Baseball Crank
Covering the Front and Back Pages of the Newspaper
November 25, 2007
POLITICS: Billion-Dollar Marty

When I looked at the long list of tax hiking Democratic Governors back in the spring, I gave an incomplete grade to Maryland's new Democratic Governor, Martin O'Malley, not out of any illusions about whether he was anything but a standard-issue tax-and-spend liberal but simply because he hadn't done anything yet.

Well, no need to wait longer for the verdict. E.J. Dionne, predictably, hails O'Malley's billion-and-a-half dollar tax hike, passed earlier this week:

Facing a $1.7 billion budget deficit, Maryland Gov. Martin O'Malley -- who offered the above observations in an interview -- led the legislature this week to approve $1.4 billion in taxes and $550 million in spending cuts. It's been a long time since we've seen that kind of balance from the federal government.

At the same time, the legislature extended health coverage to 100,000 residents and approved new money for transportation, education and cleaning up the Chesapeake Bay. . . .

The final budget package contains its share of questionable concessions to this group or that. The middle class bears more of the burden of the tax increases than O'Malley had hoped. The income tax hike for those earning over $500,000 a year -- the rate goes from 4.75 percent to 5.5 percent -- is a modest step in the right direction.

The fact that even Dionne recognizes that this is three dollars in tax hikes for every dollar in spending cuts, as well as the massive expansion of Medicaid to another 140,000 recipients, should tell you all you need to know about O'Malley's commitment to protecting the taxpayer. (Also, the $550 million is a apparently a cut in "State spending growth," not actual spending reductions). Indeed, Dionne hails the Maryland Governor as the man who can bring back the case for big government:

[T]he sound you are hearing not only in Maryland but in state capitals across the nation is the crashing and crumbling of ideology, specifically a right-wing ideology that demonizes taxes and government while preaching that the public interest depends upon solicitude toward the comfortable and the privileged.

Those rebelling against this dying disposition include liberals such as O'Malley and moderates such as Govs. Janet Napolitano of Arizona and Kathleen Sebelius of Kansas, both Democrats, and Republican Arnold Schwarzenegger of California.

In sorting out his state's budget mess, O'Malley turned for advice to Sebelius and former Virginia governor Mark Warner, a Democrat who once persuaded a Republican legislature to raise taxes.

Warner, O'Malley said, urged him to take his time to explain the options so voters understood "what the choices are." O'Malley's initial budget was thus not adventurous. Both Warner and Sebelius also said requests for new taxes needed to be connected to services that voters wanted government to deliver. "It's important that you remind people what their state government does and where their taxes go," O'Malley said.

Yup, a billion-dollar tax hike is exactly Mark Warner's formula for success; Virginia voters will soon enough be asked whether they want him to pressthat same philosophy nationally. And the fine print goes deeper than just a burden on Marylanders who work hard for their money:

Executives this week cast both brickbats and laurels at Maryland’s new package of business taxes and programs, with several singling out a new state sales tax on computer services for criticism.

The tax was ill-conceived and hastily adopted, say some, who warn it will put Maryland companies at a competitive disadvantage and send the wrong message about the state’s business climate.

+++

Expanding the sales tax to computer businesses handicaps those companies when they compete against those in states that don’t have such a tax, Micheals said.

Fortunately for Maryland, it has a lot of company these days among states with tax-hiking Democratic governors.

Much more here and elsewhere at Red Maryland.

Posted by Baseball Crank at 8:56 AM | Politics 2007 | Comments (7) | TrackBack (0)
Comments

"Facing a $1.7 billion budget deficit"

Crank.. You know, this would be much more impressive if somewhere in your post you would reference that the previous governor of Maryland was a Republican who helped to structure the previous budgets, and set up the government to create that 1.7B deficit.

I do believe it's become quite apparent that the Republican goal is to talk about cutting taxes, running up debt, and then when Democrats regain control there is an attempt to fix things.

