How can Maryland fix its budget? Look to Virginia

March 11, 2010

Another round of Maryland budget battles is upon us. This year Marylanders' are facing a $2 billion budget shortfall, while our state legislature thinks they can continue to spend recklessly.

The legislature needs to reduce spending and taxes. Why is Maryland's corporate tax rate 8.25 percent when Virginia's is 6 percent? How about a state and local income tax rate of 9 percent versus 5.75 percent in Virginia? In 2008 alone, Maryland lost population to 38 states, and a net assessable tax base of $993 million, while Virginia gained 153,000 new citizens, in the top 12 of the nation. The non-partisan Tax Foundation ranks Maryland 45th in its list of worst business climates and 49th in its list of personal income tax rankings.

Gov. Martin O'Malley proposed eliminating $1 billion in previously planned spending increases, but that still retains $333 million. Maryland Republicans have proposed cutting an additional $725 million.

The budget growth should be 0 percent. Spending reform should include the major long-term cost drivers of the state budget: Medicaid, education spending and the pension system.

Any proposals should permanently eliminate the budget deficit; reverse the tax increases of 2007 and avoid any new taxes. Perhaps when Maryland gets its budget balanced we will see more businesses and new residents.

Kathleen Jarmiolowski, Baltimore

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