Out to prove the critics right

A standard which generally has borne itself out in the field of economics is that, as far as taxes go, raising them is counterproductive because revenue declines despite the increased taxes; that is IF consumers have a choice in the matter.

The people in Maryland have apparently made their choice in the matter and it was announced Tuesday that, even with the tax increases rammed through the General Assembly late last year in a special session, the Free State’s revenue is forecast to be $432 million less than originally expected. And I’m going to predict right now that you’ll see the sword of Damocles suspended over the head of Maryland voters in November – pass the Constitutional amendment permitting video slot machines in Maryland or face the prospect of still higher taxes and/or draconian budget cuts. And these cuts won’t be cutting the fat out of the budget – oh no – Martin O’Malley is going to select the most painful cuts he can find because he’ll need major-league scare tactics to force an issue that is sinking in the polls to pass.

On a personal level, I have no issue with gambling; after all, I’ve been known to drive up Route 13 and join many of my fellow Marylanders trying my luck at Harrington. Gambling on the ponies is a long-standing tradition in the state and there’s a small percentage of the proceeds from the new video slots that is promised to help the horse racing industry here in Maryland. More recently the state has adopted the Maryland Lottery and its array of number games like MegaMillions or Keno and the scratch-off tickets one can find at any corner store worth its salt. My beef with the issue is changing the state Constitution to address a problem that could have easily been solved legislatively and would have been if Maryland Democrats had placed political pride aside and made Governor Ehrlich’s slot proposals a bipartisan effort. But as always they played the political game and dared Republicans to come out against their ballot effort and appear hypocritical.

There is no hypocricy in holding a position favoring slots through legislative means but not through the sledgehammer of a Constitutional amendment which would need voter approval again and again when changes were required. Not everyone wants video slots in their area, here on the Eastern Shore there are officials in Ocean City who worry about losing a family-friendly image, or worse, that the traffic once bound for the beach will decide instead to stop at the Ocean Downs race track and proposed casino location several miles away and skip the beach because they’re too broke to go there after losing their spending money. And that’s their right as local officials to do what they feel is best for residents’ long-term quality of life. If they turn out wrong, the voters can reject their bids for re-election the next opportunity they get.

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Martin O’Malley inherited a financial situation that was dire to some degree but nowhere near as bad as it’s become in the last year. Naturally he blames “the national economic downturn, national foreclosure crisis, and the increased price of energy, gasoline and food,” sighing that “these revenue estimates are not unexpected.” Nothing is ever his fault – never mind he instituted a budget-busting Medicaid expansion in the very same special session that raised the taxes of everyone living and working in Maryland who buys practically anything. A truly lean budget would have obviated the need for all these tax increases and for video slots, but there would have been no goodies to pass out to favored friends and special interests.

Something which would be very useful but require a person with an accounting and budgeting pay grade above my own is to look at the state budget as currently constituted and determine what expenditures are absolutely necessary by federal fiat (with the amount of money that’s actually passed through to us by the feds) and then which ones are required by the state Constitution. That’s where the budget should start and only then should discussion begin about which programs are priorities and how they can fit within the amount of revenue we’re expecting (minus a little for cushion in rough times.) For me, something like Program Open Space is a waste of money but maintaining the Bay Bridge and addressing other transportation needs by keeping our highways in shape is pretty important.

My biggest fear is that, just like a problem gambler who takes his paycheck straight to the casino and dumps the money for rent into his favorite one-armed bandit, the state of Maryland will become overly dependent on revenue from gambling and shift the percentages promised to various functions (particularly education) around until more needs to be taken directly from taxpayers’ pockets. To me, the wager on Maryland taxpayers being the ones losing their shirt is the safest bet of all.

Crossposted on monoblogue.

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