State Tax Package Looming?

August 27, 1991

The answer to the above headlined question is almost certainly "yes." There is virtually no way to close the state of Maryland's $1 billion budget gap without imposing more taxes. A key legislator conceded that point over the weekend at a meeting of county officials in Ocean City. And, as Senate Budget and Taxation Committee chairman Laurence Levitan noted, "The longer we wait, the harder it will be" -- and the higher the tax increases.

But when legislators and the governor discuss various tax options, they should not seek short-range solutions. Any tax package must be coupled with other actions that reduce the size of government and ensure equity and fairness in the distribution of local aid.

We are opposed to such Band-aids as surcharges on the income tax or sales tax. Since the state has a long-term gap between revenues and expenses of several hundred million dollars, temporary levies won't work. It will take both tax increases and sharp budget cuts by the Schaefer administration to bring the state budget back into balance.

Equally repugnant is a suggestion that the state solve its budgetary woes by simply rolling over its huge Medicaid deficit into the next fiscal year. That's how you build a mountain of

debt. It is irresponsible and could endanger the state's triple-A bond rating.

Most of the solutions to the state's current predicament lie in recommendations already made by the governor's Linowes commission. The panel called for a sensible revision of the income tax to increase the burden on wealthy Marylanders yet lower payments for lower- and many middle-income families. It called for a higher sales tax that would be more in line with other states and for a broadening of the sales tax to include services and also goods now exempted from the law.

Legislators should not overlook the other crucial element of the Linowes report: an infusion of aid to the city and counties, especially to the state's poorest subdivisions. When taxes are raised, the flow of revenue to localities ought to be weighted according to need. In other words, communities in affluent Montgomery County require less state assistance to undergird local projects than citizens in impoverished Baltimore City or Somerset County or Garrett County. State legislators must recognize their obligations to address that imbalance.

We urge the governor and legislators to agree quickly on a plan to attack Maryland's $1 billion deficit. The first order of business must be a downsizing of state agencies. Only then should the question of higher taxes be considered. And only if the new revenue is used in ways that help Maryland's less fortunate cities and counties. In the long run, that is the best way to ensure this state's prosperity and economic growth.

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