Special budget session likely

The Baltimore Sun

Gov. Martin O'Malley said yesterday that he favors a special session of the General Assembly in the coming months to solve Maryland's projected $1.5 billion budget shortfall.

The Democratic governor has not begun the formal process of calling a special session, but yesterday he made his strongest statements to date in support of bringing lawmakers back to Annapolis this fall to debate taxes, spending and slot machine gambling.

O'Malley has been working to find a consensus with the Democratic leaders of the General Assembly, and he said he would need to do so by the beginning of October to make a special session worthwhile.

"The advantage of a special session is people are singularly focused on the challenge," O'Malley said yesterday morning in a radio interview on WOLB-AM's Larry Young Show. "With a challenge as complex and as great as this budget challenge, I think it would be very helpful to get all of us focused and to resolve this so we can move forward."

O'Malley said he has a plan in mind for how he would like to solve the budget problem -- a combination of spending reductions, tax increases and revenue from legalized slot machines -- and will unveil it in the next few weeks, whether the leaders in the House and Senate agree to it or not.

He said he is confident he can develop a consensus with Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch, though the two Democratic leaders have proved difficult to bring together in the past.

O'Malley said in the radio interview that he thinks he's "five-sevenths of the way there."

"I wouldn't say we've hit any hard-and-fast sticking points as of yet," O'Malley told The Sun yesterday afternoon as he toured the Maryland State Fair. "In the past, it's been very difficult to arrive at any consensus on slots, but there was no attempt to arrive at consensus on other things."

Indeed, Miller said yesterday he is more willing to compromise on tax proposals than he has been in the past. Miller said he could back measures that have been popular in the House of Delegates but not in the Senate, such as closing some corporate tax loopholes.

He said he would also back a sales tax increase -- which passed the House three years ago but died in the Senate -- as long as it is paired with legalized slot machines.

"I don't think there are any sticking points as far as the Senate is concerned," Miller said.

In fact, O'Malley appears to have moved closer to Miller's position on slot machines. The Senate president is the legislature's most ardent backer of slots, while Busch was largely responsible for stopping them during the term of O'Malley's predecessor, Republican Robert L. Ehrlich Jr.

O'Malley has been lukewarm on the issue, saying he supports slots at racetracks such as Laurel and Pimlico to save horse racing but not as a means of paying for education, health care, public safety and other business of the state.

As Baltimore mayor, O'Malley once called the idea of using slot machine revenues to fund the operating budget "morally bankrupt."

But speaking on Baltimore radio stations yesterday morning and in an interview yesterday afternoon, O'Malley called slot machines a practical and political necessity for solving the budget deficit.

"I'd still like to see the [revenue] roped off," O'Malley said. "I still don't think it's a great source of operating revenue. I probably need to compromise on that."

Busch was out of town yesterday and was unavailable for comment, but leaders in the House say they don't yet sense a movement toward compromise.

The idea of a special session has been as hotly contested in Annapolis as any of the proposals for taxes or gambling that would be decided in one. Miller has been insisting for months that a special session is necessary, while Busch has been resisting.

Republicans are split on the issue.

Del. Murray D. Levy, a Democrat and budgeting expert from Charles County, said he would much rather see the issues addressed during the next regular session, which begins in January.

"In a special session, you only get to see one piece of the puzzle at a time," Levy said. "I like to see the whole puzzle. In a regular session, trade-offs will be made, but you'll have a complete and a much more comprehensive plan."

But former Sen. Barbara A. Hoffman, a Baltimore Democrat who chaired the Budget and Taxation Committee, said that would be a recipe for chaos.

"You get all the sturm und drang over with, all the gnashing of teeth, with a special session," Hoffman said. "If they fail to have a special session, all the legislature will be able to do next year is the budget. It's going to eat up everything."

Another advantage, special session backers say, is that higher taxes could take effect Jan. 1 rather than July 1, providing an extra six months of higher revenues and reducing the overall amount of the increase. Additional spending cuts could kick in sooner, too, and slot machines, which would likely take years to come on line, would be operational that much earlier.

The Republican leaders in the House and Senate are split on a special session, though they are unified in their belief that the problem should be handled through slots and spending freeze, not with tax increases.

Del. Anthony J. O'Donnell, the House minority leader from Southern Maryland, said he thinks the problem should be solved now, but Sen. David R. Brinkley, the Senate minority leader from Frederick County, said it can be solved in January.

"We should have addressed this issue last year in the regular session, and we did nothing," O'Donnell said. "But we are where we are, and the sooner we get to fixing the state's budget problem, the better off we'll be."

Brinkley said a special session is a recipe for tax increases.

"I'd guess their expectation is they'll spend some of their political capital in a special session on the current gap and then they'll spend some more of their capital and time in a regular session raising more money to deal with more programs," Brinkley said.

O'Malley said yesterday that he does intend to do more than just fill the $1.5 billion hole. He has said that he wants a transportation funding package and to expand Medicaid to cover more poor adults. He hasn't said how he would fund those programs, but higher gas and cigarette taxes are options.

The governor said he thinks that adding to the number of issues the state is trying to address in a special session could, paradoxically, make it easier to get the votes he needs.

"It's tough to get people to cast votes to correct the mistakes of the past," O'Malley said, referring to previous tax cuts and spending that led to the state budget shortfall. "People don't mind casting difficult votes if it means they will be able to do more on health care, education and public safety."


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