- The Washington Times - Wednesday, September 3, 2003

Maryland Democratic leaders said yesterday that they will reconsider Gov. Robert L. Ehrlich Jr.’s proposal to make money by putting slot machines at racetracks but would not compromise unless the governor’s new budget includes tax increases and spending cuts.

House Speaker Michael E. Busch said lawmakers had rejected the proposal by Mr. Ehrlich, a Republican, this spring because it had failed to reduce a budget shortfall estimated to reach $1 billion by 2005.

“The idea of basing the foundation of your budget on slots revenue is not in anyone’s best interest,” said Mr. Busch, Anne Arundel Democrat.

He, however, stopped short of saying that party leaders would reject Mr. Ehrlich’s plan again if the governor did not raise taxes.

“A number of Democrats are saying they are not going to [approve the Ehrlich proposal] unless there is a comprehensive solution,” Mr. Busch said.

He also said his vote would depend upon “what the budget looks like.”

Mr. Busch’s comments were in response to Mr. Ehrlich’s statement that he welcomed a compromise with Democrats, as reported Tuesday by The Washington Times.

The speaker said 13 of 24 Maryland counties had to increase taxes after Mr. Ehrlich cut $208 million from the state’s $22.4 billion fiscal 2004 budget.

“More cuts next year will be a greater burden” on local governments, he said.

One possible target is $1.3 billion to improve public schools through the so-called Thornton Commission initiative.

Mr. Ehrlich has earmarked $700 million of the estimated $2.5 billion slots revenue to fund the initiative.

The governor’s slots proposal would be among the least profitable if the state decides to expand legalized gambling, according to a study by two nonprofit groups published last month.

The Ehrlich proposal would generate about $1.18 billion a year, compared with $1.6 billion a year if slots licenses were awarded to the highest bidder, the study concluded.

The study of six scenarios for legalizing slots, including Mr. Ehrlich’s, was conducted by the Maryland Tax Education Foundation, a taxpayers group, and the Maryland Public Policy Institute, a nonpartisan research organization that has advocated higher taxes for the state.

Mr. Ehrlich’s proposal called for thousands of slot machines at four racetracks — Laurel, Pimlico in Baltimore, Rosecroft in Fort Washington and a proposed one in Cumberland.

The study concluded that the best money-making proposal was for owners to bid for the slots licenses and allow the winners to put slots outside racetracks. The researchers predicted that the owners would take 21.5 percent of revenues.

Deals in Delaware and West Virginia give bidders 48.5 percent, compared with Mr. Ehrlich’s plan, which would give 39 percent. A deal in Louisiana gives owners 65.5 percent, and a deal in New Mexico gives them 54.8 percent.

Senate President Thomas V. Mike Miller Jr., a Democrat, and state Sen. Ulysses Currie, Prince George’s County Democrat and chairman of the Budget and Taxation Committee, did not return calls for comments.

Mr. Busch now says he supports slots and has his own proposal, which includes a slots emporium at the state fairgrounds in Timonium.

“It still comes down to what will be an acceptable location,” he said.

Mr. Ehrlich said Tuesday that Mr. Busch’s proposal was a “good first step” toward a compromise on slots to solve the state’s budget problems.

Still, tax increases are likely to make or break the deal.

Mr. Ehrlich is steadfast about not increasing taxes, while Mr. Busch insists the state government cannot meet demands with the existing tax base.

“Property tax, income taxes and sales taxes are all stable forms of revenue,” Mr. Busch said. “They have formed the foundation of the Maryland government for years.”

State Democratic Party Chairman Isiah “Ike” Leggett agreed.

“I think that what we need is a comprehensive budget,” he said. “We are not going to get there with a one-solution-fits-all. You cannot just look at what you want, then call that working with people.”

This article is based in part on wire service reports.

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