- The Washington Times - Wednesday, April 30, 2003

ANNAPOLIS A $165 million increase in the state property tax proposed by Gov. Robert L. Ehrlich Jr. to balance next year’s budget is expected to be approved today by the Board of Public Works.
   The debate over who is responsible for the increase is far from over, however.
   The three members of the board Mr. Ehrlich, Comptroller William Donald Schaefer and Treasurer Nancy W. Kopp have no choice but to approve an increase in the tax from 8.4 cents to 13.2 cents per $100 of the assessed value of property.
   The tax must be set at a level that will provide enough money to pay debt service on bonds sold by the state for the fiscal year that begins July 1. The increase will add $96 to the annual tax bill of a house assessed for tax purposes at $200,000.
   The property-tax increase has stirred a heated debate between Mr. Ehrlich and Democratic legislative leaders over who is responsible.
   Mr. Ehrlich proposed the increase last month, when the state budget for fiscal 2004 took a double hit. State revenue estimates were reduced by $200 million, and Mr. Ehrlich revised his slot machine bill to reduce slot machine licensing fees he hoped to collect by track owners by $230 million.
   The budget included $165 million in regular tax funds to underwrite the bond costs and keep the tax rate at 8.4 cents, a policy followed by previous governors when times were good and the state had a lot of money. Mr. Ehrlich eliminated the subsidy so the money could be used for other purposes, requiring the property-tax increase.
   House Speaker Michael E. Busch, Anne Arundel County Democrat, and Senate President Thomas V. Mike Miller Jr., Prince George’s County Democrat, reacted angrily after the governor said during a radio interview last week that he agreed to eliminate the money and increase the property tax after Democratic leaders told him they were going to do so whether he liked it or not.
   “That’s pure fiction,” Mr. Busch said.
   Mr. Busch said Democrats were looking to other measures, including a temporary surcharge in the income tax, to make up for revenues lost due to the faltering national and state economies.
   Mr. Busch and Mr. Miller said Mr. Ehrlich proposed the increase at a meeting in the governor’s office and they agreed to it as an acceptable way to deal with the budget crisis.
   “The administration has got to get the facts straight and stop trying to confuse the public with political claptrap,” Mr. Miller said.
   Mr. Ehrlich said yesterday that the plan was proposed by Democrats and he went along with it.
   “I’m going to vote for it tomorrow,” the governor said.
   But he pledged that he will “put money back in next year” so the tax can revert to the current level.
   James “Chip” DiPaula, Mr. Ehrlich’s budget director, said the property-tax change was on a list of options prepared for the legislature and was not Mr. Ehrlich’s idea.
   “The fiscal leaders of the state told me they were going to take the money,” Mr. DiPaula said.
   When Mr. Ehrlich announced the increase as part of a budget-balancing plan that included a proposed $85 million increase in corporate filing fees, he portrayed it as his plan and did not mention any pressure from Democrats.
   “We’re going to end the property tax subsidy,” the governor said March 14. He said he was keeping his campaign promise that he would not increase the income or sales taxes.
   Mr. Ehrlich said yesterday he will keep his promise to veto a $135 million tax bill passed by the legislature that would close “loopholes” used by some Maryland corporations to escape paying state taxes and require health maintenance organizations to pay the same 2 percent premium on health insurance paid by regular insurance companies.
   That would require additional cuts in state spending that could be approved by the Board of Public Works or could be handled in a special session of the legislature.



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