Cut spending now

Maryland GOP delegates' plan would dig deep to balance budget, avoid future tax hikes

March 18, 2010|By Anthony J. O'Donnell and Christopher B. Shank

Maryland's budget deficit is a long-term problem that requires a long-term solution. Over the past three years, the O'Malley/Brown administration has made little to no progress in addressing the state's budget deficit.

Increased spending, a failed slots bill, the largest tax increase in our state's history and federal bailouts make for a dismal track record. The Department of Legislative Services projects a cumulative deficit of more than $8 billion for the years 2012-2015 - $1,428 for every person in Maryland - yet Gov. Martin O'Malley has yet to offer a long-term plan to deal with this crisis. Next year, when federal stimulus funding runs out, the day of reckoning will arrive, and the taxpayers will be handed the bill. If we don't reverse this trend, we are headed for yet another massive tax increase.

Another round of tax increases is the last thing our state needs; our citizens and businesses are already struggling under Maryland's oppressive tax burden. The nonpartisan Tax Foundation ranks Maryland 45th in its list of worst business tax climates in the nation. This index considers corporate tax, income tax, unemployment insurance taxes and property tax. The Tax Foundation also lists Maryland as 49th out of 50 states in terms of per capita income tax burden.

Maryland's tax burden leads citizens to vote with their feet and move to states with lower tax burdens. When comparing our tax rates after the 2007 special General Assembly session, they only need to look to our neighbors to the south to find a friendlier tax environment. Maryland's corporate tax rate is 8.25 percent; Virginia's is 6 percent. The top state and local income tax rate in Maryland is 9 percent; in Virginia it is 5.75 percent. The Manhattan Institute for Policy Research lists Maryland in the top 10 of states with a population exodus - 86,000 people left the state between 2000 and 2008. In that same period, Virginia gained 153,000 new citizens.

Maryland clearly cannot afford another round of tax increases. While the Democratic leadership in the General Assembly has stated that tax increases are not an option this year, we saw in 2007 how quickly they can become a reality. Without a long-term plan to address Maryland's increasing deficits, that is most certainly where we are headed.

There is an alternative. On Feb. 23, on behalf of the House Republican Caucus, we made an important presentation to the budget committees of the General Assembly. In response to a challenge from the Democratic leadership, we offered our vision of how to balance this year's budget as well as a long-term plan to avoid tax increases and repeal the special session taxes that have cost us countless jobs. Our plan also eliminates the need for additional demoralizing furloughs of state employees.

Our plan reduces government spending by $830 million in 2011 and puts strong limits on spending growth in the years that follow. The bulk of those savings would come from cutting Geographic Cost of Education Index Funding; changing the way the state calculates average daily attendance of public school students; and rooting out waste and fraud through Medicaid audits. We have put forth a comprehensive and detailed plan to balance the budget, avoid taxes and get our economy moving again. (For more specifics, please visit www.marylandhousegop.wordpress.com.)

By controlling spending, we can repeal the governor's sales and corporate tax increases and get our economy moving again. Unlike the governor, who according to The Baltimore Sun has a budget held together with "chewing gum and baling wire," our plan provides a road map to the future. Our plan will help stop the flow of businesses and people to our economic competitors such as Virginia and North Carolina.

Last week, we met again with the House Appropriations Committee to answer additional questions and continue the discussion about our plan. Our caucus will continue to work in a sincere, bipartisan effort to solve the structural deficit and avoid tax increases. If the Democrats reject or cherry-pick this plan, the burden will be on them. Federal funds are running out, and we face a fiscal Armageddon. If the governor and majority party ignore these recommendations as they have done in the past, then they should be honest with the citizens of Maryland and give them a list of what taxes they plan on increasing next year.

We have a choice - we can stop the flow of red ink. While Maryland's fiscal challenges are significant, they can be overcome.

Republicans Anthony J. O'Donnell (anthony.odonnell@house .state.md.us) and Christopher B. Shank (christopher.shank@house .state.md.us) are, respectively, the minority leader and the minority whip in the Maryland House of Delegates.

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