Posted by: Dave at November 25, 2007 4:02 PM

Crank, how do you suppose one pays for the massive deficits that Republicans ring up? We had a budget surplus on the Federal level when Clinton left the Oval Office -- where's it at now?

Posted by: crystal at November 25, 2007 7:57 PM

(ex-)Gov Ehrlich inherited a deficit and restored balance to the budget. He did increase spending, but it matched increases in revenue. (It would have been nice if he'd held the line on spending.) 1.7 billion is less than 6% of the state's $30 billion deficit, you can't tell me that Gov. O'Malley and the legislature couldn't have solved it without some belt tightening.

Posted by: soccer dad at November 26, 2007 5:57 AM

"He did increase spending, but it matched increases in revenue."
http://www.msa.md.gov/msa/mdmanual/34bud/html/00list.html

Yup, but that, along with various acts, marked 23% (nominal) increases in his 2003-2007 budget, and a whopping 12% or so in 2006-2007 (2007 being his last). And the full knowledge that these tax increases were driven (as everywhere else) by property sales, not permanent revenue increases.

http://findarticles.com/p/articles/mi_qn4183/is_20061116/ai_n16863943
Leaving alone, for a moment, the knowledge that there is the $20B pension problem, or the previously known $5B upcoming shortfall. If Ehrlich had fought to only grow the budget by 6% (or zero, even), this wouldn't be a problem now - and hence, no post.

I'm no longer a Maryland resident, but I have no problem saying a little belt tightening wouldn't hurt (going for 1B vs 500M). I do have a problem not recognizing how it got there.
The bigger belt tightening will happen next year, when 5% cuts vs. more tax increases are going to be faced. Less education, less police, less everything.

Posted by: Dave at November 26, 2007 2:34 PM

"He did increase spending, but it matched increases in revenue."
http://www.msa.md.gov/msa/mdmanual/34bud/html/00list.html

Yup, but that, along with various acts, marked 23% (nominal) increases in his 2003-2007 budget, and a whopping 12% or so in 2006-2007 (2007 being his last). And the full knowledge that these tax increases were driven (as everywhere else) by property sales, not permanent revenue increases.

http://findarticles.com/p/articles/mi_qn4183/is_20061116/ai_n16863943
Leaving alone, for a moment, the knowledge that there is the $20B pension problem, or the previously known $5B upcoming shortfall. If Ehrlich had fought to only grow the budget by 6% (or zero, even), this wouldn't be a problem now - and hence, no post.

I'm no longer a Maryland resident, but I have no problem saying a little belt tightening wouldn't hurt (going for 1B vs 500M). I do have a problem not recognizing how it got there.
The bigger belt tightening will happen next year, when 5% cuts vs. more tax increases are going to be faced. Less education, less police, less everything.

Posted by: Dave at November 26, 2007 2:35 PM

the $1.7 billion deficit wasn't actually a current deficit - we're balanced thru 6/30/08 - but a projected one cleverly referred to as a "structural deficit"...meaning spending was mandated by recently enacted laws passed without identifying the funding source. One of my favorites was the legistature (over the prior governotr's veto)removing a spending lid which limited the growth of some educational spending.

And the $550 million cut in spending doesn't carry any legal weight. The governor's budget to be submitted for the next session is not required to recognize those so-called cuts.

You'd be hard-pressed to find a state more in the throes of a single party and for as long as the Maryland is with the Democrats. Accordingly the language of the left is prevalent - meaning decreases in growth are described as "cuts" and spending on an inept Baltimore City School system is still considered an "investment". Our spending has easily outpaced inflation over the last few decades and the case hasn't been made for why we need to ratchet that growth rate even further up.

Posted by: Maryland Conservatarian at November 27, 2007 4:11 PM

That is an insane deficit. It will be interesting to see how others respond to the income tax adjustment.

Very interesting post! Good job

Posted by: Baseball Cards at November 28, 2007 12:47 PM
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