Wednesday, November 28, 2001

ANNAPOLIS (AP) Gov. Parris N. Glendening said yesterday that he believed Maryland residents would favor delaying a tax cut for a year or two instead of cutting funding for education and health care to help balance the budget.
The Democratic governor said before talking about the budget with House and Senate leaders that he had not made a decision on the tax cut and would not do so until mid-December, when he gets updated estimates on state tax revenues for the next 18 months.
But delaying the final 2-percentage-point reduction of the 10 percent income-tax cut approved in 1997 is one of the options being considered by Mr. Glendening and key legislative fiscal leaders.
“I get a sense that a consensus is developing for delaying the tax cut,” House Speaker Casper R. Taylor, Allegany Democrat, said after he and other House members met with the governor.
When lawmakers approved the tax cut, they voted to phase it in throughout five years with the final installment due to take effect Jan. 1.
Mr. Taylor said that when the economy was booming, the legislature accelerated the schedule to cut the first 8 percentage points more quickly than planned.
He also said that the governor and the legislature had cut taxes by $2.6 billion in the past five years.
It might be reasonable to delay the final reduction for a year or two until the recession ends and revenues return to a more normal level, Mr. Taylor said.
Mr. Glendening met separately with Senate leaders to discuss options for ensuring that the current budget and the one he will submit to the legislature in January will be balanced without major cuts in state services.
Senate President Thomas V. Mike Miller Jr., Prince George’s Democrat, said the tax cut would serve as a minor stimulus to the economy and would fulfill the pledge made to taxpayers in 1994.
“My personal preference is, I would like to see the tax cut put into place, ” Mr. Miller said.
The tax reduction would cost the state about $170 million in lost revenues for the final six months of fiscal 2001 and for all of fiscal 2002, which begins July 1.
There are so many variables in computing income taxes that the effect of a 2-percentage-point reduction on individual taxpayers will vary widely. The average savings per person would be about $30 a year, said Mike Morrill, Mr. Glendening’s communications director.
Mr. Glendening said Maryland was in much better shape than most states, some of which are considering tax increases to close huge holes in their budgets.
He said there would be no expansion of programs, but there also would be no cuts in education or services in areas such as health.

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