Seeing Red

Now that their main man Martin is in the Governor’s Mansion, apparently the state budget running in the red is no problem for the Sun Editorial Board. Their editorial this morning is one of the more bizarre editorials I have read in quite some time.

Maryland tax revenues are proving to be less than expected, particularly from the distressed housing and retail sectors, a clear indicator that the local economy is not immune from the national downturn. According to the latest estimate, tax collections for the fiscal year that began July 1 are likely to fall about $200 million short of projections.

It’s true that the housing and retail sectors being down are going to lead to lower tax revenues. But what the writers do not take into account, naturally, is the decrease in tax revenues due to the increases in taxes. I have noted before that when tax rates are increased, revenues decrease. This is particularly true when you make it a point to pass taxes targeted at those with the means to leave.

Not only have Maryland’s economic troubles proved relatively mild compared with other states, at least so far, but the budgetary outlook has been helped substantially by last year’s tax package.

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By adding a penny to the sales tax, raising the income tax for the state’s wealthiest and taking a few other steps, Mr. O’Malley and the General Assembly not only averted a potential $1.7 billion budget shortfall but also had enough to spend more on transportation projects and health care for the uninsured.

Of course, it is morally reprehensible to increase taxes to cover a shortfall, but increase them just enough to spend billions more in increasing the size of government. Not only is that detrimental to the economy and to the wallet of the taxpayer, it also sends a dangerous message that such profligate and irresponsible spending will not only be acceptable, but encouraged. The Sun seems to think that indiscriminate wasteful spending and hiking taxes to obscene levels is a more acceptable way to manage the state than it would be to spend responsibly and reduce the size of government in order to spend what we can afford.

Decisions that seemed painful last fall are now paying off. A $200 million drop in revenues is manageable because lawmakers set aside more than that in the state budget’s cash balance account.

You want painful? Talk to the parents who have less money to save for college. Tell that to the high school student who can’t get a summer job to help pay for their own education. Tell that to the mother who lost her job and can’t put food on the table for her children. Isn’t that more painful than having enough money to cover a bloated budget?

Even for families who aren’t in dire straits, they can just go hit up their neighbors for more money in order to pay their bills. They realize that they need to cut back on spending and only spend what they can afford. That’s how they make their fiscal situation “manageable.” The only way that the Sun editorial writers are going to find a solution to the current fiscal situation that is manageable is through higher taxes.

And speaking of tax hikes…

But that is the short-term view. In fiscal 2010 (the budget year that begins nearly one year from now), the gap could widen to $500 million. And after that, the state’s budget health may depend on whether voters approve this fall’s slots referendum – or find an alternative source of new revenue.

Which, of course, is ridiculous. It is fiscally irresponsible to depend on slots revenue to cover future spending. It is fiscally irresponsible to not cut spending now in order to cover expected shortfalls. And I said before, it would be morally bankrupt to raise taxes again.

The Sun wraps up their editorial with a rather weak-kneed endorsement of spending cuts, but the earlier paragraphs make it clear that their preferred method of dealing with the issue is not through cutbacks in spending, but further increasing the burden on their readers….maybe explaining why so few people are buying the Sun these days.

But of course our friends on the left still think taxes are the way to go. FSP poster Nate W posts this about the shortfalls in the last two budgets in a larger post about the recession:

Yea, I’d say that wouldn’t be such a bad idea Mr. Descheneaux. Even though this shortfall isn’t nearly as bad as the $1.5 billion gap that required a special session last year, its still around $200 million more than you’d like to see. Especially when there are no signs that this dragging economy is going to tick upwards anytime soon.

The bolding is mine because I want to draw attention to the very same mindset that the Sun is endorsing. The $1.5 billion gap did only required a Special Session because Governor O’Malley refused to act like an adult and cut the budget in a responsible way. Instead, Democrats in Annapolis raised taxes and raised the cost of living for every man, woman, and child in this state. They did so with no care whatsoever to the devastating impact these taxes had on the local economy. Terms like O’Malleynomics and the O’Malley Recession aren’t cute buzzwords to piss off the left, but real descriptors of the damage O’Malley and the General Assembly has done to the economy and done to the Maryland taxpayer. What we see in Maryland’s economy and the impact that it is having on the working and middle class taxpayer is not entirely their fault, but O’Malley and the General Assembly share a pretty good chunk of blame for it.

The cure for Maryland’s economic woes are what I have argued for from day one; lower taxes, and reduced spending. It’s that simple and until Democratic leaders understand that, we have no way out.


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