The dog-and-pony show leaves town

In a masterful bit of scheduling (not) our illustrious Governor, Martin O’Malley, arrived 40 minutes late to his presentation at Salisbury University and spent the next 50 minutes using the magic of PowerPoint to explain why he, no wait the people of Maryland, needs to dig deeper into the pockets of those he deems aren’t paying their fair share to supply the nanny state with its big-government manna.

It’s interesting to look at the coverage provided by my hometown paper (Salisbury Daily Times) and the Baltimore Sun. Both of them provided a Republican quote or two but it didn’t sound like O’Malley got a lot of tough questions. (They needed me there but I work for a living.) I did notice that the Daily Times story correctly stated that the Maryland share of the state’s budget is about $15 billion as the remaining $15 billion or so is simply transfer payments from the federal government. That’s sort of scary when you realize Maryland has just under 6 million residents but has the wealthiest per capita income in the country. There’s no way we’re getting back what we put in, unless you count how many Free Staters are employed by the feds because of our proximity to DC.

Just to review, here’s the laundry list of new taxes proposed by the state government:

  • An income tax rate increase to 6% and 6.5%, respectively, for Maryland residents making over $200,000 and $500,000. Currently all income above $3,000 is taxed at 4.75%, making the rate increase either 26.3% or 36.8% depending on income. While those rates may sound low, bear in mind Maryland counties have a piggyback income tax that generally runs 1-2% on top of the state share.
  • A 20% increase in the state sales tax, from 5% to 6%. Here on the Eastern Shore it gives another point advantage to sales tax-free Delaware. The evidence of its business effect is along U.S. 13 going north from Salisbury into Delaware – on the Delaware side it’s furniture store row because a 5% difference is pronounced on big-ticket items.
  • A doubling of the cigarette tax from $1.00 per pack to $2.00, although O’Malley conceded that may be adjusted downward if a federal cigarette tax sought as part of the SCHIP reauthorization overcomes President Bush’s veto.
  • Indexing the state’s gasoline tax to inflation, although earlier proposals have also asked for a 10-12 cent per gallon increase in the tax in addition to the indexing.

In return, there would be a few tax adjustments, ostensibly to help the poor and elderly:

  • Unspecified “tax credits” for low-income families and seniors. Of course, they already pay very little in income tax now so in essence it’s an increase in wealth transfer payments.
  • A 3 cent per $100 reduction in the state’s property tax rate. The caveat on this one is that the reduction is phased in over three years. Something tells me that the three year timeframe was selected because I believe that’s how often property is reassessed – thus any gain on the rate would likely be eaten up with the increased values.

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Also on the table as it has been for the past five years is slot machine gambling, as Marylanders flock to Delaware, West Virginia, and now Pennsylvania to play the one-armed bandits. They’re expecting slots to chip in about $500 million once the state selects locations and commences operations, but that won’t likely occur in full until the next state election year of 2010.

Another voice on the budget machinations was provided by our County Executive, Rick Pollitt. According to the Sun:

Pollitt thanked the governor for wading into the budget battle and urged lawmakers of both parties to avoid politicizing a financial issue that affects all residents. “We’re citizens,” he said. “We need to fight this and overcome this as citizens.”

His obvious concern comes from whether Wicomico County’s modest share of the state pie would be maintained. Unlike his counterpart in the Governor’s chair, Pollitt has a restriction on spending because in 2004 county voters approved a revenue cap that limits spending increases to 2 percent per year. Because of it, my property taxes here went down 6 cents per $100 this year but the county still had its maximum spending power.

I also got input yesterday from two Eastern Shore legislators. Republican Delegates Addie Eckardt and Jeannie Haddaway (both of District 37B, which covers a large portion of the lower and mid-Shore) chimed into the argument with this claim that the corporate taxes will hurt the middle class, too:

As Governor O’Malley travels the state selling his plan to raise a plethora of taxes, Delegates Addie Eckardt and Jeannie Haddaway point out that the math just does not add up.

The Governor came to Salisbury University trying to convince citizens that increasing the corporate income tax will help make higher education more affordable for the middle class”, said Delegate Eckardt. “A study released in September by the Maryland Chamber of Commerce shows that increasing the corporate income tax will lead to a loss of over 2,500 jobs by 2017. How exactly does increasing unemployment make higher education more affordable?”

“It is very easy to target seemingly faceless corporations,” said Delegate Haddaway. “But the reality is that the citizens of Maryland will be hurt by it more than the corporations themselves. The corporations can cut payroll, raise their prices, or just move out of the State to make up the difference. But how do our citizens make up the difference when this causes the costs of food and goods to rise while at the same time, mismanaged government has caused their utility bills to go up and their tax bill to go up? It is these people – hard working, middle class people – that will be hurt by this.”

In August, House Republicans offered a budget alternative that would fix the structural deficit through slowing the growth of government and a limited slots plan” said Haddaway. “The plan was presented to the Governor in good faith, but it seems to have fallen on deaf ears.”

What the Governor refuses to acknowledge is that Maryland has a spending problem, not a revenue problem”, said Eckardt. “Tax increases are not necessary”.

Ladies, don’t hold your breath. As “rich” Republicans, we’re just going to have to take it in the shorts for 3 years before we get another crack at changing the political face of Maryland. But in the meantime, we need to be like the elephants who symbolize us and have long memories because it’s going to be another 36 months of the Democrats doing what they do best – ensnare more and more people into government dependency.

Crossposted on monoblogue.

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