- The Washington Times - Tuesday, April 11, 2000

ANNAPOLIS The Maryland House and Senate approved a broad, yet incomplete, repeal of the inheritance tax last night in the waning minutes of the 2000 legislative session.
When they emerged from House Speaker Casper R. Taylor's office with Gov. Parris N. Glendening about 10:30 p.m., Maryland heirs got more tax relief than had initially been expected.
The compromise not only added siblings to the list of heirs for whom the tax is expected to be repealed, but eliminated probate fee increases the Senate had complained about in the House plan. It is expected to cost $25 million annually. Mr. Glendening has said he will sign it.
Mr. Taylor, who had advocated complete repeal for all heirs, scored a victory in getting concessions from Senate President Thomas V. Mike Miller Jr. who supported repealing the tax only on spouses and lineal heirs.
"I think we've come a long way … our goal is to eliminate it all," said Mr. Taylor, Allegany County Democrat.
The three leaders said they would continue, next year, to consider a complete repeal.
Brought to the brink, lawmakers realized it was important to bring some real tax relief back from the session, Mr. Taylor said. Legislators nevertheless set new records for spending this session.
An agreement to add about $7.5 million to the $12 million for remedial programs to end social promotion in public schools also entered negotiations.
Aside from the inheritance tax, tax relief from the $1 billion surplus was scant with the exception of oddities like the repeal of taxes on gum balls.
"Not only is there no meaningful tax relief, they frittered away a $1 billion surplus on pork and new, untested programs while core governmental services are neglected," said House Minority Leader Robert L. Flanagan, Howard and Montgomery counties Republican.
Legislation approved "could be called the 'Tax Increase and Broken Promise Act of 2002,' because that's what we are setting ourselves up for," said Senate Minority Leader Martin G. Madden, Prince George's and Howard county Republican.
Republicans said Gov. Parris N. Glendening and the Democratic majority largely ignored working people and businesses that fill the state's coffers for special interests.
Early in the session, lawmakers considered enacting the last phase of a 10 percent cut in the state's income tax a year ahead of schedule.
But talk of accelerating income-tax relief evaporated among Democratic leaders after March revenue estimates showed recent growing gains were going flat.
The average Marylander will have to wait until next year for tax relief, Mr. Madden said, when the state lifts its sales tax on clothing and shoes priced under $100 for one trial week in August.
Other tax relief is scarce and spotty. Sales tax was eliminated on:
Bottled water sold in gallons or more.
Vending items priced at 25 cents (gum balls) or less.
Smoking cessation products (nicotine patch, gum).
Energy-efficient appliances and vehicles.
Digital-broadcast equipment for TV and radio stations.
There were also some tax credits:
For adoption expenses up to $5,000, or up to $6,000 for a special-needs child.
$3,500 for fire-and-rescue workers with 72 months of service.
$2,500 for each prepaid tuition plan.
Up to $500 of the cost of long-term care insurance.
Business expansion in least-populous counties.
Mr. Glendening's $19.5 billion budget, approved by the legislature, features massive increases in spending on college and public school buildings. It uses about 60 percent of the surplus for capital-construction projects that include the largest college-building program in state history and a $262 million school-construction program.
But fiscal conservatives said Mr. Glendening's successful push to make companies pay higher, union-influenced "prevailing wage" to workers on many large public school-construction projects will put increased pressure on the state treasury and could threaten his school-building legacy.
Most Democrats said it's an issue of fairness because workers on other state-funded projects already are paid the prevailing wage. Glendening aides said, at most, it will increase costs about 0.33 percent.
Agreement on a plan expected to cost the state about $65 million annually was pending last night amid concerns about how much money should go to remedial programs in order to end social promotion although lawmakers agree teachers should be paid more.
Democratic and Republican lawmakers agree with Mr. Glendening that education should be a top priority, but there was dissension in both parties over his decision to send more than $6 million to private and parochial schools for textbooks.
During debates over how to spend the first payment from the tobacco industry, several lawmakers even argued that money for private schools wasn't taxpayers' money. They apparently lost sight of the fact that the money, to be paid out over 20 years, comes from a "restitution fund" meant to pay back costs that largely landed on taxpayers.
Still Mr. Glendening argued that most spending increases are for one-time projects and will not push up budget levels. Lawmakers note that they cannot remember seeing a budget decrease from year to year.
Expansion of state-paid health insurance for children which will pay all of that cost for children in families with incomes at 200 percent of federal poverty level and part for those with incomes at 300 percent will cost the Maryland about $25 million more in 2002.
Maryland's budget grew about 10 percent this year, while taxpayer income grew only about 5.4 percent. To fiscal conservatives of both parties, that's a warning flag that the state could be headed for some involuntary belt-tightening when the volatile stock market undergoes a major correction or takes a long downturn.
And Maryland lawmakers are already making plans to review and prepare to revamp their revenue structure as the trend to buying over the Internet promises to reduce the treasury's income from sales tax.

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