Why Maryland should raise taxes

March 13, 2003|By Steve Hill

AS MARYLANDERS should know by now, our state has a budget problem. For the coming fiscal year, state general fund revenues are expected to equal $9.9 billion while the cost of providing services is expected to be $11.2 billion.

Because there is a constitutional requirement to balance Maryland's budget, sometime between now and the end of March our policy-makers must figure out how to make the spending and revenue numbers match.

Some in the legislature would like to consider tax increases as one way to balance the budget. Others would prefer to focus on spending cuts. Proponents of spending cuts argue the government is too big and has grown too fast. They say that a case hasn't been made for why tax increases should be part of the budget-balancing equation.

Here's a start.

First, it's easy to say that government is bloated and has grown too fast, but saying it doesn't make it true.

In fact, Maryland has one of the leanest governments in the United States. A recent study by the Maryland Budget and Tax Policy Institute shows that Maryland has fewer state and local government employees per capita than every state but nine. And state and local government spending in Maryland reflects a smaller share of our economy than in every state but three.

If state and local governments could deliver the level of services that Marylanders want or need with few employees and low spending, then the small size of government here would be something to tout. However, service needs are not being met.

Because of inadequate state funding, more than 1,000 people with developmental disabilities are on a waiting list to receive services. At present funding levels, that waiting list will exceed 5,000 within a few years.

Our state, which has the second-highest median family income in the country after Alaska, also cannot afford to extend health insurance to low-income working parents. A single parent with two children who earns a little more than $500 a month earns too much money to qualify for the state's health insurance program for the poor.

Maryland's eligibility levels are among the lowest in the United States and leave low-income working parents with only two choices: go without health insurance or stop working and get access to health insurance through the welfare system.

One need not be poor or have a disability to feel the pinch of low state spending.

Because of inadequate state spending, tuition and fees at Maryland public colleges and universities are sixth-highest in the United States. A recent national study gave Maryland a grade of D minus on affordability of higher education, largely because of the combination of high tuition and low access to student aid.

Now, because of spending cuts, Maryland universities are considering enrollment limits -- meaning that those of us who can afford Maryland's high tuition may find that there's no room for our kids.

Concerned about public safety? Maryland has 623 parole and probation officers to oversee a caseload of 52,000 offenders -- an average of 83 offenders per officer. However, 70 percent of the caseload needs intensive supervision, which has an industry standard of 30 cases per officer. The Department of Parole and Probation has more than 100 vacant positions, but the agency is subject to a hiring freeze due to the revenue shortfall.

One doesn't need to be familiar with the data and policy choices to see the impact of low government spending.

My child attends a high school that has a slab filled with trailers parked outside for use as classrooms. They are called "temporary" classrooms, but they are permanent fixtures at her overcrowded school. Because the cafeteria cannot reasonably accommodate the number of students, the first lunch period begins at 10:15 a.m. -- less than an hour after the start of school.

I recently waited three hours to renew my driver's license. My wait did not result from slackers who were dawdling or chatting with their coworkers. Rather, there weren't enough people there to get the job done. Why? Because we don't pay enough taxes to hire an adequate number of workers.

The natural response to long waits or poor service is to assume that we're not getting what we pay for. In truth, we are getting what we pay for -- we pay little, and often little is what we get in return.

Our policy-makers are poised to make things worse by balancing the budget by further reducing services -- unless tax increases are a large part of the equation.

Steve Hill is the director of the Maryland Budget and Tax Policy Institute in Silver Spring.

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