- The Washington Times - Wednesday, May 26, 2004

ANNAPOLIS — Gov. Robert L. Ehrlich Jr. yesterday vetoed bills that would have increased corporate taxes and the cost of state contracts, but let stand a bill that allows the state to collect more taxes from Delaware-based corporations.

“Despite my serious reservations concerning the [Delaware] bill, I have allowed [it] to become law … because it will prohibit the establishment of sham holding companies with no economic substance, solely designed to shield income derived from operations in Maryland from the state’s corporate-income tax,” said Mr. Ehrlich, a Republican.

He introduced the bill but stopped supporting it after the Democrat-controlled General Assembly made it veto-proof with an amendment to ensure a funding cut to the state’s Department of Business and Economic Development.

Mr. Ehrlich said the bill also is unfair to foreign companies.

“I didn’t think the companies should be allowed to get away with this,” said House Majority Leader Kumar P. Barve, Montgomery Democrat. “I am glad he let the bill become law.”

Mr. Ehrlich’s decision is a concession to Comptroller William Donald Schaefer, a Democrat but also a political ally to the governor.

However, Mr. Ehrlich did allow the passage of a bill that gives amnesty on back taxes to Delaware-chartered corporations that do business in Maryland. That rankled Mr. Schaefer, whose office estimates that those companies have run up a tax bill of about $90 million since 1995.

Mr. Ehrlich vetoed a bill that would have increased to $10.50 the minimum wage of employees working under state contracts because “he wants to encourage job creation and economic growth rather than limit business opportunities and endanger job growth,” said Henry Fawell, a spokesman for the governor.

He also vetoed a bill to put a temporary surcharge on corporate taxes to keep tuition costs from increasing by about 5 percent annually for the next three years.

“It is irresponsible and haphazard to create an unfunded [education] mandate,” Mr. Ehrlich said.

The bill has strong support from House Speaker Michael E. Busch, Anne Arundel Democrat, and Senate President Thomas V. Mike Miller Jr., Prince George’s Democrat.

Mr. Barve said the legislature most likely will overrride the veto after the fall tuition increase.

However, it is unclear whether Democrats will have 85 of 141 House votes or 29 of the 47 Senates votes to override the veto.

“When it gets to that point, you are going to have both sides twisting people’s arms,” said House Minority Leader George C. Edwards, Allegany and Garrett Republican.

Mr. Ehrlich vetoed 16 bills and signed more than 120 yesterday.

Among those signed was an administration proposal to add a $2.50 monthly fee on Marylanders’ sewer bills to upgrade wastewater treatment plants to improve the health of the Chesapeake Bay.

Mr. Ehrlich vetoed 19 bills after last year’s General Assembly session. His predecessor, Parris N. Glendening, a Democrat, vetoed as many as 35 bills and as few as 10 each year during his eight years in office.

Democratic lawmakers overrode five of Mr. Ehrlich’s 19 vetoes last year, his first year as governor. They were the first overrides in Maryland since 1989, the Department of Legislative Services said.

• This article is based in part on wire service reports.

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