Budget myths

March 26, 2004

WITH PASSAGE of Speaker Michael E. Busch's $670 million tax package in the House of Delegates last night, Mr. Busch's opponents are likely to step up their campaign of misinformation and partisan rhetoric. And it's going to be amplified by the usual suspects, the amen-corner of right-wing talk-radio shows and Internet forums where the malevolence of the attacks is matched only by an appalling disregard for the facts.

Much of the propaganda is based on some basic misconceptions about state government, a mythology that portrays Maryland as an evil land where taxpayers are treated cruelly and fat cat bureaucrats pocket their tribute. It's an entertaining idea - and far less demanding on the brain that the complexities of Maryland's actual finances. But in the interests of provoking a more truthful discourse, let's separate the myths from the math:

1. State spending is out of control. Gov. Robert L. Ehrlich Jr. shoulders much of the blame for this whopper - it helped get him elected. It's true that the legislature acted irresponsibly when it committed to the $1.3 billion Thornton education plan without the means to pay for it. But the growth of state government has been fueled mostly by the growth of Maryland's economy. Gov. Parris N. Glendening didn't raise taxes (unless one counts the tobacco tax or the kinds of fees that Mr. Ehrlich also has raised), he cut them. His $600 million income tax cut is one of the reasons Maryland is facing a long-term deficit.

2. Maryland is a tax hell. This is one of those deceptions that is repeated so often it sounds true, but it isn't. Maryland's overall tax burden is actually fairly middling, particularly when compared with the state's relative wealth. It's ranked 38th (when measured against personal income) by the nonpartisan, nonprofit Tax Foundation. One of the most compelling features of Mr. Busch's tax proposal is that it keeps tax rates competitive with surrounding states. (Still, it's interesting how you never hear about those 6 percenters in Pennsylvania shopping in Maryland to take advantage of our nickel sales tax.)

3. There's plenty of fat in the state budget. Mr. Ehrlich's own budget experts will tell you this one isn't true. Here's where the majority of state tax money goes - health care for the poor and public education. Vilify state government all you want, but you can't squeeze it without cutting services. Mr. Ehrlich's budget cuts have been chiefly to local aid - and have already spurred many counties to raise property taxes to make up the difference.

4. Slot machines would solve the financial crisis without new taxes. Even the governor doesn't make this outrageous claim. But he clearly expects a bonanza from slots. That will require the fleecing of tens of thousands of Maryland gamblers, and steers our civic aspirations to those of Biloxi, Miss., and Dover, Del. Nevertheless, for all the revenue expected from slots, there are many, many off-setting costs.

5. The state is run by a bunch of tax-and-spenders. Remember the last time the state raised the sales or income tax? Probably not if you're younger than 30. There was a temporary boost in income taxes during the recession in the early '90s, but the last permanent tax increase was when the sales tax went from 4 cents to 5 cents - in 1977.

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