Mar 27, 2008 8:00 pm US/Eastern
O'Malley Seeks Votes For Tech Tax Repeal Plan
ANNAPOLIS, Md. (AP) ―
Gov. Martin O'Malley is working on finding support for a compromise plan to repeal the state's increasingly reviled sales tax extension to computer services, but Senate President Thomas V. Mike Miller said Thursday the plan doesn't yet have the votes.
"The governor's going to have to get the votes," Miller told reporters. "You know, they want the tax repealed, but they don't have the votes at this point in time to move his compromise plan forward."
The governor is trying to find a way to fill an estimated $200 million hole in the budget that a repeal would cause.
"No I haven't," the governor said, when he was asked if he has reached consensus on how to repeal the tax during a news conference on the state's agreement with Constellation Energy Group to settle litigation. "But we're working on it -- every day and every way."
The compromise that O'Malley administration officials are talking about would make up $100 million with a tax on people who make $1 million or more that would be in place for a couple of years.
The other $100 million would be made up with $50 million from the state's transportation trust fund and $50 million in yet-to-be-determined budget cuts.
The plan is running into resistance, though, in Montgomery County, where many companies affected by the so-called tech tax are located, as well as many of the residents who would be affected by the income tax proposal. The county also needs the transportation money to help ease rising traffic congestion.
Montgomery County Executive Isiah Leggett describes the dilemma as "a three-edged sword" for the county. The computer tax hurts county businesses; the income tax hits county residents; and the loss of transportation money isn't welcome news either.
"We get hit any direction you go," Leggett said. "So it's a question for us of which poison pill do you want us to take?"
Leggett said he wants to be supportive in resolving the computer services tax problem, "but we don't want to put Montgomery County in a position of being the resolver of a statewide problem."
The tech tax was approved during November's special session. The tax, which would not take effect until July, is a 6 percent extension of the sales tax to computer services.
A surge of support for its repeal has been growing throughout the current legislative session, because lawmakers believe it will chase important information technology jobs out of Maryland to the detriment of the state's economy.
A variety of bills has been introduced to repeal the tax.
With less than two weeks to go in the session, Miller said he supported moving forward with a bill to repeal the tax and amending it by adding the governor's compromise package on to it.
"It's a close vote in the committee and it'll be a close vote on the floor," Miller said. "But if the votes aren't in the committee, obviously, it's not going to go forward, and if we don't have the votes on the floor lined up in advance, then I'm not going to bring the bill to the floor."
Under draft regulations released recently by the comptroller's office, the tax would apply to computer facilities management and operations, custom computer programming, and computer system planning and designing that integrate computer hardware, software and communication technologies. It also would apply to computer disaster recovery, data processing, data storage, hardware and software installation, software maintenance and repair and Web services.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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