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What Mr. O'Malley Achieved

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FACED WITH a gaping hole in Maryland's budget, Gov. Martin O'Malley (D) gambled by calling a special session of the General Assembly to put forward one of the broadest tax overhauls in state history, along with major spending proposals.There is plenty to dislike in the package that emerged from the legislature, not least that in raising $1.4 billion in new taxes starting next year, it puts a comparatively heavier burden on the middle class than on the rich. That is the case mainly because of a higher sales tax, which will be felt by average Marylanders more than by top income-earners. And the package will be even less progressive if the O'Malley-backed proposal to allow 15,000 slot machines at five sites (3,500 more than he originally proposed) is passed by Maryland voters at referendum a year from now.
It's also fair to ask whether the governor and his fellow Democrats who control the legislature did their utmost to cut spending before ordering up $1.4 billion in taxes and half that much again from slots.
On top of that, the General Assembly, an insular and clubby institution, displayed all the procedural nastiness for which it is notorious. Interest groups with savvy lobbyists and deep pockets got special breaks; car dealers, for example, were treated to a subsidy worth $80 million. Those who lacked comparable clout, like some segments of the computer services industry, will be hit by a sales tax increase that, inexplicably and illogically, still does not apply broadly to most services in the state.
 
Special session hands taxpayers a $1.3 billion bill

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So, it's over. In the end, the legislators who assembled this month for a special session did more or less what Gov. Martin O'Malley asked them to: They raised taxes by roughly $1.3 billion. In narrow political terms, the special session was a win for Mr. O'Malley. But in the long run, getting his name linked to a huge tax increase - perhaps the biggest in state history - might not be much of a boon for Mr. O'Malley. Quick session or not, legislators were hearing dire rumblings from their constituents. That's the major reason they ultimately insisted that Mr. O'Malley go beyond his previous halfhearted efforts at austerity and make about $550 million in budget cuts next year.
We thought a tax increase of some sort was probably inevitable. But, as the outnumbered Republicans have repeatedly pointed out, state spending isn't a fact of nature - it can be cut to match revenues.
Taxpayers are livid now, but will they still be angry enough in 2010 to take it out on Mr. O'Malley and his legislative allies? You might call that the $1.3 billion question.
 

Bad timing makes tax hikes even worse

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Gov. Martin O'Malley, Senate President Thomas V . Mike Miller and House Speaker Michael Busch must possess special knowledge. Just as the national economy teeters on the edge of a recession because of the housing meltdown, they decide to hike state taxes across the board. What a plan! Drain the taxpayers when they can least afford it! As Steve Hanke, professor of applied economics at John Hopkins University said Tuesday, "this whole thing happened with the worst possible timing."
Tell us, leaders. Will Maryland escape the housing fallout? Does it exist in a special federal government-financed bubble that immunizes it from the rest of the U.S. economy? History tells us no.
Maryland cannot wring higher revenue from residents if they don't have it. They will spend less and businesses will hire fewer people if current trends continue. That means less money gleaned through taxes. If that is making "progress," we'd like to go backward.
 

What Hath the Senate Wrought?
Special Session Report – Annapolis

November 9, 2007 60 days until the 2008 Session

Senate Republican Caucus: Senator David Brinkley, Minority Leader and Senator Allan Kittleman, Minority Leader Minority Whip

3-Month Residency Now Subject to State Income Tax

Comptroller Franchot Decries Tax on Computer Services

Filibuster Shut Down After Two and One-Half Hour Debate: Republican Senators led a filibuster against the largest tax increase in Maryland history today on the floor of the Senate. The cloture motion to shut down debate passed by a vote of 29 to 18 as indicated below:

Cloture Vote

Voting Yea – President Mike Miller, Astle, Britt, Conway, Currie, DeGrange, Dyson, Exum, Forehand, Frosh, Garagiola, Gladden, Jones, Kasemeyer, Kelley, King, Kramer, Lenett, Madaleno, McFadden, Middleton, Muse, Peters, Pinsky, Pugh, Raskin, Robey, Rosapepe, Zirkin

Voting Nay - Brinkley, Brochin, Colburn, Della, Edwards, Greenip, Haines, Harris, Hooper, Jacobs, Kittleman, Klausmeier, Mooney, Munson, Pipkin, Simonaire, Stoltzfus, Stone

· Just Put Up the “Not Welcome” Signs At Maryland’s Borders: Republican Senators were astonished with the passage of a new residency standard offer by Senator Brian Frosh on the floor that will require anyone living in the state for three months or more to pay state income taxes. The prior standard and the residency requirement used in most states is 6 months and one day. Fiscal estimates project that an additional $58 million will be raised from these temporary residents.

