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Tax ax awaits wary '92 General Assembly

ANNAPOLIS — ANNAPOLIS -- Afraid to raise taxes, afraid to cut the budget again, and afraid that whatever they do will offend an already unhappy electorate, the Maryland General Assembly reconvenes this Wednesday to face options that have only this in common: All are bad.

Following a decade of booming revenues and a corresponding expansion of government, Maryland finds itself in the grip of enduring economic calamity that demands a wrenching self-examination, a return to first questions:

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What do people want from government? Will they pay for it?

By the time the 90-day session ends in early April -- and despite all the fear and loathing -- it is likely that taxes will have been raised and that dozens of long-standing government programs will have been eliminated or pared back.

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Promised outlays of state aid to Baltimore and the 23 counties, for instance, are likely to be cut, and in their place local governments will be given the authority to raise more taxes themselves -- whether they want it or not.

At stake more directly this year than in any in a decade are the quality of life in Maryland, the state's fiscal stability and the immediate and long-range political fortunes of the state's 188 senators and delegates.

"In a phrase, I think it is going to be the session from hell," said Sen. John A. Pica Jr., D-Baltimore.

To complicate matters further, the volatile tax and budget issues must be decided against the back drop of a new legislative redistricting plan, which Gov. William Donald Schaefer is required to introduce on the session's opening day. The new election-district map will pit delegate against delegate and senator against senator as every politician tries to hang onto familiar neighborhoods and loyal supporters. Among other changes proposed this year, the new map would merge Baltimore and Baltimore County districts for the first time.

The governor's proposal will become law automatically on the session's 45th day unless a majority of legislators in both houses agrees to an alternative. The early betting says the governor's plan will prevail.

"This is potentially a very difficult session," says Delegate D. Bruce Poole, D-Washington County, the House majority leader. "But it may be that circumstances are so bad we find ourselves not as divided as we fear. I think there's a consensus on how bad things are. With a few exceptions, you don't hear a lot of debate on whether we have serious problems. The question is what to do."

Mr. Poole and others say Marylanders may be watching their sometimes-faceless legislators this year, looking for answers.

"This year counts," he said. "People are looking for some stability."

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Governor Schaefer, who's been obliged to repress his penchant for building and for the pursuit of new programs, says he is more optimistic this year about the return of the legislature. Last year, he says, the assembly rejected his pleas for additional taxes -- but he expects more cooperation this time, he said.

In a presession interview last week, he said he hoped legislators would reject "continual reduction of state government." He has provided a road map that would balance the books without taxes -- but he clearly intends to oppose it.

"That will do major damage to the subdivisions and poor people. It can be done, but when they look at the [additional] budget [cuts] we propose, it will be very difficult for the legislature to agree with," he said.

If redistricting doesn't distract legislators, the state's unusually early, March 3 presidential and congressional primaries may. Six delegates and senators are candidates for either the U.S. House of Representatives or the U.S. Senate, and presidential candidates are likely to invade Maryland seeking an early primary victory.

Budget, tax and political issues undoubtedly will dominate the session, but the assembly will face other questions as well:

* After a series of false starts, will gambling-shy lawmakers finally legalize off-track betting on horse races? The early odds say they will.

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* Can motorcycle riders again stop the legislature from requiring them to wear helmets when they ride? Probably not. A new federal highway law offers the state more money if it has a mandatory helmet law, and in these hard times the state is likely to go along with almost anything that will mean more money.

* Will the legislature take its first tentative steps toward some type of socialized health care system that aims to lower insurance costs, expand the availability of coverage, or both? The issue will be addressed at a two-day health care "summit" next week that's expected to attract up to 400 participants.

* Can the governor exert the clout necessary to push through a ban on assault weapons, or a companion measure to protect children from loaded firearms? Mr. Schaefer was unable to get similar measures through last year, and little has changed to give them more oomph this year.

* The governor also wants some health care workers tested for the AIDS virus, but with so little money available for basic state programs, it seems unlikely the legislature will support such an expensive proposition. Besides, the idea is opposed by the politically powerful medical community as well as by the governor's own AIDS Council.

* Mr. Schaefer also has decided to back a bill that died last session that would attempt to reduce air pollution by setting in Maryland the same stiff vehicle emissions standards that are now the law in California. Other states in the region have backed the idea, giving it momentum.

There will be other controversies, including renewed fights over the structure of the state's system of higher education, such as whether the University of Maryland's Baltimore and Baltimore County campuses should be merged.

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There will be debates over state efforts to regulate development, over regulation of the insurance industry, over stiffer penalties for drug dealers. But the session's focus, likely from beginning to end, will be money.

"There's only one issue: How we balance the budget," said Delegate Timothy F. Maloney, D-Prince George's, chairman of a House appropriations subcommittee.

But Mr. Maloney and many of his colleagues readily concede that part of their dilemma is that the public -- and a significant number of rank-and-file legislators -- either do not understand the depth of the crisis or believe it can be managed without raising taxes.

"I think the governor of the state is going to have to expose the citizens to the hardships attendant to a no-tax-increase budget," Mr. Maloney said. "I think any responsible legislators have now reached the point where they agree that both substantial budget cuts and substantial tax increases are necessary."

Among the many tax ideas on the table:

* An increase in the state's 5 percent sales tax, and expansion to include a new array of consumer services, such as car repairs, haircuts and dry cleaning.

