Len Lazarick, The Examiner
2008-03-28 07:00:00.0
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Annapolis -

Gov. Martin O’Malley is “going to have to get the votes” to replace the new computer services sales tax with a surcharge on the incomes of millionaires plus transfers and budget cuts, Senate President Thomas V. Mike Miller said Thursday.

“They don’t have the votes at this time,” Miller said. But Senate Majority Leader Edward Kasemeyer is actively rounding up support for increasing the maximum state income tax rate to 6.25 percent on incomes over $1 million. It would raise about $100 million for the state.

The tech tax would generate an estimated $200 million. To replace it, in addition to the income tax increases, $50 million would be taken from the transportation trust fund, and $50 million would come from other reductions in next year’s spending.

Senators from Montgomery County, where almost half the millionaires live, are split. Kasemeyer said it seemed likely Democrats could come up with the necessary 24 votes to pass the income tax. Some senators want to make the tax increase permanent, and others want to make it last five years, Kasemeyer said. Miller said he would prefer a sunset provision in three years, as was done in the early 1990s.

“There’s got to be some soul-searching in Montgomery County,” Miller said.

He noted that the county was getting a lot of transportation money for construction of the InterCounty Connector and planning for a Purple Metro line.

Sen. Rona Kramer, chairwoman of the Montgomery County senators, said the revenue from computer services is “phantom money” since many of those businesses are planning to leave the state if they must pay the tax. “We’ve got a deficit to cover, regardless,” said Kramer. She lost her subcommittee chairmanship in the Budget and Taxation Committee after refusing to vote in November’s special session for tax increases, which included income tax increases on high earners.

The all-Democrat Montgomery County delegation is crucial to success because the Senate and House Republicans have refused to vote for any tax increases, preferring to finance repeal of the tech tax with further budget cuts. They reinforced their opposition in a letter to O’Malley on Thursday afternoon.

llazarick@baltimoreexaminer.com