House OKs cut budget, without tech tax repeal

The Baltimore Sun

The House of Delegates yesterday gave preliminary approval to a slimmed-down version of Gov. Martin O'Malley's budget, voting down a Republican amendment to repeal the computer services tax through additional budget cuts.

But multiple efforts to scrap the unpopular levy are still under way in Annapolis, with some support building around the idea to tap the $400 million Transportation Trust Fund to pay for a repeal of the $200 million expansion of the sales tax to computer services.

"It's a possible source," said Senate President Thomas V. Mike Miller. "I don't like to give up any money from the Transportation Trust Fund ... but if in fact we're going to have to pass on the computer services tax, the money needs to be forthcoming somewhere."

Miller said he may discuss the issue with O'Malley when the two meet today.

Yesterday in Greenbelt, O'Malley said he was aware that legislators are considering tapping sales tax revenues that had been earmarked for the transportation fund during November's special General Assembly session. But he said doing so would result in increased traffic congestion.

House Speaker Michael E. Busch said he agreed with O'Malley's opposition. "I don't think that's a good idea," said Busch, who also supports a repeal of the technology tax. "That fund has been stripped for years."

Busch said that he preferred increasing the income tax on high-earners to pay for it. That alternative is also supported by the governor, but it faces strong opposition from key Montgomery County lawmakers who are worried a tax increase on the wealthy will disproportionately affect their constituents.

During a three-hour debate in the House, lawmakers gave preliminary approval to a $31.2 billion budget, reflecting about $511.6 million in overall reductions to O'Malley's proposal.

The House cut about $239 million from general fund expenditures, or about $45 million more than the Senate did last week. Budget leaders from the two chambers will attempt to reconcile their differences in a conference committee this month.

"This budget is fiscally prudent because it is balanced and because it is $156 million below the limit recommended by the Spending Affordability Committee," said Del. Norman H. Conway, chairman of the House Appropriations Committee.

Republicans warned that the cuts were not enough to ward off future economic downturns.

"These reductions do nothing to cushion against the next round of write-downs we're expecting this summer or fall and we all ... know they're coming," said Del. Anthony J. O'Donnell, the minority leader from Southern Maryland.

Sun reporters Tim Wheeler and Bradley Olson contributed to this article.

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