The Canary in the Coal Mine

You know that Maryland’s Democratic leadership has made some poor choices on taxes and spending when one of their own starts warning that they may have sent the state economy into bad water:

Maryland Comptroller Peter Franchot (D) offered a bleak assessment of the state’s economy yesterday, saying recent changes to the state’s tax laws could negatively affect an already dire financial outlook.

Delivering Maryland’s first State of the Treasury speech in recent history, Franchot, who considers himself the state’s chief fiscal officer, said the subprime mortgage crisis, instability in financial markets and declining retail sales are driving the economy into “a period of profound uncertainty.”

The full speech is available from the Comptroller’s website. And true to form (and my opinion that Franchot is preparing a 2010 primary challenge to Governor O’Malley), the Comptroller railed against the tax package:

Furthermore, I believe that we must acknowledge that the sweeping changes to Maryland’s tax laws – which resulted from last Fall’s Special Session – have only added to this climate of unpredictability. As you know, I publicly objected to the idea of writing complex tax legislation in a frenetic and overheated political environment. Significant tax increases were essentially drafted behind closed doors and adopted without the benefit of substantive analysis, meaningful public hearings or consultation with stakeholders. And while I commend Governor O’Malley and the General Assembly for their shared commitment to resolving Maryland’s structural deficit, I remain deeply concerned about the potential of some of these tax measures to inflict harm on our State’s economy.

I am particularly troubled by the expansion of the Maryland sales tax to computer services. I spoke out in public opposition to this proposal when it was rammed through during the closing days of the Special Session, and I feel the same way today. This technology tax tax, if allowed to stand, will erode Maryland’s competitive advantage in the Knowledge-based economy.

What Franchot’s endgame with his criticism of O’Malley and General Assembly leadership is anyone’s guess. But it is significant that somebody who is probably to the left of just about every major elected official in the state of Maryland is being critical of O’Malley, the General Assembly, and the way business was conducted during the Special Session speaks volumes of how bad things are in our state. Politically, Franchot would have been expected to be on board with the historic tax hikes that we saw, but instead even he is concerned with the way everything went down.

Is this another salvo in an O’Malley v. Franchot gubernatorial primary? There is a long way to go before we can speculate too much about that. But it says a lot as to why O’Malley’s poll numbers are sinking when ever those who are generally philosophically in league with where he wants to take our state can’t support his tactics and methods…

(Crossposted)






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