ANNAPOLIS -- A union-backed proposal to guarantee a minimum wage of $10.50 an hour in state contracts could create a family feud within the Democratic Party.

The so-called living wage bill is sponsored by Del. Herman L. Taylor Jr. (D-Dist. 14) of Ashton and Sen. Katherine A. Klausmeier (D-Dist. 8) of Baltimore and pushed by Progressive Maryland and state employees. It has 80 co-sponsors in the House and 22 in the Senate.

Sean Dobson, deputy director of Progressive Maryland, said Democrats should pass the bill and put it on Gov. Robert L. Ehrlich Jr.'s desk. Democrats win whether Ehrlich (R) signs the bill or vetoes it, he said, because they can use it as a campaign issue.

But Senate President Thomas V. Mike Miller Jr. (D-Dist. 27) of Chesapeake Beach gave the idea -- and Progressive Maryland in particular -- a chilly reception when asked about it this week.

"I condemn them as much as I do the governor," Miller said of Progressive Maryland, calling the social action group the "far left."

"Before we decide how we're going to spend money, we have to decide how we're going to pay for some of these things on the wish list.

"There are so many great ideas on how to spend money," he said, but closing the budget gap must be the first priority.

Maryland Democratic Party Chairman Isiah Leggett has urged Democrats to support the measure. Leggett has pushed living wages during his four terms on the Montgomery County Council; Taylor, one of two black delegates from Montgomery, is a Leggett protege.

"I always believed that we should have done it as a state," Leggett said. "Clearly there are some political overtones to it. ... You can't get any more clear in terms of a core Democratic value than this living wage fight. This is something that I think Democrats should stand up and fight for."

Leggett said Democrats should help one of their core constituencies -- labor.

Taylor's bill would exempt contracts of less than $100,000 and nonprofit groups. Companies would be allowed to reduce the mandated wage by the amount of health benefits they provide.

Living wage laws already exist in the Democratic strongholds of Prince George's and Montgomery counties and Baltimore city, but have not come without controversy. Backers argue that the government should not provide poverty-level jobs on moral grounds, and that turnover is less and productivity better when pay is improved.

"It's going to save the state money," said Tom Hucker, executive director of Progressive Maryland. Jurisdictions that have living wage laws reduce their need for social services and bring in more tax dollars, he contended.

But the business community has argued vigorously against mandated wage hikes, fearing they will increase costs and hurt the state's business climate.

Ellen Valentino, state director of the National Federation of Independent Business, said the costs would be significant and spur higher wages in private industry as well.

"A living wage would hurt the wage market as a whole," she said. "Some small businesses would like to make a living wage themselves."

The living wage laws already in place have an impact on the cost of doing business there, she contended.

Montgomery County Council President Steven A. Silverman (D-At large) of Silver Spring disputed the argument that the law hurts business.

Montgomery County's living wage law went into effect July 1. Silverman said he has not heard that it is hurting businesses that contract with the county or driving up contract costs.

"The evidence basically indicates all over the country that there would be very little increases in contracts," he said.

In fact, he said, businesses that contract with the city of Baltimore have told him that the law has helped them recruit and retain employees because they can offer higher wages.

Silverman said he does not see why it should be any different at the state level.

"Passage on a statewide basis would help our working poor make a better living for themselves and for their families," he said.

The Montgomery County Council defeated a living wage bill in 1999 by a 5-4 margin. Silverman said that he did not support that bill because it applied to all nonprofits. The current law exempts nonprofits with smaller county contracts.

The issue was bipartisan when it passed in 2002, Silverman said. Howard A. Denis (Dist. 1) of Chevy Chase, the sole Republican on the council, supported the law.

"I can see where someone would want to see this as a partisan issue, but I don't see it that way," Silverman said.

State GOP Chairman John M. Kane derided the living wage bill, saying it would put Maryland businesses at a competitive disadvantage with businesses in Virginia and Washington, D.C. The market should set wages, he said, not the government.

Kane, a Potomac trucking magnate, said he pays his workers an average of $12 an hour. Some make $8 an hour, some $21, he said. His 17-year-old son gets $7.25 an hour.

"My son isn't worth $10.50 an hour," Kane said.

Staff Writer Sean R. Sedam contributed to this report.