- The Washington Times - Monday, January 28, 2002

ANNAPOLIS Tough choices. That is Gov. Parris N. Glendening's mantra this year as he talks about decisions he has faced in writing the state's $22 billion budget a process complicated by a lingering economic downturn that has taken a sizable bite out of expected state revenues.
One of those tough choices could have an impact on your wallet, albeit a relatively small one.
In 1997, the legislature approved a 10 percent cut in the state income tax. Lawmakers decided to phase it in over five years, and the final 2 percent reduction was scheduled to take effect Jan. 1 on income earned in 2002.
Mr. Glendening wants to put off that 2 percent tax cut, a move he says will free up $175 million so the state doesn't have to make cuts in basic services and can increase spending for education and health care.
Opponents say the governor's plan breaks a promise; furthermore, if taxpayers had that money, they could spend it and help revive the economy.
But Glendening spokesman Mike Morrill points out that governors nationwide including some Republicans are compensating for the recession by increasing taxes or putting off scheduled tax cuts.
Furthermore, Mr. Morrill says, the governor and the legislature have cut taxes by a total of $2.6 billion over the seven years Mr. Glendening has been in office.
The governor still wants this tax cut, Mr. Morrill insists, just not now.
"What he says is, we should do it on a timetable that doesn't destroy our investments in education and health care," Mr. Morrill said.
What does the 2 percent tax cut mean for the average Maryland family? The number varies depending on income, but Mr. Morrill says it averages less than $75 per family, or less than $1.50 a week. That figure applies to a family of four making $53,000 the median family income in Maryland. For a family of four earning $100,000, the tax cut would be around $80.
"It's really so little out of our checks in a year," said L.J. Machoian, 31, who works at her family's chicken stand in the Annapolis Market House. "You don't even really feel it, and it helps [the state]."
For comparison's sake, the Bush administration's across-the-board tax cut in 2001 sent rebate checks of up to $300 to individuals, $500 to heads of households and $600 to married couples.
Anirban Basu, director of applied economics at the Regional Economic Studies Institute at Towson University, said Maryland is generally an affluent state, so Mr. Glendening's proposal would have little impact.
"In most households, that's not going to make much of a difference," he said.
The state income tax was at 5 percent when the bill was passed in 1997. After five years of trimming, it was to have been chipped down to 4.75 percent this year. The tax cut was supplemented by an increase in the personal exemption a taxpayer can claim, which rose from $1,200 to $2,400.
Under the governor's proposal, the tax would remain at 4.8 percent and the personal exemption at $2,100, the same amounts as in 2001.
Senate Minority Leader Lowell Stoltzfus, Somerset Republican, believes lawmakers need to stand up to the governor and keep the tax cut in place.
"It's already law, so for us to do it now would actually be raising taxes," Mr. Stoltzfus said.
That position has bipartisan support. Senate President Thomas V. Mike Miller, Prince George's Democrat, and Sen. Barbara Hoffman, Baltimore Democrat and chairman of the Senate Budget and Taxation Committee, have indicated they want the tax cut to go into effect on schedule.
Comptroller William Donald Schaefer said going back now would be a "breach of faith with the taxpayers."
Mr. Stoltzfus and others also think the money would be a stimulus to Maryland's economy if it were to stay in taxpayers' hands.
Mr. Basu, on the other hand, thinks that effect would be minimal.
"If a tax cut would help stimulate the economy, delaying a tax cut would therefore have a detrimental effect to an already weak economy," he said. However, Mr. Basu said that effect may be mitigated by an economic expansion in 2003, which he anticipates.
Plus, if the government spends the money wisely, that also can be a stimulus to the economy, Mr. Basu said.

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