1 is balanced without tax increases, and includes a record amount for public schools. <p>The select committee of Senate and House negotiators could reject any or all of the taxes, and could also broach the issue of legalizing slot machines to bring in more money as it begins work next week. The legislature is scheduled to complete its 90-day annual session on April 12. <p>Ehrlich said after the House vote that he would veto the bill if it passed the Senate. "I don't think that's going to happen," he said. <p>"Obviously, they fell far short of their goal," the governor said. He said Busch and his top leaders "had to twist arms and break knuckles" just to get 75 votes. <p>Last night's vote was considered a risky decision for Democrats in suburban and rural areas where a freshly resurgent Republican Party is making inroads under the leadership of the first GOP governor in nearly four decades. <p>Twenty-two Democrats voted against the plan. Six of them were from Baltimore County, and three were from Baltimore City. Three of five Anne Arundel County Democrats rejected it. While many Democrats from conservative areas said they could not support the tax package, others stepped behind Busch's leadership and asserted that the future of public schools was more important than their political careers. <p>Del. Norman Conway of Salisbury, a former school principal who succeeded the late Del. Howard P. Rawlings as chairman of the House Appropriations Committee, spoke of the educators from around the state who told him how important the school-funding program known as the Thornton Plan was to their schools. <p>"Sometimes I feel like taxes are right up to my nose, but I don't want to live anywhere else," Conway said. "It's not easy to vote for taxes. ... I want our young people to be the best that they can be." <p>Busch said he felt proud of every delegate who voted for the bill, and expressed disappointment with a handful of delegates from urban areas who "didn't step up to the plate." <p>"I drop off my two kids at school every day, and I ask, 'Is it fair to fund their education off of gambling money because it's more politically palatable to say you're dedicating gambling funds to educate them, rather than to ask every member of the community to stand up for quality schools that are the essence of good government?' " Busch said. <p>Democrats from more liberal districts who voted no included Baltimore Dels. Tony Fulton, Nathaniel Oaks and Marshall Goodwin; Del. Mary Conroy of Prince George's County; and Neil Quinter from eastern Howard County. <p>In a rare public oration, Del. Hattie N. Harrison, 76, a Baltimore Democrat, gingerly rose from her seat to implore her colleagues to adopt the taxes. <p>"Our future is what we're talking about," said Harrison, whose 31-year tenure makes her the longest serving African-American woman lawmaker in state history. "I don't have a very long future, but many of you do. ... Is it the children, or is it trying to find a way to keep yourself safe?" <p>Overall, the House plan would raise roughly $1 billion a year in new tax dollars. It would increase the state's sales tax rate from 5 percent to 6 percent, and expand the tax to a few services not currently subject to the levy, including tanning salons and health club memberships. <p>It would also create a new higher income tax bracket for the wealthiest 3 percent of Marylanders. Individuals earning more than $150,000 a year, and joint filers with income of more than $200,000, would pay 6 percent tax in the top range, up from 4.75 percent. Car titling fees would go from 5 percent to 6 percent of a vehicle's value. <p>At the same time, the House package delivers a $320 million reduction in the state portion of property tax bills and would provide $30 million in tax relief to the poorest Marylanders. The net effect is $670 million a year in extra funds for state programs. <p>The House taxes are included in a cumbersome companion bill needed to keep the fiscal 2005 budget in balance, and includes $256 million in transfers and $157 million in higher fees and taxes initially proposed by the governor. An Ehrlich veto would knock the $23.6 billion budget out of balance, and could force an extended session. In a separate vote, the House gave preliminary approval to its version of the spending plan last night, with a final vote expected today. <p>The Senate added more modest taxes to Ehrlich's initial plan, and leaders in that chamber said they were sticking with their proposals. The Senate extended the sales tax to salty snack foods, for example, something the House declined to do. <p>Miller, the Senate president, said yesterday that the package would garner only limited support statewide. <p>"The tax issue appeals to the same base that Kathleen Kennedy Townsend appealed to, and she lost in almost every jurisdiction of the state," Miller said. <p>But the president said that there was room for compromise between him, Busch and Ehrlich that included slots and some higher revenues. <p>Sun staff writer Howard Libit and the Associated Press contributed to this article.