- The Washington Times - Wednesday, March 17, 2004

ANNAPOLIS — The Senate gave tentative approval yesterday to Gov. Robert L. Ehrlich Jr.’s $23.6 billion budget and two accompanying bills that would increase fees and taxes to keep next year’s budget in the black.

There was limited discussion as the Senate slogged through almost 300 amendments that were added to the two bills by the Budget and Taxation Committee.

However, lawmakers debated the committee’s decision to impose a 5 percent sales tax on snack items such as chips, pretzels and nuts. The “snack tax” would generate about $16 million a year.

It was part of a $158.9 million package of tax increases, with most of the money coming from a bill proposed by Mr. Ehrlich, a Republican, to close tax loopholes used by corporations to avoid paying state corporate income taxes on part of the profits they earn in Maryland.

Sen. Nancy Jacobs, Harford Republican, led the fight against the snack tax. She complained that it was added by the committee without notice or a public hearing.

“This issue is too important to take up like this,” Mrs. Jacobs said.

She also said the tax, which is paid by consumers at the time of purchase, would be devastating to her county’s largest manufacturing employer, Frito-Lay.

The snack-food maker has 386 full-time workers and has bought land to expand its facility in Harford County, Mrs. Jacobs said.

Sen. Patrick J. Hogan, Montgomery Democrat, said that the state repealed its snack tax in 1997 “when money was rolling in,” and that the majority of committee members think it should be reinstated because Maryland needs the money again.

Mrs. Jacobs’ motion to eliminate the tax increase was rejected by a 26-20 vote.

The three bills making up the budget plan are expected for a final Senate vote on Friday.

Minority Leader J. Lowell Stoltzfus, Somerset Republican, said the 14 Senate Republicans will vote as a bloc against the bill that includes the taxes and fees, though most of the new revenue initially was proposed by Mr. Ehrlich.

“We were prepared to vote for the fees, at least most of us were,” Mr. Stoltzfus said.

However, Republicans cannot support the taxes added by the Budget and Taxation Committee, he said.

Republicans argued that the taxes are not needed because there is a surplus in the budget of about $169 million.

“We might not even need these things [taxes] to balance the budget,” Mr. Stoltzfus said.

Mr. Hogan said the committee deliberately built the large surplus into the budget because the legislature’s fiscal advisers thought Mr. Ehrlich underfunded some programs in next year’s budget by about $150 million.

James “Chip” DiPaula, the governor’s budget secretary, said last week that the administration thinks its numbers are correct and that the budget is fully funded.

Mr. Stoltzfus said the tax increases might come back to haunt Democrats.

Mr. Hogan said Republicans are trying to have it both ways, voting to increase spending but opposing tax increases to pay it.

“It’s frustrating that people who will not vote for a revenue measure are the first ones at a ribbon cutting for a new, publicly funded project,” Mr. Hogan said.

If the budget and the bills are approved by the Senate on Wednesday, they will go to the House of Delegates, where the Appropriations Committee also is working on the governor’s budget and revenue bills.

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