Tax increases likely by ends of sessions

Taxpayers in Maryland and Virginia had better hold on to their wallets: The general assemblies on both sides of the Potomac River are back in business today, and lawmakers across the political spectrum are talking tax increases.

Lawmakers in both states are eyeing higher sales taxes, higher gasoline taxes, higher cigarette taxes and higher income-tax rates for the wealthiest taxpayers.

“Every year is a tough year, but this is a tougher year,” said Dee Hodges, president of the Maryland Taxpayers Association, a nonpartisan group opposed to tax increases.

She said the new taxes recently dumped on the budget table in Virginia, which so far dwarf the tax proposals in Maryland, don’t bode well.

“We are keenly aware of Virginia,” she said. “The two states are inextricably entwined.”

Last year, residents in both states dodged the tax-increase bullet in the face of huge budget shortfalls, although fees increased for a wide range of services, from getting a copy of a Maryland birth certificate to obtaining a Virginia driver’s license.

The pressure is mounting on the legislators and the governors to boost taxes, because budgets in both states already have been “cut to the bone,” as some lawmakers described last year’s meager spending increases. The fiscal crunch lingers with a projected $786 million shortfall in Maryland’s annual $22 billion budget and a $1 billion shortfall in Virginia’s two-year $59 billion budget.

“With all the pressure this year, the conventional wisdom [in Virginia] is that a cigarette tax will pass and possibly a gas tax,” said James T. Parmelee, president of Republicans United for Tax Relief.

Mr. Parmelee already was walking the corridors of power in Richmond yesterday, lobbying lawmakers to resist the tax-and-spend bug.

“It’s going to be a tough fight,” he said. “We are going to be successful, but we cannot let our guard down, because these guys really want the tax hikes.”

Still, there are signs of weakening within the Republican majority in the Virginia General Assembly, even as the state’s Republican Party remains staunchly opposed to raising taxes.

“As the national economy continues to show these promising signs of recovery, now would be the worst possible time to raise taxes in Virginia,” said Kate Obenshain Griffin, chairman of the Republican Party of Virginia.

“The improvement in our national economy is a direct result of President Bush’s tax cuts, and with a massive tax increase [in Virginia], we run the risk of stifling our own recovery at its emergent stages,” she said.

In Maryland, Gov. Robert L. Ehrlich Jr., a Republican, has vowed to veto most new taxes, but his party’s minority in the House and Senate makes a veto-proof two-thirds majority vote to raise taxes a real possibility.

Story Continues →