Tax issue looms in Annapolis

December 17, 2006|By C. Fraser Smith

Maryland's brand-new General Assembly convenes soon to address an old problem. Several old problems, actually.

You could think of them as chickens coming home to roost.

Chicken No. 1: The state's tax structure doesn't match up well with the modern service economy. It dates to a time when manufacturing dominated. So even when the economy is doing well, the state's tax revenue stream doesn't flow as freely as it might.

And, with billion-dollar deficits in prospect next year, more revenue is needed. Political leaders will face a selling job: They're going to have to show why tax reform is needed to pay for public education, highway construction and other necessities.

Studies over more than 15 years have attempted to modernize Maryland's tax system, but they've always run into political problems. A billion-dollar plan in the 1990s failed after voters went on an anti-incumbent rampage, turning out leaders all over the country.

Some important political figures - Gov.-elect Martin O'Malley, for example - may wish to avoid new taxes or even the study of new taxes as a first order of business. At the same time, he made some expensive promises during the recent election. More revenue is needed to pay for commitments already made.

And even if the powerful players climb board for a study, every tax target finds a way to fight off the reforms.

Nevertheless, there are those in the Assembly who believe it's time to overhaul the system.

"We may want to take a broader look," says Del. Maggie L. McIntosh, a Democrat and member of the House of Delegates leadership. "Virginia just did it. ... The leadership is talking about it."

The question from the Assembly's point of view is this, she says: "Why do we keep poking our fingers in holes in the dike?"

The thought of a study arises along with the inevitable return to the question of allowing slot machines back into Maryland. Prospects for passage of such a new revenue measure appear to be worse than they were over the past four years, when repeated efforts to make them legal failed.

Despite cries of distress from the racing industry, which hopes slots would produce bigger purses, the appetite appears to be in decline among legislators. House Speaker Michael E. Busch opposes slots, and many House members agree it's a poor way to pay for public services. Republicans were reluctant to vote for more gambling even when Republican Gov. Robert L. Ehrlich Jr. was putting all his budget-balancing chips on that revenue source. Mr. Ehrlich's defeat freed them of that pressure.

Chicken No. 2: The unmet Thornton challenge. The mammoth aid-to-education funding plan called Thornton included $90-million to provide more assistance in parts of the state where the costs of education are higher. Mr. O'Malley promised to fund that part of the plan - contrasting himself in the campaign with Mr. Ehrlich, who had chosen not to fund it.

Chicken No. 3: Energy costs. The Assembly cobbled together a stop-gap program last summer to ease consumers past a looming 72 percent increase in energy costs - and past the election. But the big bills are still looming. By early summer, they will land in Maryland mailboxes unless a way is found to deflect the impact.

Chicken No. 4: Smart Growth. With an influx of military base personnel and just normal growth, Maryland's cities and towns are facing intense growth pressures. New schools will be needed. Highway improvements will be needed - and the trust fund that helps to pay for big projects has been depleted as the Assembly and Governor Ehrlich tried to keep the ship afloat.

Chicken No. 5: New wastewater and storm-draining systems are needed to protect the Chesapeake Bay.

These are just a few of the full-grown birds. There are no doubt others. What the would-be spenders ought to do now is decide which new revenue sources they could support.

If they don't, in time they'll end up with some pretty demanding chickens.

C. Fraser Smith is senior news analyst for WYPR-FM. His column appears Sundays. His e-mail is

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.