Tax increases likely by ends of sessions

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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.