By Len Lazarick
Widening Maryland’s sales tax to include more services is “the place to go” in fixing the state’s persistent structural deficit, the chairman of the Senate Budget and Taxation Committee said Thursday.
Sen. Edward Kasemeyer, D-Howard, also said, “I’m assuming some kind of revenue increase” will be part of a transportation package Gov. Martin O’Malley will sponsor in the fall special session of the legislature that he will call to deal with congressional redistricting.
O’Malley press secretary Shaun Adamec confirmed that next Friday in Howard County, O’Malley will “convene a roundtable on transportation needs” involving business leaders and legislators to develop a transportation proposal, and revenues “will be part of the discussion.”
Kasemeyer was speaking in Annapolis to a legislative wrap-up organized by Maryland Nonprofits, which represents many nonprofit charities and service agencies. The group has been pressing for a broad array of tax hikes to prevent cuts to state services and even expand them.
But Kasemeyer predicted that fiscal 2013 is “going to be another year of belt tightening.”
Taxing more things
“We’ve got to tax more things,” Kasemeyer said, and broadening the sale tax to cover more consumer services is “where we might end up. … I see that as the place to go.”
Kasemeyer said it might be hard to get there. “It’s difficult to get people to agree,” he said, and requires getting six or seven people sitting at the table. “To a great extent, it’s a political decision.”
He noted that in the 2007 special session, the governor had proposed taxing a few services such as lawn cutting, and “we couldn’t even get there.” The session wound up with a few legislators sitting at a conference committee table – Kasemeyer was one of them as then vice-chair of B&T – and putting in the computer services tax that was repealed in a few months. He said that might not be the best way to do things.
Expanding the 6% sales tax to cover services has been proposed by many liberal Democrats, and opposition to it was one of persistent campaign themes for Republican ex-Gov. Bob Ehrlich in 2010 as he sought to reclaim the State House from O’Malley. Ehrlich would display charts naming the dozens of services that could be taxed if Democrats prevailed.
The need to replenish the depleted transportation trust fund has been recognized for years as highway projects small and large have gotten delayed. But instead, O’Malley has taken the money out of transportation to pay for other state programs in recent budgets.
“We still haven’t found an adequate way to fund transportation,” said Kasemeyer. Senate President Mike Miller has pushed for a gas tax hike for years, and House Speaker Michael Bush frequently notes the tax hasn’t been raised since 1992.
There was a push in January to put the transportation trust fund in a “lockbox” and to raise the gasoline tax along with other fees to pay for both highways and transit. In the 2007 special session, O’Malley proposed indexing the tax to inflation.
Despite strong support from business groups, none of the proposals have gained widespread support among legislators, especially as gasoline prices have risen sharply.
“There is a clear and defined and identified need to explore solutions,” Adamec said. “We have no idea” what the governor’s transportation proposal might look like, but “we need to begin the dialogue.”
“There are a thousand options out there,” he said.