- The Washington Times - Saturday, March 15, 2003

ANNAPOLIS Gov. Robert L. Ehrlich Jr. yesterday sent to the legislature a new budget-balancing proposal that would raise state property taxes and increase fees paid by businesses by $85 million a year.

The governor also asked lawmakers to take $106 million out of the state's rainy day fund to avoid a deficit in next year's budget.

Warren Deschenaux, the legislature's chief fiscal adviser, said the state portion of the property tax now 8 cents per $100 of assessed value would have to increase to almost 13 cents to free about $165 million needed to balance the budget.

Democratic leaders commended the Republican governor for proposing some revenue increases, but Mr. Ehrlich is coming under attack from some of the more conservative members of his own party.

Speaking to reporters in Baltimore, where he attended the swearing in of Col. Edward Norris as state police superintendent, Mr. Ehrlich defended his proposal, saying he has a constitutional duty to balance the budget.

He said he has kept the promises during his campaign that he would not increase the sales tax or income taxes.

The constitution specifies that the property tax is to be used to pay off bonds sold by the state, but the legislature and previous governors have held the tax at 8 cents by using other state funds to pay part of the debt service.

"We're going to end the property tax subsidy," Mr. Ehrlich said.

He said the $85 million in new budget cuts he proposed yesterday will bring total spending reductions for next year to half a billion dollars.

Senate President Thomas V. Mike Miller Jr., Prince George's County Democrat, said Mr. Ehrlich deserves credit for agreeing to the property tax increase and the higher fees on corporations as part of the solution to a revenue shortfall estimated at almost $2 billion this year and next year.

"I know that is the third rail in Republican politics, you don't raise taxes," Mr. Miller said. "I'm pleased that the partial step has been taken because there's the right wing of his party that is his base that's displeased with this."

Even with the new proposals, Democratic leaders said Mr. Ehrlich did not go far enough to balance the budget because he is counting on collecting about $165 million in slot machine revenue for the fiscal 2004 budget most of it from $120 million in fees he wants to collect from owners of Laurel, Pimlico and Rosecroft racetracks.

Legislative leaders say it is unrealistic to expect the state will get any revenue from slot machines next year even if the General Assembly passes a slots bill.

Yesterday, the House approved a bill that would delay a decision on slots legislation to study how Maryland would be affected if thousands of slot machines are installed at racetracks.

The vote "does not preclude us passing a [slot machine] bill this year," said House Minority Leader Alfred Redmer, a Baltimore County Republican who is supporting the governor on slots.

But Delegate Peter Franchot, Montgomery County Democrat, said the bill is a clear signal that the House will not vote for a slot machine bill this year.

Most House leaders are opposed to slot machines, but there is much more support in the Senate, where Mr. Miller is a key Ehrlich ally on slots.

Meanwhile, some conservative lawmakers criticized Mr. Ehrlich's proposal to raise taxes.

Sen. Roy P. Dyson, Calvert County Democrat, said he "does not like the idea" of raising property taxes or of taking money out of the rainy day fund.

"It's a good idea if we never have any problems," he said, adding that unexpected situations requiring money from the fund arise all the time, like the tornado that swept though Charles County last year. "A lot of the help that came in comes through in those kinds of situation relies on the rainy day fund."

Mr. Ehrlich proposed some spending increases in the new supplement to the budget he introduced in January.

He is seeking $1 million for the Baltimore State's Attorney's Office that would be used to prosecute gun crimes and repeat offenders.

He also asked the legislature to give state police an additional $3.6 million to pay for costs incurred during the sniper attacks last fall and last month's record-setting snowfall.

Staff writer Vaishali Honawar contributed to this report.

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