GOP offers fix for budget

ANNAPOLIS (AP) — Maryland House Republicans yesterday announced a budget proposal to address the state’s $1.5 billion budget deficit that calls for legalizing slot machines and cutting the rate of growth in spending instead of increasing taxes.

Delegate Anthony J. O'Donnell, the House minority leader, described the proposal as “a budget that has a slower growth rate but continues to fund the priorities of the citizens of Maryland.”

“We are strongly united in our effort to provide a credible alternative that does not take the citizens’ hard-earned money from them and redistribute it to other purposes,” said Mr. O'Donnell, Southern Maryland Republican.

The plan would limit spending growth to 3.5 percent in the 2009 budget, compared to what Republicans described as a projected “baseline” budget increase of 8.5 percent.

For example, Medicaid spending would be reduced from a projected 10 percent increase to 8.3 percent, said Delegate Steven R. Schuh, Anne Arundel Republican.

The plan also calls for a 2.3 percent increase in K-12 education, compared with a proposed 5.9 percent increase, and a 5.7 percent increase for higher education instead of 8.6 percent.

Delegate Christopher B. Shank, the House’s second-highest ranking Republican, said Marylanders already bear a high tax burden compared with taxpayers in other states and can “ill afford to increase that tax burden.”

“We, ladies and gentlemen, do not have a revenue problem in the state,” said Mr. Shank, Washington County Republican. “We have a spending problem.”

The plan has four main components: no new taxes, reductions in spending, legalizing slot machines and avoiding the diversion of the state’s Rainy Day Fund reserves.

Gov. Martin O'Malley, a Democrat, has said he would like to change the state’s tax system, charging a higher rate to those who earn more. He also has said he wants to close corporate loopholes in the system.

Democrats also have considered increasing the state sales tax from 5 percent to 6 percent and raising the gas tax, which has not been increased since 1992.

Mr. O'Donnell and Mr. Shank met Tuesday with Mr. O'Malley and some of his top aides to discuss the proposal. Mr. O'Malley described the proposal as “an approach that would reduce our rate of investment” in Maryland. But he said the plan fails to include concrete details about how to reduce spending when 80 percent of the budget goes to education, health and public safety.

Mr. O'Donnell said Republicans have gone through an exhaustive process to plan out the details.

“If they decide to bring us more into the policy discussions, we will of course have that discussion,” he said.

The 15,000 slot machines would be split among six venues and would generate roughly $600 million in upfront license proceeds, according to the proposal.

Mr. Schuh said the slots plan also calls for auctioning the hold rate, or the percentage of revenue retained by the licensee.

The slots debate, which has been divisive over the past five years, already has been prominent in discussions about how to address the deficit. But it’s not clear if lawmakers will be able to reach a breakthrough this time.

Though Republicans are outnumbered in the House, Mr. O'Donnell said the party wants to offer an alternative, instead of sitting back and merely lobbing “rhetorical bombs.”