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TAXING FUTURE:Key legislators believe increases maybe necessary to solve budget crisis


Struggling to solve Maryland's growing fiscal problems, several key lawmakers are saying it's time to consider raising taxes.

Senate President Thomas V. Mike Miller Jr. said the legislature will wait to see if Gov. William Donald Schaefer proposes any tax changes during the coming session.

"We'll give him the opportunity," Miller said. "But, if we find he's not living up to the mandate expected of him, the House and Senate will put together its own package of proposals to get the state fiscally sound."

Schaefer has said he likes the recently released report of the Linowes Commission, which calls for raising $800 million through new and higher taxes, although he has refused to say which specific parts he supports.

Despite the governor's endorsement, the administration will not propose any of the commission's recommendations, at least not in the opening weeks of the session when major legislation normally is introduced, according to several officials. Officials are planning instead to develop support for pieces of the proposal both within the legislature and among outside interest groups.

Even before that lobbying, though, some legislators already are discussing the possibility of higher taxes.

"I don't think there's any question that it's necessary" to consider raising taxes, said Del. Tyras S. Athey, chairman of the House Ways and Means Committee, which considers tax proposals. "I don't know where, and I don't know when. But we have to have some revenues."

Maryland has been hit by an onslaught of bad financial news lately. The state is facing a $243 million deficit in the current budget. Schaefer has proposed laying off as many as 1,800 workers, borrowing from the state's savings account and cutting programs to balance the budget by June 30.

The transportation fund also is running well behind expectations, which has forced Schaefer to halt any new construction projects for 45 days. The administration is expected to propose a gasoline tax increase of at least a nickel and perhaps as much as a dime a gallon.

And Schaefer will have to cope with drastically reduced revenue forecasts for 1991-92 when he presents what promises to be a low-fat budget to the General Assembly next month.

Although lawmakers are beginning to talk about the unpopular task of raising taxes, nobody is predicting it will happen during the 1991 legislative session.

"I think it will take a good year to massage it into shape to get it passed," said Sen. Barbara A. Hoffman, D-City, who will become vice chairman of the Senate Budget and Taxation Committee in January. "Something as big as restructuring the state tax system deserves some real attention."

Miller suggested the state might look at making state taxes, particularly the income tax, more progressive.

"I think the sentiment is there to consider the issue of fundamental fairness," said Miller, D-Prince George's. "I don't know any Marylander who isn't willing to pay their fair share. It's when he or she feels they are being unfairly soaked, that's when they stand up and holler."

Lawmakers agreed that they must convince the public that tax increases are necessary.

"I'd rather look at how we can reduce services, how we can reduce the budget before we talk about tax increases," said Del. Charles J. Ryan, D-Prince George's, chairman of the House Appropriations Committee.

While tax increases may be on the horizon, lawmakers are scrambling now to come up with a deficit-reduction package in response to Schaefer's proposal of last week. Lawmakers appear ready to accept some of the governor's ideas, such as borrowing as much as $75 million from the "rainy day fund" and the savings and loan recovery fund, and cutting about $40 million million from Program Open Space, a parkland program favored by environmentalists.

But legislative leaders, who have met several times over the past six days, are looking for other ways of reducing the number of layoffs, including:

* Postponing special pay raises for some underpaid state employees, such as prison guards, at a savings of about $8 million.

* Furloughing employees temporarily. Or having employees give up a week's pay, money that would be returned to the employees at the end of their state service.

* Halting the state's purchase of a new computer system for the Maryland lottery, which would save about $29 million this year. Coincidentally, yesterday was the due date for bids for the new ** computer system. Two companies submitted bids.

Meanwhile, leaders of a union representing state workers were meeting today with state leaders to lobby against layoffs.

"Now's the time to get off our duff because we are backed against the wall," William H. Bolander, director of AFSCME Council No. 92, told a group of about 60 union members last night.

Bolander -- who referred to the governor's depiction of the state's economy as "a trap" -- said the union refuses to believe any layoffs are necessary. Taxes on the state's rich, corporations and financial institutions should be considered, he said. Bolander also suggested the state could float a $400 million bond to pay off the deficit.

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