House GOP Offers Spending Plan, Billions in Tax Cuts

Republican lawmakers proposed $3.8 billion in tax cuts Thursday, part of a four-year spending plan they said would wipe out the deficit and boost Maryland’s slumping economy.

The plan, introduced Thursday by the Maryland House GOP caucus, would slash the corporate and sales taxes, among others, and reduce government spending. According to the caucus, the proposal would lead to a $217 million general fund surplus by 2013, compared to the $159 million deficit currently projected.

The package was rolled out the same day Gov. Martin O’Malley, a Democrat, asked every state agency to cut spending by 5 percent this fiscal year. State officials recently hacked $432 million off Maryland’s expected revenue stream, mainly because of sliding income and sales tax receipts, and the state faces a potential $1 billion deficit next fiscal year.

Del. Tony O’Donnell, the House minority leader, dismissed the notion that, given the state’s economic woes, the GOP plan would fall flat in the Democratic-controlled legislature.

“”We actually believe it will stimulate the economy,”” O’Donnell said, in an interview about the spending proposal.

O’Donnell also blamed the sluggish economy on the $1.3 billion in tax hikes approved last fall by the General Assembly. The increases were meant to plug a $1.7 billion deficit, legislators said at the time.

“”When you raise taxes, revenues to the state actually go down, and we’re seeing that,”” he said.

The House Republicans presented their spending package at a press conference where they outlined Maryland’s dwindling finances and how the proposal will refill state coffers.

The state, they said, will have less than $500 million in cash-on-hand by 2009, far less than the $700 million required by state law. By 2010, the total will fall to a $449 million deficit.

The Republicans blamed the fiscal problems on “”chronic overspending”” by the government. O’Malley, in a statement, said the state needs to make “”painful”” budget cuts to solve the situation, though he did not cite a need for tax cuts.

“”The more [spending] reductions we make now, the better off we will be in dealing with an extraordinarily difficult budget next year,”” O’Malley said, in the statement.

Copyright © 2008 University of Maryland Philip Merrill College of Journalism