Selling higher taxes puts O'Malley to the test

May 06, 2007|By C. Fraser Smith

As it attempts to erase a $1.5 billion difference between spending commitments and income, the O'Malley administration faces a classic test of political leadership.

During the recent General Assembly session, Gov. Martin O'Malley and the legislative leaders agreed to lead - next year. They put off the $1.5 billion problem for another day. But that day is near.

By late fall, the O'Malley administration must have clear outlines of a solution in hand. It will have to assume that additional revenue will be available to balance the books.

The administration's green-eyeshade types have been meeting with legislative leaders for weeks. And administration officials have begun to appear in various venues around the state with presentations that define the problem in concrete terms.

It's called "selling the problem." Recent polling suggests that a substantial number of Marylanders know generally that the state faces a structural budget deficit, yet the term remains abstract. So the administration will try to impress Marylanders with the immediacy - and the severity - of the problem. The sales job has begun.

Transportation Secretary John D. Porcari told a group of Central Maryland business leaders that he was unable to propose any mass transit improvements because there is no money. Years of borrowing from the transportation trust fund have left the cupboard bare.

Mr. Porcari and others in the administration will be pointing out that urgent needs - such as providing better public transportation for workers and businesses - can be met only if more money is provided by taxes, spending cuts or both.

The governor has been saying that other Cabinet secretaries will be delivering a similar message, because none of them can offer a "loaves and fishes" answer - a miraculous multiplying of cash on hand.

The politics of the situation are immediately clear: The deficit was created by the majority-Democratic General Assembly. It was left in place by former Republican Gov. Robert L. Ehrlich Jr. But as Mr. O'Malley has said, it's an O'Malley administration problem now.

It's a moment when the O'Malley team can show its skills - or not.

The administration has help on the urgency side of the equation.

Senate President Thomas V. Mike Miller said again last week that a special session of the General Assembly should be called in the fall to address the problem. The administration does not rule out such a conclave, but it says an agreement must be reached first, so that a special session would merely endorse a plan hammered together in advance by the administration and leaders of the Senate and House of Delegates.

Strategists in the administration must have a plan that wins support in both Houses. Senator Miller, for example, wants slot machines in the package, while House Speaker Michael E. Busch - no slots lover - will want assurances of support for his plan to get medical insurance for more Marylanders.

A proposal to pay for expanded health care coverage (financed by an increased cigarette tax) stalled this year. State leaders have their eye on next year, when the overall tax package will need support from every quarter. Had the initiative passed, the pressure for tax reform would have dissipated.

There is currently no consensus on a revenue package. But it will almost certainly include slot machines, higher income taxes for wealthier residents, and an effort to save hundreds of millions of dollars by squeezing various programs for cost savings. There has been talk of broadening the sales tax by applying it to services - haircuts, for example. The Maryland Chamber of Commerce and other groups have opposed that approach, so it can be a difficult sell when every business group has a lobbyist in Annapolis. All of these groups can form a powerful coalition of opponents.

As they work toward a proposal, the governor's advisers have been talking to their counterparts in other states, including Virginia, where comprehensive tax reform was accomplished under former Gov. Mark Warner.

O'Malley watchers have predicted that his minions will fan out with warnings of pestilence and plague if there is no new revenue.

The governor's team is fired up by the opportunity to prove its mettle.

It won the election. Now it must prove it can govern.

C. Fraser Smith is senior news analyst for WYPR-FM. His column appears Sundays in The Sun. His e-mail is fsmith@wypr.org.

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