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The Associated Press March 30, 2011, 5:22PM ET

Maryland Senate approves alcohol tax increase

The Maryland Senate voted 27-19 Wednesday to increase the state's sales tax on alcohol from 6 percent to 9 percent over three years, raising millions that would benefit schools in Prince George's County and Baltimore and other programs.

Eleven Republicans and eight Democrats voted against the bill. The measure now goes to the House of Delegates.

Democratic supporters of the bill said the schools need the money.

Sen. Bill Ferguson, D-Baltimore, recalled his experience as a teacher in Baltimore, when he carried a pair of scissors in his pocket for six months to open the door of his classroom, which did not have a door knob. He also said he only had 22 history text books for 198 ninth-grade students. And his wife, who taught in a classroom next door, had a broken window in her classroom for six months.

"This is the richest country in the world," Ferguson said. "We live in one of the richest states in this country, and we have windows hanging out of buildings. ... This is unacceptable, but it costs money to fix it."

Opponents said the tax would hurt businesses.

"Alcohol is an ingredient," said Sen. Jim Mathias, a Democrat who represents three counties on the Eastern Shore who voted against the bill. "It's an ingredient in the bar and restaurant/hospitality industry, and it would be like imposing another tax on any ingredient on any industry throughout out state, whether it would be paper in our offices or whatever."

Analysts estimate the increase would raise about $29 million in the next fiscal year. It would raise $58 million in the following year and $85 million in the third year.

The measure would steer $9 million more in education funding to Prince George's County and $12 million to Baltimore. Supporters say the extra money is a one-time adjustment to make up for shortfalls under state funding formulas. But critics questioned why those systems should reap so much from a statewide tax.

The measure also allocated $5 million for the developmentally disabled in fiscal year 2012. The money increases to $10 million the following year and $15 million in fiscal year 2014.

The American Beverage Institute, which represents more than 130 Maryland restaurants, ran full-page advertisements in two Maryland newspapers criticizing the raising the tax at a time when the hospitality industry is still struggling from a sluggish economy.

"Maryland legislators should focus on supporting economic growth instead of further increasing taxes," said Sarah Longwell, the institute's managing director. "Raising hospitality taxes will send hundreds of Maryland residents straight to the unemployment line."

But the spokesman for a health care group who has been pushing for the alcohol tax increase cheered the vote.

"The Senate's historic action on this bill marks the first time in 40 years that a Maryland legislative chamber has approved an alcohol specific tax increase," said Vincent DeMarco, president of the Maryland Health Care For All Coalition.

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