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Maryland House panel holds hearing on alcohol tax hike

ANNAPOLIS — Two Maryland state senators urged lawmakers on a House committee on Friday to approve an increase in the state’s sales tax on alcohol that would generate money to help the developmentally disabled and steer millions of dollars in the next fiscal year to increase education funding, as the General Assembly’s session entered its waning days.

Sen. Verna Jones-Rodwell, D-Baltimore, and Sen. Richard Madaleno, D-Montgomery, told members of the House Ways and Means Committee that raising the tax would help reduce problem drinking as well as raise needed revenue for good causes.

But Republicans raised questions about how the tax increase could hurt businesses.

Delegate Kathy Afzali, R-Frederick, said she is concerned a sales tax increase could stop people in other states from coming to Maryland to buy alcohol.

“I’ve gotten hundreds of emails from people who this law is going to affect, and what they’re telling me is they are struggling, especially if they own small businesses,” Afzali said. “They are hanging on by fingernails. They’re just holding on, and they feel that they do get business from these other states and they believe they’re going to lose that business if their prices go up.”

Afzali also questioned whether there were safeguards to prevent the money from being redirected to other purposes.

Madaleno said the bill, which already has been approved by the state Senate, outlines how much money would go to the developmentally disabled. He also said the money could be matched with federal funds to generate even more money.

“We’ve tried to address that very carefully in this bill to make sure that that money goes to the Developmental Disabilities Administration to make sure that all of you can have a great deal of confidence that when you vote for this bill … it is going to the Developmental Disabilities Administration,” Madaleno said.

The sales tax increase would raise an estimated $29 million in the next fiscal year. About $5 million of that would be allocated to help the developmentally disabled by reducing a waiting list for services. For next year only, $9 million would shore up education funding in Prince George’s County, and $12 million would go to Baltimore schools. Supporters of the move say it’s a one-time adjustment to make up for shortfalls under state funding formulas.

Money for the developmentally disabled would increase to $10 million in fiscal year 2013 and $15 million in fiscal year 2014.

The sales tax increase would raise an estimated $58 million in fiscal year 2013 and $85 million in the third year.

Lawmakers don’t have much more time to get the bill through the House of Delegates, and the measure has yet to clear a House committee. Lawmakers are scheduled to convene Saturday. The General Assembly is scheduled to adjourn Monday at midnight.

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