Schaefer Tries the 'Washington Ploy'

February 18, 1992|By STEPHEN MOORE

WASHINGTON — Washington. -- Hats off to Governor Schaefer and his recent fiscal theatrics. If the purpose of his ''doomsday budget'' was to mobilize support for the largest tax increase in Maryland history, then he seems to have succeeded in spades.

His no-new-taxes budget envisions an apocalyptic fiscal future: deep cuts in aid to the schools, drastic reductions in the police and fire fighting services, evictions of the homeless from state-financed shelters -- in the dead of winter, no less. No wonder that public-interest groups and concerned citizens are lining up to support the governor's billion-dollar tax proposal.

In Washington we call this kind of budget chicanery ''the Washington ploy.'' If you try to cut federal agency expenditures, Congress starts issuing scary press releases about shutting down the FBI, the Supreme Court, the Library of Congress and the Washington Monument. In other words, the essential services, not the fat, will always be the sacrificial lambs. This is hardly the kind of conduct we would expect from our elected officials -- in Washington or Maryland.

But the real issue for Marylanders to decide in this pivotal budget year is whether the government in Annapolis is underfinanced, as the governor would have us believe.

Money magazine apparently doesn't think so. It recently declared Maryland one of the nation's ten ''tax hell'' states. Between 1980 and 1990 state tax revenues in Maryland skyrocketed by 110 percent -- a rate of increase twice that of inflation. The Census Bureau now says Maryland ranks seventh of all states in per-capita taxes. For the typical family of four this means an annual state tax bill of nearly $8,000 a year.

Although it is true that many neighboring states have outspent Maryland since the mid-1980s, Governor Schaefer has been anything but a frugal governor. Since 1980, the Maryland budget (in nominal dollars) doubled in size. Question: How many Maryland family budgets doubled over this time period? Over the past decade state government spending has been outpacing the growth in Maryland personal income by about 5 percent per year.

Such a trend means declining take-home pay for Marylanders. This clearly is not economically sustainable, yet Mr. Schaefer would accelerate the trend.

Is the only other alternative to new taxes the governor's doomsday budget? On the one hand, it is true that Maryland is one of only 14 states that has not had a major tax hike since 1990.

Yet look at the unhappy results of the big tax-increase states of late. New Jersey is an economic basket case in the wake of Gov. James Florio's $2.8 billion tax hike. Connecticut is facing a ferocious tax revolt as citizens continue to loudly protest Gov. Lowell Weicker's $1.1 billion first-ever income tax for that state. And last year California enacted a $7 billion tax hike -- the largest ever for any state -- but it still faces a $5 billion deficit in 1992 because businesses are fleeing the state. Marylanders take note: Across the nation tax-raising states are finding they have only dug themselves into a deeper fiscal hole.

There is another budget strategy that seems to be popular with the taxpayers and has not led to the dark doomsday scenario laid out by Mr. Schaefer. Massachusetts, Michigan and Virginia all have had larger deficits than Maryland, yet each is combating the red ink through spending restraint alone. Massachusetts' Gov. William D. Weld reduced real government expenditures by more than 5 percent last year, and that historically debt-ridden state now enjoys a budget surplus.

If a liberal state like ''Taxachusetts'' can end its tax-and-spend cycle, then certainly it isn't asking too much for Maryland -- with its 200-year history of fiscal moderation -- to do the same.

Stephen Moore is director of fiscal policy studies at the Cato Institute in Washington.

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