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by Pat Warren
ANNAPOLIS, Md. (WJZ/AP) ― Gov. Martin O'Malley formally called Monday for a special session to grapple with Maryland's $1.7 billion budget deficit, but he added that he was inclined to support a referendum on whether to legalize slot machine gambling.

"Over the last four years our state government has failed to act and chose to defer our state's $1.7 billion deficit. Now, it's time to take action in a special session starting Monday, Oct. 29. The cost of waiting is too high," said Governor O'Malley.

O'Malley said he was "very optimistic" lawmakers could reach consensus on his broad budget plan of new taxes and some tax cuts, proposals he contends will ultimately save about 80 percent of state residents some money.

"This is a forward-looking plan," O'Malley said. "It is broad enough and it is flexible enough for the men and women of the General Assembly to arrive at a consensus."

But not everyone has been a fan of holding a special session. House Speaker Michael Busch recently cautioned the governor against trying to tackle so much in a special session, which he has said would be "unprecedented" in its scope. Even Senate President Thomas V. Mike Miller, who has been a supporter of holding a special session for months, has had some questions about whether it's a good idea, without more certainty enough lawmakers will support O'Malley's proposals.

Miller, D-Calvert, said he spoke to O'Malley on Sunday night, and that the governor told him he doesn't have enough votes to support all of his plan so far.

"There is not a consensus ... The governor doesn't have the votes," Miller told reporters shortly before O'Malley's
announcement.

Still, Miller said O'Malley was working hard to sell his plan in meetings with lawmakers and that he supported the governor, who is battling a budget problem he has mostly inherited.

"The only responsible thing to do is to go into a special session and help this governor fund the budget that we haven't
provided the funds for in the past," Miller said.

Despite some concerns about how things have gone so far, Miller said he was confident the governor would at least make some progress in passing components of the plan in a special session.

"Some aspects of the plan, if not all the plan, are going to pass," Miller said.

O'Malley said the session could last up until Thanksgiving, giving lawmakers more than three weeks to move legislation through both chambers.

"We do not want this to be a slapdash process," the governor, a Democrat, said.

The special session is needed, O'Malley argues, because the state needs to get new revenues on the books, such as a sales tax increase from 5 to 6 percent, by Jan. 1. If lawmakers wait until the General Assembly's regular 90-day session in January, the tax increases won't go into effect until July, causing the state to miss out on nearly $600 million and worsening the budget crunch.

There are a variety of sources in the governor's plan to fill the budget hole. The four biggest parts include changing the
state's income tax structure for the first time in about 40 years to create two higher tax brackets for Maryland's wealthiest 3.7 percent, the sales tax increase, a slight reduction in the property tax and legalizing slot machine gambling, a contentious issue that has bedeviled lawmakers for more than five years.

Republicans have come out against the special session, saying it's just an excuse to raise taxes, instead of reducing growth in spending. They have said they won't support the governor's slot proposal in a special session, dealing a setback to the slots portion of the plan.

In a concession to lawmakers who find slot machines an especially prickly issue, O'Malley has sounded the possibility of having the state's voters decide the matter. He said he was leaning toward the referendum idea.

"There are many people who are elected members of the General Assembly who feel that the only way we'll get this behind us is if we put it to referendum and allow the people to decide," O'Malley said, adding after he was asked for his view, "I'm inclined that way."

A referendum, however, if it were supported, would still delay the arrival of proceeds. But the slots money isn't a big part of next year's budget under O'Malley's plan. His slots proposal would generate an estimated $27 million in 2009; $250 million in 2010; $500 million in 2011; and $550 million in 2012, not including $100 million in money that would be set aside to fatten purses for horse races in an effort to keep the industry alive in Maryland.

In addition to tackling the $1.7 billion hole, O'Malley's plan also would raise $400 million a year for transportation projects in the state, which O'Malley contends is badly needed to handle growing congestion and aging infrastructure.

O'Malley admitted that finding consensus for the sweeping plan isn't going to be easy. But he said: "I believe that we have the support for a consensus both in the Senate and in the House. It won't be easy, but I believe the support is there."

"The time for delay is past, and I am very, very optimistic," O'Malley said. "I am optimistic about what the leaders of our
state can accomplish when they know that so much is at stake. We want to move forward. we do not want to move back."

Steve Kearney, a spokesman for O'Malley, said the governor and his staff have been meeting regularly with lawmakers in recent weeks, and meetings will continue in the next two weeks up to the session.

"The governor would not have called the special session if we didn't think there was a decent prospect for succeeding," Kearney said.

(© 2007 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)