- The Washington Times - Saturday, March 29, 2008

ANNAPOLIS — State budget negotiators gained little ground yesterday in their efforts to resolve some of the harder high-profile spending reductions, as questions about how to repeal a despised tax on computer services linger in Maryland’s budget backdrop.

Members of the House and Senate budget conference committee met for the second straight day to work on differences in budget legislation. It wasn’t enough to reconcile discrepancies in stem-cell-research funding, health care expansion and a proposal to put $25 million in a fund to battle pollution in the Chesapeake Bay.

“We made progress on the easy issues. These were tough issues,” said Sen. Ulysses Currie, Prince George’s Democrat who chairs the Senate Budget and Taxation Committee.

Lawmakers are trying to put the finishing touches on how to make up more than $300 million in cuts. They are scheduled to meet again on Monday.

The House has recommended cutting money Gov. Martin O’Malley has put in the budget for research from $23 million to $15 million. But the Senate wants to cut it down to $5 million. The conference committee is considering the possibility of tying extra money generated by the state lottery into boosting stem-cell money.

Negotiators have been hampered by uncertainty about how to fill the $200 million budget hole that would be caused by repealing an extension of the sales tax to computer services, which critics say could end up devastating the information technology industry in the state.

Mr. O’Malley, a Democrat, has discussed making up the money with a tax on people who make $1 million or more, which would raise about $100 million. The other $100 million would be made up with $50 million from the state’s transportation trust fund and $50 million in further budget cuts that haven’t been determined.

Loathing for the so-called tech tax, a product of November’s General Assembly special session, has reached the point where budget negotiators are even preparing a scenario for $200 million in budget cuts — if necessary, just in case new revenues can’t be found.

A fund to fight pollution in the Chesapeake Bay is another big issue lawmakers need to resolve. The Senate has proposed putting $25 million in the fund for the next two years. That represents only half of the $50 million the General Assembly approved in the special session. The House only wants the $25 million reduction for next year.

In an extreme example of what might have to be done to repeal the tech tax — without new revenue or using the transportation trust fund money — Mr. Currie mentioned the possibility of a further hit to the Bay fund, perhaps draining it to nothing.

“If we’re required to find $200 million if we repeal the computer tax, I think everything is on the table, including the Bay fund,” Mr. Currie said in an interview after the meeting.

The conference committee also is grappling with what to do about an expansion of health care to the uninsured — another product of the November special session. The Senate wants to delay the implementation of Medicaid expansion to parents by six months, while the House wants to start it on schedule in July.

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