As a proposed tax on businesses gains momentum in Annapolis, business leaders and owners showed up in force on Wednesday to try to stop it, or at least change some of the details.

More than 400 people flooded General Assembly lawmakers with letters of opposition, and more than 100 people lined up to testify during a pair of hearings on the plan. They used dramatic terms to portray the feared effects of the 2.5% tax, saying it would drive businesses out of Maryland or cause some to go under.

The tax, they said, would be “damaging,” with “devastating impacts.” It would be an “assault on Maryland small businesses” and “a bad idea at a bad time,” creating “administrative chaos” and a potential “tipping point” for struggling businesses.

Mary D. Kane, president and CEO of the Maryland Chamber of Commerce, gathered with business owners at an Annapolis restaurant across the street from the State House on Wednesday morning to drum up attention for the opposition. She said businesses already contribute much to the state’s economy and shouldn’t bear the burden of closing a state government budget gap.

“The state is continually using them as an ATM machine,” Kane said.

Democrats have put forward the business tax plan as an option amid difficult budget decisions that will be made in the coming days. The state entered the new budget year with a $3 billion gap between money coming and projected spending on programs.

Gov. Wes Moore proposed a budget that closes the gap by a combination of tax increases and spending cuts. But the budget picture is getting worse with massive layoffs of federal workers under the Trump administration, which has lawmakers looking for more cuts and more ways to raise money.

Part of the budget-balancing puzzle

“I do not bring this to you lightly,” Del. David Moon, one of the bill’s sponsors, said as he pitched it to a House of Delegates committee.

Moon, a Montgomery County Democrat, made a point to say that he’s open to tweaking the bill and that it’s just one in a menu of options for keeping the state budget in balance.

“I do not want to raise taxes and I’m guessing neither do each of you,” Sen. Shelly Hettleman, a Baltimore County Democrat, said to her colleagues on the Senate Budget and Taxation Committee as she presented the bill.

But with the looming federal actions and a desire to keep schools, health systems and universities operating and serving Marylanders, taxes need to be considered, she said.

The bill, if approved, would charge a 2.5% tax on services that businesses sell to one another, such as legal work, marketing, accounting, consulting and equipment repair.

The legislature’s nonpartisan analysts estimate the tax would raise more than $800 million in the first year, rising to more than $1 billion in future years.

Moon and Hettleman both said they were open to discussing changes to the bill. Options for changes could include exempting certain types of businesses, or clarifying the definition of “business entities” subject to the tax by removing the smallest of businesses, such as sole proprietors.

Higher costs, higher prices

The business owners and leaders who trekked to Annapolis urged lawmakers to dispatch with the proposal entirely.

The Chamber of Commerce, for example, gathered a hotel owner, a tech entrepreneur, an accountant and a human resources consultant to share their concerns about the tax ahead of bill hearings.

Kimberly Prescott, who owns Prescott HR in Columbia, said she estimates the tax will cost her $40,000.

“This tax punishes businesses,” she said.

Sandip Patel, whose Crossroads Hospitality owns eight hotels, said he’d pay at least $300,000 in taxes on services for his properties, potentially leading to increased prices for guests.

Tensions rose in the hearing rooms as frustrated business representatives pleaded with lawmakers not to levy another tax.

In the House of Delegates Ways and Means Committee, there was a chorus of boos from the audience when Del. Joe Vogel, a Montgomery County Democrat, suggested the budget problems are due to the Trump administration’s actions. Committee Chair Del. Vanessa Atterbeary banged her gavel to silence the room.

Later, in the Senate Budget and Taxation Committee, a witness took exception to Sen. James Rosapepe questioning whether there were other suggestions for cuts or revenues instead of raising the business tax. A tense exchange ensued, and Chair Sen. Guy Guzzone also had to rap his gavel.

Where does Moore stand?

Republican lawmakers are also fighting the tax, but recognize the uphill battle they face.

House Minority Leader Del. Jason Buckel of Allegany County acknowledged to reporters that the B2B tax has “significant traction” in the State House.

Buckel and other top Republicans argue that the tax will further worsen an already-difficult climate for businesses to operate in Maryland.

Del. Jesse Pippy, the House minority whip from Frederick County, said it seems like Democrats will try “anything they can get their hands on to raise revenues.”

Republicans are hoping they might find an ally in Moore, noting the Democratic governor has talked about the need to grow Maryland’s economy.

Moore has not offered a public position on the business-to-business tax, but the governor told reporters last week that, as a former business owner, he recognizes the challenges facing businesses.

A decision on the business tax could come quickly in Annapolis, as lawmakers move closer to putting forward their version of the state budget.

One sign of the importance of the bills: Senate President Bill Ferguson sat in on the Senate bill hearing, and across the street, House Speaker Adrienne A. Jones’ chief of staff, Matt Jackson, monitored the House bill hearing.

“None of us wants to be in this position,” Ferguson said, ”but we do have a responsibility for figuring it out.”