O’Malley’s Potential Hat Trick

There is a pathetic quality to watching the O’Malley administration gouging about to find money to close a gaping hole in the state budget while simultaneously promising not to reduce aid to counties, to retain current programs and spending levels, to give the middle class a tax break, and to “invest” some $400 million in transportation.

These promises are made, like a lot of political promises, with full knowledge that they cannot be kept but the O’Malley administration seems to think that it can find the silver bullet that will allow it to accomplish some of these objectives.

More to the point, the administration views each of the revenue producing gimmicks as occurring in a vaccuum, totally unrelated to each other.

As my colleague Brian Griffiths points out below, we can make a safe bet that slots revenue will disappoint. For a lot of reasons. Right now Charlestown, Dover Downs, and Pennsylvania are available to Marylanders who wish to indulge in this form of gambling favored by the mathematically impaired and those with ADHD. The locating of slots in Maryland does nothing to expand the market but rather cannibalizes the existing market.

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The same applies to other taxes. Maryland is realtively small state and raising tobacco, sales, and gas taxes in Maryland doesn’t guarantee a linear increase in revenues. To the contrary. It is cheaper for me to drive across the Potomac and buy gas in Loudoun County, VA than it is to fill up near my house. Tobacco? Ditto.

The administration is at least publicly pushing the notion that the relatively small number of jobs moving to Maryland under BRAC will bring some kind of significant benefit. Maryland already has a reputation for a rapacious government and the idea that families will relocate to a high tax state which is getting higher taxes rather than chosing to live in Pennsylvania, Delaware, or Northern Virginia simply presumes that those people can’t read.

O’Malley has promised virtually every demographic in the state something for nothing. These promises have been made one at a time without regards for their impact on the economy. If the General Assembly follows the governor’s lead we will have succeeded in raising taxes, hurting most Marylanders, and retaining the $1.7 billion (or whatever it is today) “structural deficit.” That is quite a hat trick, isn’t it?

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