- The Washington Times - Thursday, March 20, 2003

ANNAPOLIS The state's budget gap $2 billion and growing has emboldened Democratic lawmakers to propose a barrage of tax increases that combined would cost the average Maryland household hundreds, if not thousands, of dollars.
Jack Horbey, who makes about $125,000 a year from his Baltimore-based home-remodeling business, figures he would lose at least $2,000 a year if most of the tax increases become law.
He is bracing for a 5 cents property-tax increase backed by Gov. Robert L. Ehrlich Jr. and pondering the cumulative effect of possible increases in everything from the sales to gasoline and alcohol taxes.
"I'm paying enough taxes now. As a small businessman, I'm getting killed," said Mr. Horbey, who runs Horbey Custom Builders Inc. "Any added tax is an added burden."
Mr. Ehrlich, a Republican, has vowed to veto any increase of taxes on sales, income, gasoline, tobacco and alcoholic beverages. But the veto threat hasn't stopped Democratic lawmakers from pushing forward those types of increases. And the governor's acquiescence to higher property taxes has left some of his supporters wondering what's next.
Mr. Ehrlich also is receptive to raising some corporate taxes and eliminating some tax shelters. The House is moving toward passage of a package that includes more than $205 million in corporate tax increases, including higher filing fees and a repeal of the corporate exemption from transfer tax on property sales.
When the House yesterday sent the amended bill to a final vote, Minority Leader Alfred W. Redmer Jr. waved a white handkerchief in the air. "On behalf of the taxpayers of the state of Maryland, I surrender," said Mr. Redmer, Baltimore County Republican.
The governor's plan to increase the state's property-tax rate from 8 cents to 13 cents per $100 of assessed value would add about $200 to the annual tax bill on Mr. Horbey's $400,000 home in Baltimore County.
Separate proposals by Delegate Van T. Mitchell, Charles Democrat, and Delegate Sheila E. Hixson, Montgomery Democrat, would increase the state sales tax to 6 percent from 5 percent. Mr. Horbey figures that would cost him another $78 to $156 a year.
And the proposal by Delegate Howard P. Rawlings, Baltimore Democrat, for a 1.25 percent income-tax surcharge on people earning more than $100,000 a year would take another $1,562 out of his pocket.
Then there are Mrs. Hixson's and Mr. Rawlings' proposal to raise the gas tax by 7 cents per gallon. Delegate Adrienne A. Jones, Baltimore County Democrat, wants to double the tax on alcoholic beverages and Delegate William A. Bronrott, Montgomery Democrat, wants to more than triple it.
Bills by Sen. Ida G. Ruben and Karen S. Montgomery, both Montgomery Democrats, would increase the cigarette tax by 36 cents a pack.
Clarence Davis, Baltimore Democrat, sponsored a bill to increase the top income-tax rate to 4.8 percent from 4.75 percent and temporarily lower the amount of personal exemptions on income-tax returns.
"Individual taxes are not going to break you. But when you add them up, they put pressure on you," said Mr. Horbey, 50.
At the same time, the state slashed higher-education funding, forcing state universities to impose a midyear tuition increase. Now Mr. Horbey is paying $144 more for his 20-year-old son Eric's spring semester at the University of Maryland at College Park. The annual tuition has risen to $4,800 and another tuition increase is likely next year as the state's funding for universities drops to 2001 levels.
"I can handle that," Mr. Horbey said. "Money going into education is money wisely spent."
He blamed the budget crunch and ensuing tax proposals on excessive spending by the Democratic majority in the General Assembly and former Gov. Parris N. Glendening, a Democrat.
"The problem is not that there is not enough money. It's that the money is not being spent right," Mr. Horbey said. "If the government was run like a private business, I think we would do better."
In Montgomery County, where property assessments have soared and the county's property-tax rate might rise this year, Seema Paul is worried that state taxes will eat away at her savings.
The nickel increase to the state's property-tax rate would add about $150 to the tax bill on Mrs. Paul's $300,000 home in Bethesda. She said she was afraid that was just the starting point.
"I don't know what they will hit us with next year," said Mrs. Paul, who makes about $92,000 as a program administrator for a nonprofit group. She said the property tax hit especially hard because her salary stagnated in recent years while her home assessment and property taxes rose.
"It doesn't help families," she said.
Mrs. Paul, who doesn't smoke, but occasionally drinks, said she did not mind higher taxes on tobacco and booze. But she was troubled by a 1 percentage point boost to the sales tax.
"If I spend $20,000 in a year, that's $200. That's significant," she said. "If you add it up with higher property tax, it's $350. That's not small."
She is most worried about the quality of public schools and the cost of college for her daughters, 10-year-old Kiriti and 12-year-old Nastasia.
"I have to be careful with every dollar I spend because a dollar saved for me is a dollar invested in my children's education," she said. "But every time I look at the numbers, I realize that I can't do it. My children will have to rely on scholarships."
Mrs. Paul said she understood the need for taxes. But she fretted about how big the tax bite would be for her family and questioned whether the government was squandering the money.

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