Lawmakers considering range of fees, taxes

The increases would start in the cradle, with a boost in the cost of obtaining a birth certificate.

They would hit passengers on a train or a bus, students paying for college, and residents buying a car or a house.

Hospital patients could would see their health insurance premiums go up, homeowners would pay more for energy, drinkers would owe more for that beer.

With two weeks left in the 2011 legislative session, the General Assembly is focused on the state's operating budget. And as lawmakers look for new revenue to close a deficit estimated to be as large as $1.6 billion, they are considering increases to a broad range of fees.

Marylanders are likely to feel the impact in their wallets for years to come.

Collectively, the proposals would raise hundreds of millions of dollars — money that the legislature's majority Democrats say is necessary to keep the state running in the fiscal year that begins July 1.

Republicans say lawmakers should be downsizing government and have warned of fees they say are "hidden" within the advancing budget legislation. The House minority party proposed a spending plan that GOP members said would have cost the state $621 million less than the proposal introduced by Gov. Martin O'Malley. It was rejected by House Democrats.

The House of Delegates voted last week to send a $14.6 billion general operating budget spending plan to the Senate. The Assembly has until April 4 to approve the budget bill.

Because many of the cost increases would be permanent, the revenue would shrink the state's so-called structural deficit into the future. Democrats say the budget approved last week by the House of Delegates would narrow the gap by 46 percent, sending a signal to the Wall Street analysts who help determine a state's fiscal health.

But those increases also mean the state would be establishing a new, more expensive normal. Lightening consumer pocketbooks could be politically risky for O'Malley, a second-term Democrat who has tried to present himself at home and around the country as a fiscal hawk.

The governor kept his carefully worded 2010 campaign promise to avoid new taxes, but it's unclear if Marylanders will let him off the hook for the fees he has proposed, or any tax hikes might accept from the General Assembly.

"If he signs it, he owns it," said Jennifer Duffy, an analyst with the nonpartisan Cook Political Report. Duffy said the political impact would depend on how broadly the fees are felt.

But O'Malley sailed to a decisive victory last fall, seemingly unaffected by a special session in his first year in office that included more than $1 billion in tax increases. It featured a penny-per-dollar increase to the sales tax and elevated income tax rates for high-earning residents and small businesses — moves Republican challenger Robert L. Ehrlich Jr. eagerly pointed out on the campaign trail.

O'Malley spokesman Shaun Adamec said the governor has "a solid record of making decisions for the long-term fiscal health of our state and not based on political winds."

"The costs of doing nothing far outweigh the tough choices that need to be made now to address the challenges we've got with regard to the budget," Adamec said.

Fees have a particular resonance for O'Malley, whose campaign last year labeled Ehrlich "a typical politician" for claiming not to have raised taxes when he was governor.

Ehrlich did raise fees, which inspired the high-rotation advertisement in which an O'Malley supporter declared there was no difference: "If it comes from my pocket, it's a tax."

Months later, Duffy said, O'Malley "is hoping nobody remembers."

Republicans have labored to remind citizens.

"Watch out for a possible tax avalanche," Sen. E.J. Pipkin wrote in a email sent to the media earlier this month, noting "proposed taxes, fee hikes and bills that would burden Maryland's already over-taxed citizens."

"Let me count the ways the Maryland taxpayer could be scalped," the Eastern Shore Republican wrote.

One of the most sizable fee increases would be imposed on Maryland hospitals — and likely passed on to anyone with health insurance.

Democrats are proposing to increase the assessment on the state's 57 hospitals to a total of more than $250 million. The hospitals want to recoup that expense by raising their rates.

But increases in hospital rates require the approval of the state's Health Services Cost Review Commission, an independent panel that doesn't meet until four days after the General Assembly adjourns.

Commission Chairman Frederick W. Puddester said last week he didn't want to "prejudge" the panel's response.

"Historically, the commission has asked the hospitals to share," Puddester said. Last year, the state levied a smaller assessment, and hospitals had to eat 30 percent of it.

The larger assessment could result in increased insurance premiums for Marylanders.

