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No new taxes in budget, but many will pay more

THE BALTIMORE SUN

Marylanders who could soon pay more to renew a driver's license, dock a boat or flush a toilet may find solace in Gov. Robert L. Ehrlich Jr.'s campaign promise not to raise taxes.

Ehrlich pledged to hold steady the state's sales and income tax rates. So far, he has - despite a burdensome budget crunch. But he is seeking to raise a myriad of less-noticed charges and fees to help balance a $23.8 billion budget and launch new initiatives.

His Democratic opponents say the fee plan is a tax increase in disguise, and they are combing through the governor's budget and other proposed legislation to compile a comprehensive list of the fees that he wants to raise.

"His no-tax stance is obviously just a sham," said Sen. Brian E. Frosh, a Montgomery County Democrat who called the proposals a "nickel and dime" approach to budgeting.

Republican leaders contend that higher fees are preferable to taxes, because their effect is more narrow.

"There's a very clear difference," said Del. Anthony J. O'Donnell, the House minority whip from Calvert County. "The funds are dedicated, and there's a nexus between the user of the service and the fees attached."

Leading Democrats say the distinction is more semantics than substance. The governor, they charge, is trying to hide the increased cost of government to avoid retribution from angered voters.

"I don't think it fools anybody," Frosh said. "Obviously the strategy is one of obfuscation and denial."

When Ehrlich aides released the governor's budget last month, they refused to provide a detailed accounting of fee increases.

Legislative staffers are beginning to compile such a list, however, in preparation for a Feb. 10 meeting of the House Ways and Means Committee. More of the governor's bills containing the charges will be released by then.

Chairwoman Sheila E. Hixson said she expects that the sum of fee increases could exceed the $600 million a year that would be brought in by a one-cent increase in the state's five-cent-per-dollar sales tax.

"We want people to see it for what it is," she said.

State Budget Secretary James C. "Chip" DiPaula Jr. said the level of fees needed to balance the budget is far smaller. A budget-balancing bill in the works will contain $25 million in fee increases, "which is minuscule," he said.

But DiPaula's figure doesn't include a host of other charges on driver's licenses, veterinary licenses, scale inspections and other services that are being proposed by individual agencies.

Marylanders seem inclined to support an income or sales tax increase rather than higher user fees. In a telephone poll for The Sun conducted last month, 59 percent of likely voters surveyed picked a sales or income tax increase when asked for a preference "if taxes had to be raised." Twenty-seven percent chose "user fees such as an increase in the gas tax."

But budget experts say properly calculated user fees often make sense.

"If it is possible to set a price for a good or service that a citizen gets from the government, it could be very efficient to charge for it," said Roy T. Meyers, a political science professor at University of Maryland, Baltimore County. "You wouldn't encourage people to overuse it."

But many Marylanders will have a hard time escaping some of the proposed increases, even if they want to.

Ehrlich has proposed a $2.50 a month charge for households connected to sewers. The money will be used to upgrade 66 of the state's largest sewage treatment plants to reduce nitrogen flowing into the Chesapeake Bay.

"I would prefer to have the Republicans start telling the truth: A user fee is a tax," said Severna Park resident Edward Malarkey, 67, a retired physicist from Severna Park and a registered Democrat. "The user fee for sewers is particularly ugly because it hits everyone the same way, instead of charging people based on their usage."

Other broadly applied fees would affect drivers. Ehrlich is expected to propose in the coming days an increase in the automobile registration fee, from $40 to $70 yearly, to raise money for road construction.

Additionally, the state Motor Vehicle Administration is backing legislation that would allow it to collect $21 million more yearly in "miscellaneous fees," which include driver's license renewals and learner's permits.

If the bill passes, license renewals would increase from their $30-for-five-years level to a still-undetermined amount. The money would pay for computer technology so the MVA could provide better online, automated telephone and kiosk service, said chief deputy administrator John Kuo.

"Those are things we have to do more of," Kuo said. "Even though our customer base is increasing, the employee base is not increasing."

Mary Zimmerman, a retired nursing-home employee from Frostburg, worries about how such charges affect those on fixed incomes.

"I hate to keep saying that the people who make more money should be more responsible [for carrying a tax burden], but on the other hand why shouldn't they?" said Zimmerman, 71.

Criticism is increasing over another proposed charge: between $1,000 to $1,300 yearly on the state's 29,000 nursing home beds. Administration officials think the charge would be reimbursed by the federal Medicaid program at a higher rate, compensating nursing home owners and leaving $17 million for the state.

But the federal government looked unkindly on the maneuver when it was previously tried a decade ago, said Warren G. Deschenaux, the General Assembly's chief budget analyst.

The charge is "bad public policy," said Isabella Firth, president of Mid-Atlantic LifeSpan, an industry association that represents nursing homes and other senior care facilities, because it increases costs for seniors who are not on Medicaid.

"It's essentially a tax on Maryland's frail elderly, and particularly on seniors who are paying for their own care," Firth said.

A bill offered by the state Department of Natural Resources would increase two-year boat registration fees from $24 to $40 and would raise vessel manufacturer's and dealer's licenses from $25 to $50.

Carol Durr, co-owner of the Hammock Island Marina in northern Anne Arundel County, is more concerned about a separate state proposal to carry out a $50-a-space annual commercial marina slip tax.

"We would pass it on to our slip-holders. We wouldn't pay it, but we would have to collect it," Durr said. "The marina owners are still shellshocked from Hurricane Isabel. We are dealing with hundreds of thousands of dollars in damages. This is not the time to add to the marinas' burdens."

Despite the anticipated Democratic effort to demonize that charge and others, Ehrlich's budgeting approach is sound, said O'Donnell, the Republican delegate. To change the nomenclature from fee to tax, O'Donnell said, is nothing more than "playing games."

"The people of Maryland will see through these political, partisan games," he said.

Sun staff writer Johnathon E. Briggs contributed to this article.

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