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Assembly Democrats likely to wrangle over tax cut specifics

Faced with a relatively non-controversial budget, Democratic lawmakers look to flex their muscles on other fis

There's not much in Gov. Larry Hogan's spending proposals that General Assembly Democrats don't like, but that doesn't mean there won't be wrangling.

Legislative leaders are likely to try to adjust Hogan's plans for who should receive tax breaks. And they want to guarantee that money is spent on their cherished priorities in the future.

The Republican governor's $42.3 billion budget, released last week, spends part of a projected $450 million surplus on public schools, state universities and health programs.

"I don't think there's any real consternation over the budget, as there was last year," said House Speaker Michael. E. Busch, an Anne Arundel County Democrat.

But Hogan has also proposed cutting $480 million in taxes and fees over the next five years and is seeking to take even more control of the state budget process. He would do that by eliminating spending requirements the legislature has imposed over the years. Those mandates dictate how more than 80 percent of the state's discretionary dollars are spent.

Lawmakers cannot add money to the governor's budget proposal. But when it comes to maintaining mandates and cutting taxes, the power shifts to Assembly Democrats. They hold super-majorities in the House of Delegates and Senate and used that advantage to override five of the governor's vetoes last week.

That strength might be shown again if Democrats can agree on how to alter Hogan's tax proposals and address his calls for mandate reform. Republican leaders say their members are behind the governor, while Democrats have just begun to consider alternatives.

Del. Maggie McIntosh, the Baltimore Democrat who chairs the House Appropriations Committee, said education aid formulas account for the bulk of mandated spending. She can't see the legislature agreeing to cut any future education spending.

A Hogan spokesman said Democrats wouldn't be doing anything they hadn't done under Gov. Martin O'Malley, a Democrat. According to the state Department of Budget and Management, the legislature cut $550 million in mandated K-12 education spending from 2007 to 2014.

"The phrase 'the pot calls the kettle black' doesn't come close to capturing the level of hypocrisy that we're seeing," Doug Mayer said.

On taxes and fees, some Democrats appear inclined to pare back Hogan's proposed reductions, while others lean toward substituting a package that reflects Democratic priorities.

Montgomery County Sen. Richard S. Madaleno Jr., vice chairman of the Budget & Taxation Committee and one of Hogan's fiercest critics, said Democrats might take a look at revamping the governor's across-the-board income tax credit for retirees so that it concentrates benefits on low-income and middle-class seniors rather than the well-to-do. Busch said the House might consider something similar.

One of Hogan's tax proposals — speeding an increase in the earned income tax credit for low-income working families — has been widely applauded by Democrats. But Busch said lawmakers will consider whether to expand the program to include single people.

Baltimore Sen. Nathaniel J. McFadden, a senior member of the budget panel, said Democrats are likely to consider some of the business tax cuts recommended recently by a commission led by Norman R. Augustine, the former Lockheed Martin chief executive. Busch and Senate President Thomas V. Mike Miller set up that commission.

Hogan spokesman Matthew A. Clark said there is no way he could see the governor vetoing a tax cut authored by Democrats unless it was a "phony-baloney" measure that was actually an increase.

House Minority Leader Nic Kipke, an Anne Arundel County Republican, said his caucus will follow Hogan's lead. With the Democrats' top priorities funded and room for tax relief, he doesn't see much in the budget that can be criticized. "It's very difficult for partisans to disagree with that," Kipke said.

That might be true of the budget, but not of tax cuts.

Del. Kumar Barve, a Montgomery County Democrat who is part of Busch's leadership team, said he's concerned about the effect of Hogan's proposed tax cuts when two years of projected surpluses are expected to end. An accountant by profession, Barve is wary of changing Maryland's tax structure based on good times that might be fleeting.

"My view is you only cut fees or taxes if you know where you're going to cut spending," said Barve, noting that he was speaking for himself and not House leadership.

While major priorities are fully funded, Democrats might take issue with smaller budget measures.

Hogan has drawn a line in the sand, saying he won't spend money that is cut from his budget and redirected toward another cause in separate legislation. Lawmakers might challenge that by cutting money for the governor's top priorities — such as $4.8 million allocated for drug treatment — and daring him to leave it unspent.

Richard Vatz, a political communication professor at Towson University and an outspoken Republican, said Hogan comes into the fiscal struggle with the strong upper hand because of his strong approval rating as measured in recent polls.

"There's a better chance for Governor Hogan to accomplish this than before it was apparent how popular he is," he said. Vatz said one of Hogan's strengths is a perception that he's willing to negotiate.

"I wouldn't be very surprised if what we end up with is everybody [agreeing] they've compromised reasonably," he said.

Baltimore Sun reporters Erin Cox and Pamela Wood contributed to this article.

mdresser@baltsun.com

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