GBC’s Fry: Unfinished business looms for “tax-fatigued” lawmakers

Don Fry Commentary on WYPR

After enacting more than $1 billion in added taxes and other new revenues during the 2007 special session, “tax-fatigued” lawmakers are anxious to move on to other issues in the 2008 session of the Maryland General Assembly.

However, unfinished business from the special session remains and will impact the General Assembly during the next 90 days and beyond.

First, even with the special session’s revenue increases, the state’s expenses still must be trimmed by millions of dollars.

Also, lawmakers must defend their rationale for expanding the sales tax to computer services as business advocates, including the Greater Baltimore Committee, push hard for the tax’s repeal before it takes effect on July 1. Both Governor Martin O’Malley and Senate President Mike Miller say they are strongly opposed to repealing the tax, which would generate an estimated $200 million in state revenue. Speaker Mike Busch has said that for him to support a repeal, $200 million in cuts or other revenues must be identified.

Then there’s the $400 million in added state transportation revenue enacted in November. It’s still $200 million short of the amount needed to address the state’s $40 billion backlog of unfunded transportation projects.

A wild card looming over Annapolis is the November referendum on the constitutional amendment to legalize slots that was passed during the special session. More than $500 million in state revenue is anticipated from slots.

Passage of the slots referendum is, by no means, assured. Though polls show more than half of Marylanders favoring slots, most lawmakers expect a contentious pre-election public campaign over slots and a very close referendum vote.

If voters don’t approve slots, that could leave the state with an additional $500 million deficit to fill. But the potential economic impact of a slots referendum defeat could be even worse. Maryland could lose the Preakness, say racing industry sources.

Then there’s the ultimate wild card – Maryland’s economy. Will it deliver the tax revenues lawmakers are projecting? In Annapolis, that’s the billion-dollar question.

For the Regional Business Report, this is Don Fry, President and CEO of the Greater Baltimore Committee, for 88.1 WYPR, your NPR news station.

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