"There is going to be that kind of pressure," said Health and Mental Hygiene secretary Joshua Sharfstein.

Senate Republicans have called the assessment a "hidden tax" that breaks O'Malley's campaign promise.

"The adjusting of hospital assessments is not an unprecedented way to help close a deficit, not in Maryland and not across the country," O'Malley spokesman Adamec said.

Talk of increases driving you to drink? Grab a beer — but that, too, could cost you more.

For the first time in more than four decades, a legislative committee has given the green light to raising a tax on alcoholic beverages. A new, alcohol-specific surcharge on the 6 percent sales tax for beer, wine and spirits would notch up one cent on the dollar over next three years, reaching a 9 percent rate.

Since more than half of Marylanders drink alcohol regularly, the proposal, which was approved last week by the Senate Budget and Taxation Committee and is backed by Senate President Thomas V. Mike Miller, is projected to raise $30 million in new revenue next year and about $85 million a year once it is fully implemented.

Carrying out that liquor — or anything else — in a plastic bag could cost extra in some areas.

The full Senate gave initial approval last week to legislation that would add Prince George's County to the list of Maryland jurisdictions authorized to levy a tax on plastic bags from stores. Baltimore City and Baltimore and Montgomery counties already have that ability.

"I love it," Miller said. "We need this bag bill to pass."

The senate president, a Southern Maryland Democrat, would like a statewide bag tax, but that idea is stalled in a Senate committee. Sen. Joan Carter Conway, who chairs the Senate Education, Health and Environmental Affairs Committee, said she believes the cost would be too great.

"It is about the economy," Conway said.

Another set of fees would be felt in daily life. The budget approved by the House would double the fee for birth certificates from $12 to $24, raising a projected $4 million — based on figures such as the 75,000 babies born in Maryland in 2009.

Other increases include doubling titling fees for cars and trucks to $100 and doubling the every-other-year charge for a vanity license plate to $50. Together, those measures are projected to generate $50 million. Nearly a million Marylanders registered car or truck titles with the Motor Vehicle Administration last year. And 81,000 vehicles bear vanity license plates.

The House plan would also double land recording fees to $40, producing another $17 million.

Bus, light rail and train trips would cost more if the Senate follows the House budget plan, which requires the Maryland Transit Administration to raise its basic fares for the first time since 2004. The basic fare for bus and light rail is $1.60 but could go up 40 cents. MARC train fares vary by distance.

College students and their families would feel more of a pinch under the proposed budget. Expect a 3 percent hike in tuition at the sprawling University System of Maryland, where there are about 168,500 students enrolled.

The governor's budget anticipated that increase, which the Board of Regents is expected to make official late next month.

It's the second year in a row that tuition has ticked upward, after a four-year freeze aimed at making higher education more affordable.

O'Malley wants Maryland utility companies to invest in a wind farm about 10 miles off the coast of Ocean City — an idea that would generate about 500 megawatts of power but could cost more than $1 billion.

Lawmakers have chafed at the price tag, which would be paid by utility customers in almost every household in Maryland. The O'Malley administration estimated the average ratepayer would see his or her monthly bill go up by about $1.44, but other estimates are higher. In an attempt to salvage one of his signature legislative items, O'Malley has proposed a cap of $2 per month in the first year.

House Economic Matters Chairman Dereck Davis said his committee members "are very concerned about the cost to ratepayers. We have to work through that."

Davis said his committee would delve into the issue this week.

Adamec said the governor is "confident that the people of Maryland see offshore wind as an investment in the energy security of our state, and a major job generator for the people of Maryland."

The year's tax talk won't stop when the General Assembly ends work on April 11. Some legislative leaders want to further reduce the structural deficit and address persistent funding shortfalls to the Transportation Trust Fund when legislators reconvene this fall for a special session to approve a new congressional map.

"I'd like to get it all done," said Senate Majority Leader Robert Garagiola. The Montgomery County Democrat has proposed a 10-cent increase to the gas tax and a bump in vehicle registration fees to raise nearly half a billion dollars that would mostly be used for road maintenance and repair.

He acknowledged the plan is dead for this session, but he is considering resurrecting it in the special session.

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