It’s critical because it’s crunch time, he said.
‘‘We are out of time and we are out of money,” he said. ‘‘If we can’t come together in a special session, we are in for a very, very bad time.”
O’Malley has said that building the consensus needed to call the special session is the most difficult thing he has done in his political life.
‘‘Once you’re at this point with something as political as this you really can’t think about personal political ramifications ...,” he said. ‘‘That’s not to say we’ve been at all cavalier about what we’re proposing.”
To bridge the budget gap, O’Malley has proposed a 20 percent increase in the sales tax, a 14 percent increase in the corporate income tax, a doubling of the cigarette tax, new tax brackets for the wealthiest Marylanders, the closure of two corporate tax ‘‘loopholes” and a 20 percent increase in the vehicle titling tax.
The proposal gives lawmakers ‘‘the ability for us to reach a consensus,” O’Malley said.
Still, Republicans are lining up to decry the tax proposals, with a GOP-sponsored anti-tax rally on Lawyers Mall before the General Assembly convenes Monday. Democrats are set to follow with their own rally in support of education and health care on the State House steps two hours later.
Voters have long memories when it comes to tax increases, but the special session is not all about raising tax revenue, lawmakers said.
‘‘I think it’s something that people always remember, and it all comes down to how the money’s managed, the purpose,” said Del. James N. Mathias Jr. (D-Dist. 38B) of Ocean City.
To borrow the title of an Eric Clapton song, ‘‘It’s In the Way That You Use It.”
‘‘Of course, people will remember if taxes are raised,” Levy said. ‘‘They’ll also remember if the government fails to balance this budget, and there’s $1.7 billion in cuts that have to be made.”
Push back
Under a ‘‘cost of delay” budget unveiled on Tuesday, if the legislature does not pass O’Malley’s deficit package, he would have to cut $886.2 million in aid to the counties and $791.5 million to state programs.
Republicans said they will not use the hole the state finds itself in for political gain, but are determined to influence the process of finding a solution.
‘‘We’re not in this to play a cynical game of ‘gotcha’ politics,” said Christopher B. Shank (R-Dist. 2B) of Hagerstown, the House minority whip. ‘‘We’re in this to try to solve a problem.”
The ability to do just that could have sweeping political implications for O’Malley (D) and for lawmakers, including some who rode a tide of anti-Republican sentiment into office in conservative districts last year.
‘‘I think all of us should feel at risk,” said Del. Pamela G. Beidle, who was elected last year from a conservative Anne Arundel County district.
She does not expect all of O’Malley’s tax proposals to pass — which would be fine with some voters she has heard from.
‘‘Some don’t want any new taxes. Some of them feel that they can’t trust us with the money,” said Beidle (D-Dist. 32) of Linthicum.
Mathias was mayor of Ocean City for 10 years, where he said he was known as the man who vetoed two budgets because they included higher taxes than he found necessary.
‘‘That was a core part of my record, being fiscally responsible,” he said.
Keeping that reputation could be important to keeping his seat, he said. ‘‘I had a tough election [in 2006], man. That doesn’t mean it’s Republican. There’s conservative Democrats there.”
Look behind you
There are pitfalls.
Suppose the session is marked by filibusters, and lawmakers leave town with nothing to show for it, said John N. Bambacus, professor emeritus of political science at Frostburg State University.
‘‘The media will immediately say, ‘What a waste of time or money,’” said Bambacus (R), a state senator from 1983 to 1991 and Frostburg’s mayor from 1994 to 2002.
‘‘From the governor’s point of view, it’s risky because his leadership is at stake right now,” he said. ‘‘If the governor calls a special session and it’s not successful, it could have repercussions, not only for 2008, but for 2010.”
O’Malley should not face a challenge or questions about tax hikes in the 2010 Democratic primary, he said. The general election is another matter.
‘‘If you vote for a tax increase, you might forget about it and you might hope the people will forget about it, but your opponent will not forget about it,” Bambacus said.
Game planning
A handful of senators may have had some influence on the O’Malley tax package. Fourteen senators sent a letter to the governor in July calling for policies that would not only close the budget gap but lead to a healthier state.
Since then, five of those senators have met with the governor twice to talk about their tax proposals, three of the senators said.
Some of their ideas were included in the O’Malley plan, including a progressive income tax structure and bills to close corporate tax ‘‘loopholes.”
‘‘If he wasn’t planning to do it before, it might have nudged him in the right direction,” said Sen. Brian E. Frosh (D-Dist. 16) of Bethesda, one of the senators who have met with O’Malley.
