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One of them is wrong

State Comptroller Peter Franchot:

Dear President Miller and Speaker Busch:

As you know, Governor O’Malley has signed an Executive Order convening the Maryland General Assembly to consider his proposed remedies for the State of Maryland’s $1.7 billion structural budget deficit. The Governor’s proposal includes, but is not limited to, an increase in the State’s sales tax, cigarette tax and corporate income tax rates, an extension of the sales tax levy to service transactions that are currently exempt, a fundamental realignment of our State’s personal income tax structure, and a plan to legalize slot machines in Maryland.

Having served two decades in the General Assembly, including several years as Chairman of a House budget subcommittee, I have been through similar fiscal challenges and appreciate the Governor’s desire to address our State’s looming budget shortfall in an aggressive manner. As Maryland’s chief fiscal officer, however, I must question the timing and necessity of this approach. Mindful of the reservations each of you has expressed about a special session, I must underscore the profound – and perhaps unintended – consequences of this undertaking on Maryland’s economy, business climate and quality of life, and to caution against acting in haste.

One or the other of these guys is wrong. The question is which one. If we assume, as a lot of us do, that Peter Franchot sees himself as governor, possibly challenging O’Malley for the nomination in 2010, then you have to assume he doesn’t care to be remembered as the asshat who precipitated a budget crisis. On the other hand, O’Malley has been a cornucopia of shifting numbers. We know he intends to push for a $500 million expansion of Medicaid in the middle of a crisis brought on by our “structural deficit”. How better to do this than in an atmosphere of panic and absence of definitive revenue numbers.

I have to give the nod to Franchot. If he’s wrong, O’Malley has just jettisoned a primary challenger in 2010 and we all get to keep our money for a little longer. If Franchot is right, there is no chance the taxes passed in the special session will be repealed instead that windfall of revenue will fuel a new round of programs and a new “structural deficit.”






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