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Governor Lacks the Pull to Install Slots

Maryland's new executive agrees to property tax hikes to close deficits after he fails in his vow to expand gambling.

May 05, 2003|Stephen Braun | Times Staff Writer

ANNAPOLIS, Md. — Bob Ehrlich swept into the governor's office in November as a rare breed in the free-spending Democratic stronghold of Maryland -- a Republican vowing to close gaping deficits with slot machine profits instead of tax hikes. But in Maryland, old habits apparently die hard.

Bowing to the same budgetary pressures afflicting governors across the country, Ehrlich agreed last week to a drastic hike in Maryland's property tax rate and warned that he will have to slash $450 million in spending. Both moves came after Ehrlich was stung by the Maryland Legislature's scuttling of an ambitious plan to expand gambling in a state that has resisted it for decades.

Ehrlich's eager pursuit of slot profits had been seen as a promising bellwether for the gambling industry -- a sign that hard times are eroding entrenched opposition to casino expansion. Even after the Maryland House killed Ehrlich's slots bill last month, officials in neighboring Pennsylvania and in Minnesota are still considering slots proposals.

That keeps the pressure on Maryland. "Slots won't go away," said former Maryland Gov. Marvin Mandel, a canny appraiser of the state's political world. "They'll try again next year, and when they do, it'll be 'how,' not 'if.' "

But the collapse of Ehrlich's slots initiative quickly soured his relationship with Democratic politicians. Some legislators and political observers say a bill that should have passed ended up dead because Ehrlich's proposals were flawed and poorly researched. In turn, Ehrlich blamed prominent Democrats for playing hard politics during a crisis.

The sniping grew so intense that Ehrlich admitted recently to a group of business executives that he was "getting my butt kicked." He is dishing it out, too, vowing to pressure legislators by campaigning for his slots measure among Democratic voters who rebelled against their party last fall.

The Legislature was unable to resolve the state's soaring $1-billion deficit after killing a slots bill that would have installed 11,500 betting machines at four Maryland racetracks.

"They snuck out of town and figured their hands were clean," said Greg Massoni, an Ehrlich spokesman. "They had a lot to do with it, and the governor is holding them to it."

But Ehrlich was left to make the hard decisions.

On Wednesday, he committed to raising a state tax on property-holders by nearly 60% -- a temporary one-year hike he insists is now essential to maintaining Maryland's high bond rating. Ehrlich also ordered every state department to brace for budget cuts as deep as 7% -- threatening layoffs of hundreds of state employees and cuts in long-protected police and education programs.

Even after Ehrlich's bullet-biting, the state probably will be faced with another $1-billion budget gap next year. Much of it stems from a final splurge of expenditures by Ehrlich's predecessor, Democratic Gov. Parris N. Glendening.

"It's a mess," said Thomas Schaller II, a professor of political science at the University of Maryland Baltimore County. "You've got a rookie Republican governor and a Democratic Legislature who already hate each other. And you've got an out-of-control deficit. To his credit, Ehrlich inherited this, but he's compounded his problems by saying there's only one way out -- my way."

Schaller said Ehrlich also hurt himself by taking unyielding stands on issues only to backtrack when he came under heavy criticism. "He's got this habit of drawing a line and then smudging it," Schaller said.

During last year's election, Ehrlich insisted he would not raise taxes. His change of heart on property taxes, Massoni said, was a "necessary evil." Ehrlich still refuses to raise state sales or income taxes and promises to rescind his property tax increase next year. Massoni said Ehrlich stood his ground by refusing to cave on a deal that would have passed the slots bill in the Maryland House of Representatives in return for agreeing to a 1% sales tax rise.

Massoni said the deal was proposed by Ehrlich's archenemy, House Speaker Michael E. Busch, who led the fight against slot machines. Massoni said Busch "flip-flopped" on the issue, willing to accept full-fledged casinos despite his earlier opposition to any gambling expansion. Ehrlich draws the line on casinos, saying he would only allow slot machines at racetracks.

Busch said he is now willing to "look at all venues" as a "practical matter." But he warns that "trying to sell casinos is still not going to be easy." After pressing a House committee to kill Ehrlich's bill before it reached a full vote, Busch led legislators to order a full study of the effect of slots.

"What didn't make sense to me was why the governor was so intent on rushing through a slots bill before we had a chance to find out what it would do to us," Busch said. The study, he said, will examine the effect of slot machine casinos on state finances, crime, jobs, poor neighborhoods and gambling addiction.

Busch also said he doubts Ehrlich can hold to his promise of no tax increases. "I don't know if Houdini could get out of this jam," he said.

After a long spring of sparring over slots and deficits, the two foes agreed only on letting it all slide until next year.

"The learning curve has been a little rough," Mandel said. "Let's hope they get it right next time."

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