Del. Maggie L. McIntosh, a Baltimore City Democrat and chairwoman of the House Environmental Matters Committee, said her panel ratified the agreement by a 19-3 vote last night. She called it a sign of strong bipartisan support for the compromise measure – intended to provide hundreds of millions of dollars to clean up the Chesapeake Bay.
The agreement came as the General Assembly, facing an adjournment deadline tomorrow night, raced to complete its business. It gave the governor some hard-won victories as well as some difficult choices on possible vetoes.
Creation of a new Department of Disabilities and expanded opportunities for small businesses were two of the items on Ehrlich’s wish list to receive final approval during a long day of legislative activity.
The House and Senate reached agreements on some high-profile bills that could force the governor to make tough decisions.
One measure would hold down future tuition increases at state universities by temporarily raising the corporate income tax. A second would close a gaping tax loophole while forcing Ehrlich to choose whether to grant companies amnesty for money owed from years past. Yet another would require holders of large state contracts to pay their employees a “living wage” of at least $10.50 a hour.
In other Assembly action:
Ehrlich’s most important victory yesterday may prove to be the agreement on the sewer and septics bill – even if the result is not entirely to his liking.
McIntosh said negotiators scrapped a House proposal to tax septic systems indirectly through the companies that pump them out.
Instead, it will impose a $30-a-year charge directly on owners of septic systems – equivalent to the $2.50 a month to be charged to sewer users – and will leave the method of collection to an advisory group that will work with local governments. The Senate had originally left it to the administration to work out those details.
McIntosh and Sen. Paula C. Hollinger, a Baltimore County Democrat who is chairwoman of the Senate’s environment committee, also decided to exempt local governments from the fee.
A spokesman could not be reached last night to say whether Ehrlich would sign the much-altered version of his bill. However, the measure passed both chambers by overwhelming margins.
Another important issue House and Senate negotiators resolved yesterday concerned a loophole that allowed companies to escape corporate taxes by setting up Delaware holding companies to shelter income from their business in Maryland.
The House and Senate had differed over an amnesty period allowing discounts to companies that pay up their previously owed taxes and interest between July and November.
Under the deal, the House version of the bill would close the loophole without the amnesty provision. The Senate measure would just provide the amnesty, said Del. Anne Healey, vice chairwoman of the House Ways and Means Committee.
“We’ll send the two bills to the administration,” the Prince George’s County Democrat said. “We are hoping they will veto that Senate bill. The Senate wanted to have the opportunity to vote on that amnesty, and reluctantly we agreed.”
The Assembly’s decision likely will put Comptroller William Donald Schaefer – a vocal opponent of amnesty – in the position of lobbying Ehrlich to veto that measure.
Meanwhile, the Senate gave preliminary approval to a plan – which House leaders said they would accept – that would cap university tuition increases at 5 percent yearly for the next three years. To pay for it they would temporarily raise corporate income tax rates from 7 percent to 7.7 percent for the same period.
The plan comes in response to Ehrlich’s deep cuts to the budget of the state university system last year, which resulted in tuition increases of about 20 percent. Another 10 percent increase is scheduled for the fall semester.
The Senate plan differs slightly from a similar bill passed by the House, lowering the amount of the tax increase and leaving it in place for three years instead of four. House Speaker Michael E. Busch said his chamber will agree to the changes if the bill receives final Senate approval tomorrow.
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Passage of the legislation could force Ehrlich to decide whether to veto a bill with obvious appeal to public university students – and their parents. Henry Fawell, an Ehrlich spokesman, said the governor opposes the measure. Fawell said Ehrlich wants state universities to control costs and does not support tax increases to subsidize tuition.
Ehrlich also expressed firm opposition to the so-called “living wage” bill that survived repeated attempts to change or kill it yesterday in the House.
“The living wage bill is really bad economic policy,” the governor said yesterday. “It may have some short-term political advantages for some people, but is really bad economics, bad for the state.”
Decisive 2-to-1 margins marked votes on the amendments, but it remained unclear whether enough lawmakers would vote to enact the legislation before the session closes. Eighty-five supporting votes are needed to insulate a bill from an Ehrlich veto.
The administration has been working aggressively in recent days to kill the bill, and a handful of affected state agencies are also opposing the bill, including the Transportation Department, Department of Business and Economic Development, Department of Budget and Management, Department of General Services and the Maryland Stadium Authority.
Environmentalists were cheered by the Senate’s 35-10 vote on the renewable-energy bill, which will require utilities to gradually increase their use of “clean” power sources over the next 15 years. Businesses had expressed concern that the measure would raise energy prices, but advocates said the bill would bring long-term gains.
“It’s the start of the clean-energy revolution in Maryland,” said Gary Skulnik, director of the Clean Energy Partnership.
The measure will still have to be reconciled with the House bill, but Charles County Democrat Sen. Thomas M. Middleton, chairman of the Finance Committee and a sponsor of the bill, predicted an easy agreement.
Ehrlich won a victory as the House and Senate gave final passage to a measure that would allow the state to direct 10 percent of all of its procurement contracts to small businesses. Minority and small-business leaders say the legislation will give them greater opportunity to become primary contractors in state work.
The measure was one of several recommendations of a gubernatorial commission that Ehrlich created a year ago to improve the state’s Minority Business Enterprise Program.
According to the legislation, all small businesses will be eligible to compete for the state work regardless of the racial makeup of the company.
Sun staff writers Howard Libit, Ivan Penn and David Nitkin also contributed to this article.