The senators offered other ideas that didn’t make it into the tax package including a carbon tax, an inefficiency tax and alternative taxing schemes on corporations.
‘‘He did some things I would not do and he did some things I think are terrific,” said Sen. Paul G. Pinsky, another of the five.
‘‘It should come as no surprise that the [five] of us are the most liberal senators and we are philosophically aligned,” said Sen. Richard S. Madaleno Jr. (D-Dist. 18) of Kensington.
Pinsky and Madaleno tried to downplay the group’s role in crafting policy, either in the meetings with O’Malley or as a voting bloc next week in the Senate.
‘‘It’s not just five or six or 14 senators. He’s got to get 24. And then 71 in the other chamber,” said Pinsky (D-Dist. 22) of University Park. ‘‘If I thought I or some of the colleagues had such a great brain trust, we’d be doing a lot more.”
O’Malley spokesman Steve Kearney said the governor reached out to a number of people to draft his tax plan.
‘‘And certainly you’ll see some of the things important to the senators were in line with the governor’s interest to protect working people,” he said.
Despite being heavily outnumbered, Republicans say they can influence the proceedings if enough people express their distaste for O’Malley’s plan.
‘‘It’s not predestined at this point,” said House Minority Leader Anthony J. O’Donnell (R-Dist. 29C) of Lusby.
Counties for taxes
If the legislature fails to pass the tax increases, O’Malley’s ‘‘cost of delay” budget would hurt the quality of life in local jurisdictions, said the Maryland Association of Counties.
Top officials from several counties — including two Republicans — predicted higher property tax rates, larger class sizes, reduced library services, even fewer pothole repairs if the revenue package fails.
Their statement also expressed support for legalizing slot machine gambling, assuming legislation is ‘‘responsibly crafted.”
The leaders would not say whether they would support a slots bill that pre-empted local zoning laws.
‘‘We’re not going to get into that,” Baltimore County Executive James T. Smith (D) said.
O’Malley, however, has said repeatedly he worked from a 2005 House bill that included a slot machine parlor in Frederick County. That county has since outlawed slot machines in unincorporated areas within its borders.
Commissioners President Jan H. Gardner, the Democrat who serves as MACo’s president, said she didn’t believe the governor would suggest slot machines in her county.
‘‘I think the only palatable thing for a majority of Marylanders is a limited number of slot machines in existing racetrack facilities that want them,” Gardner said.
Details of O’Malley’s slots bill, which could put the issue to referendum in 2008, were expected today.
A need for focus
Lawmakers need to look at what needs to be done in a special session and what can wait until the regular session in January, Levy said.
On Thursday, O’Malley offered a health care expansion plan, and environmentalists are pushing for the ‘‘green fund” — a tax that would help the Chesapeake Bay.
‘‘I think if you put the green fund and health care and transportation, all of these things, on the table at the same time with the revenue package and slots and cuts, that would be a plateful for a regular session,” Levy said. ‘‘There are a lot of very, very complicated issues.”
O’Malley could face ‘‘major problems” with the health and environment proposals, Bambacus said. ‘‘The governor has to really tighten his focus on what he wants to do and forget the new stuff because that’s not going to play well.”
If lawmakers wait until the regular legislative session to act on revenues, O’Malley estimates the state will need another $500 million. But cuts can wait until January because they won’t take effect until the start of fiscal 2009 on July 1, Levy said.
If the session ends in gridlock ‘‘the whole tone of the regular session will begin in a very bad way,” Levy said, ‘‘and it could foretell a very, very bad regular session.”
For the good of the state
While Democrats are eager to give O’Malley a victory by resolving the deficit, O’Donnell said that would be wrongheaded.
‘‘That line of thinking would say that partisans are willing to sacrifice the well-being of Marylanders for one guy’s political career,” he said. ‘‘That notion is nauseating. I care about whether the working mom and dad are going to be able to make ends meet, not whether Martin O’Malley is going to get his next political plum.”
Republicans are not focused on any electoral gains in 2010 that might result from passage of O’Malley’s tax package, O’Donnell said.
‘‘This should not be about partisan advantage. This should be about what’s good for Maryland’s economy, Maryland’s competitiveness with other states, Maryland’s working families and Maryland’s small businesses,” he said. ‘‘Elections come and go, but let’s put that stuff aside.”
Such comments could be one reason O’Malley has hope that lawmakers can find consensus over the next weeks.
‘‘Sure, we want to get re-elected,” Levy said. ‘‘But there’s no point having this job if at times like this you can’t come together and do something good for the state.”
Staff Writer Alan Brody contributed to this report.
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