EHRLICH TO VETO CORPORATE TAXES

Gov. Robert L. Ehrlich Jr. is expected to veto a corporate-tax package
today, a move expected to create a $135 million shortfall in the state
budget. "The corporate-tax package is certain to be vetoed," said Ehrlich
spokesman Greg Massoni, who added that the state needed to reduce
government spending instead of making Marylanders pay more taxes. The
governor plans to issue a list of other bills he will veto. The signing
deadline is tomorrow. The administration and General Assembly lawmakers
have declined to speculate on the list. Also undecided is the fate of a
bill allowing communities to use radar cameras to catch speeders, as well
as legislation allowing illegal immigrants to pay in-state tuition rates at
public colleges and universities and to obtain driver's licenses. Mr.
Ehrlich's choices will help define his political agenda and show voters
whether he is indeed the centrist Republican portrayed in his election
campaign. He has opposed photo radar, but has not commented on legislation
allowing cameras in residential and school zones to catch speeders.

The bill has strong support from Montgomery County lawmakers. Montgomery
County lawmakers also support a bill that would give in-state tuition to
illegal aliens, but the state chapter of the National Association for the
Advancement of Colored People has asked Mr. Ehrlich not to sign it until
the impact on minorities can be studied. Other high-profile bills would
reduce penalties for possession of medicinal marijuana and would replace
half the board of directors of the nonprofit health care group Blue
Cross/Blue Shield. House Speaker Michael E. Busch, Anne Arundel Democrat,
has lobbied the governor to sign the health care bill. Mr. Ehrlich supports
the concept of medicinal marijuana, though he has not decided on the bill,
which reduces the possession charge to a $100 fine. John P. Walters,
President Bush's drug czar, has advised Mr. Ehrlich against signing the
bill. Mr. Ehrlich likely will sign a bill that could open more charter
school in the state, despite some misgivings. His proposal gave
universities, local school boards and the Maryland Board of Education the
authority to open the schools, but the General Assembly watered down the
bill to give such powers only to local school boards. The tax package Mr.
Ehrlich will veto would have raised business taxes temporarily and would
have imposed a 2 percent tax on health maintenance organizations, or HMOs.
Mr. Ehrlich has said the HMOs simply would have passed the cost on to
customers. Mr. Massoni said the administration instead was looking at
further spending cuts to replace the estimated $135 million revenue loss
created by the veto. He said no final decisions have been made. "In the
last eight years, we have gone from a $12 billion budget to a $22 billion
budget," Mr. Massoni said. "So there are definitely areas where we can make
cuts." Senate President Thomas V. Mike Miller Jr. of Prince George's County
and other Democratic legislative leaders wrote a letter this week
condemning Mr. Ehrlich's decision to veto the tax package, which they said
brought fairness to the corporate-tax structure. "In Maryland, corporations
bear less than 5 percent of Maryland's tax burden," the letter stated. The
letter also warned against further budget cuts that would inflict
"unnecessary pain on Maryland's families, while protecting corporations
that don't pay their fair share." Mr. Ehrlich, who supported a nearly
5-cent rate increase in property taxes, has opposed the corporate-tax
increase. Mr. Massoni declined yesterday to discuss Mr. Ehrlich's
decisions, but said last week "we will clearly see the governor has been a
man of his word."