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* A restructuring of state income taxes to shift the burden to wealthier taxpayers.

* A phased-in increase in the state gasoline tax to reignite the state's stalled highway construction program.

* An increase in the state's corporate income tax rate.

But one important legislator who apparently has not reached the conclusion that taxes are inevitable is the leader of the House of Delegates, Speaker R. Clayton Mitchell Jr., D-Kent. Virtually alone among the legislative leadership, Mr. Mitchell has stubbornly refused to go along with leaders in both houses who have decided some sort of tax increase is unavoidable.

Mr. Mitchell thinks government is too ambitious and too big. He thinks the public does not like and won't stand for a further demand on their resources. Until that changes, he believes, the legislature won't vote for more taxes.

Sen. Michael J. Collins, D-Baltimore County, is fairly typical of the legislative skepticism about new taxes: "I'm personally very reluctant to consider increased taxes at this time until I am convinced -- and I have not been yet -- that there are more 'D efficiencies and downsizing taking place," he said.

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Conservative Republicans, like House Minority Leader Ellen R. Sauerbrey, R-Baltimore County, go even further. Mrs. Sauerbrey questions whether the deficit is really as bad as the Schaefer administration says, and thinks the legislature has an obligation to eliminate most, if not all, of the deficit by belt-tightening.

If she had her way, for example, she would simply pass legislation canceling a $183 million increase in state aid for education mandated by law, saying such a huge increase

approved when times were good cannot be justified in the

current economy. But tampering with money appropriated for education -- an untouchable even in the era of no new taxes -- may prove politically impossible.

Whatever is done will demand the best leadership skills of Mr. Schaefer and the presiding officers, Mr. Mitchell and Senate President Thomas V. Mike Miller Jr., D-Prince George's.

"Without the governor and the speaker really pushing hard for this, it just cannot, will not happen," said Mr. Miller, who says he supports a temporary tax increase that would automatically end in one or two years. A year ago, however, Mr. Miller similarly urged the governor to introduce a major restructuring of the tax system, but then did little to support it.

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This session is likely to be particularly chaotic because whatever is decided will have to be decided by a wildly divided legislature. Any tax increase will require legislative approval, and just about any significant budget reduction would mean a change in statutorily mandated expenditures, which also would require legislative approval.

As chairman of Baltimore's Senate delegation, Mr. Pica said city senators are united in the view that a tax increase is essential to help the city out of its financial abyss.

But he said city lawmakers will not support any tax plan that does not make the city "the main beneficiary."

That, of course, will cause problems with legislators from most other jurisdictions who may not have the political support at home to raise taxes at all, much less to bail out the city.

"Legislators who are under pressure for increased spending are looking over both shoulders trying to figure out which is most detrimental politically -- to anger teachers and others who want more spending, or taxpayers who don't," said Mrs. Sauerbrey. "Where is the political retribution?"

At the core is this stomach-churning fact: Democrats who control the House and Senate know the Republicans are just waiting for them to pick their poison: to cut programs people want, or to raise taxes.

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"I think events are on our side right now," said Mrs. Sauerbrey. "And I think we're on the side of the angels. . . . If the [Democratic] majority goes in another direction, they are going to be giving us one powerful tool to be used in the next election. It's like: 'Make my day!' "

On the agenda

Here are some of the major issues that are expected to be debated in the 1992 General Assembly session:

Budget and taxes

The state faces a projected $1.2 billion deficit in upcoming fiscal year 1993. The legislature must decide whether that deficit can be eliminated by raising taxes, by cutting programs and reducing mandated expenditures, or by some combination of those actions.

Reapportionment

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Based on the 1990 census, the governor will introduce a plan to redraw the boundary lines between the state's 47 legislative districts. Unless the General Assembly can agree on an alternative plan, the governor's plan becomes law on the session's 45th day.

Horse racing

The state's horse racing industry again is expected to push for legalization of off-track betting in an apparent effort to keep Maryland's racing industry competitive with that in other states.

Education

One central issue will be whether the state can afford in these lean economic times to finance a previously mandated $183 million increase in state aid for public schools.

Health care

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At least three sweeping proposals to reform Maryland's health insurance system will be on the table, including a bill to adopt a Canada-style universal health plan. At the very least, some relief is expected for small businesses encumbered by high insurance costs.

AIDS testing

Governor Schaefer wants some health care providers subjected to mandatory tests for the AIDS virus, a proposal opposed by the medical community and by the governor's AIDS Council.

Helicopters

Based on a recommendation from the governor's Commission on Economy and Efficiency in Government, the legislature will be asked to increase vehicle registration fees by $8 to finance the Medevac helicopter program.

Hostages

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The Schaefer administration will propose legislation that would substantially increase the penalties on prison or jail inmates who take guards hostages.

Air pollution

The Schaefer administration wants the state to introduce stiff California-style standards on vehicle emissions to help meet federal air pollution guidelines.

Guns

The Schaefer administration again will try to convince the legislature to ban the sale or possession of certain types of "assault" weapons, and also will back a companion bill aimed at making it harder for children to gain access to loaded firearms.

Motorcycle helmets

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The Schaefer administration will propose legislation requiring all adult motorcycle riders in Maryland to wear helmets.


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