· Landscaping Services Out (for now): Most legislators were shocked when the Budget and Tax Chairman answered yes to Senator J. Robert Hooper question asked during floor debate whether a 17-year-old making money during the summer by mowing lawns would have to collect a sales tax. His line of questioning about the far-reaching effects of the landscaping provisions laid the foundation for a late-night vote that removed landscape services from the bill. However, the House still has the opportunity to put them back in.

Tax on Computer Services Would Cripple Development of Maryland’s High-Tech Industry: WBAL reported that Comptroller Peter Franchot sent a letter to Speaker Michael Busch demanding that the House of Delegates reject the Senate’s expansion of the sales tax on computers services. Franchot implored the Speaker because "the computer firms form the nucleus of the state's new economy" and that the sales tax, "plays into the hands of those who would unfairly question Maryland's business climate." Franchot also questioned the long-term ramifications of the special session could "undermine our ability to compete effectively in the global technology marketplace."

Highlights of the Filibuster Debate:

Senator David R. Brinkley, Minority Leader: “Advocates testifying in favor of Governor O’Malley’s tax package urge that the entire package be passed because it is “progressive.” In reality, over 85% of new revenues in the Senate amended O’Malley package are from regressive taxes, which will greatly harm the working poor and middle-class families of the state.”

Senator Allan H. Kittleman, Minority Whip: “Who are the winners and losers as a result of the tax increases? The clear winner is big government and the clear losers are the citizens of Maryland - who were not heard, not respected and not protected by their representatives.”

Senator Nancy Jacobs: “This special session will not only be remembered for passing the largest tax hikes in Maryland history, but for passing bills with huge unintended consequences. I ask my colleagues to put a face on the taxpayers we represent rather doing what you are being told to do by the Democrat leadership.”

Senator Alex Mooney: “The working families of Maryland can not afford higher taxes - we should be cutting the ‘out-of-control’ state budget.”

Senator Andrew P. Harris: In responding to a rejection from the Budget and Tax Committee Chair to answer questions about the bill: "I've never seen a committee unwilling to answer questions on a bill they proudly brought to the floor. . . I've never seen a committee unwilling to give us the numbers on the largest tax increase in Maryland history. . . It is not a debate when one side refuses to answer questions. . . The truth is - they don't really know the cost. Why won’t they reveal the total cost to taxpayers.”

Senator Janet Greenip: “This whole process reveals a fundamental difference in the view of government and taxpayers rights. I believe that the taxpayers’ money belongs to them and that the government should take as little as possible. The other side believes that the government knows how to run people’s lives and invest their money better than they do.”

Senator George C. Edwards: “At some point, we need to bite the bullet. . . If you don’t believe that businesses are not going to come to Maryland – you better think again. If you don’t believe that businesses already here are not going to leave the state, you better think again. If you think that this bill will not put some of our citizens out of work, you are fooling yourself. Because if we adopt all of these taxes, it will happen.”

Senator E.J. Pipkin: Speaking about the proposed expansion of health care bill on the floor after the filibuster on the tax bill: “If the tax bill was on steroids – then the health bill is on Quaaludes.”

 

Drawing the line on taxes
 Wednesday, August 15, 2007

Maryland House Republican Caucus present budget plan with no new taxes.

ANNAPOLIS—On Wednesday, August 15, 2007, the House Republican Caucus outlined their budget proposal to eliminate the structural deficit without severe cuts to services or new taxes.

"For many months Marylanders have been bombarded with horror stories regarding the State's fiscal health" said Minority Leader Anthony J. O'Donnell. "The Governor and the Democratic Leadership have insisted that the only choice is to raise a number of taxes, or make deep, painful cuts to services. It is time to be honest with the people we represent. Our structure devicit can be fixed without any new tax increases or draconian cuts."

The Republican plan would limit growth in State government to 3.5% and includes a limited slot machine proposal. The plan eliminates the structural deficit and creates a surplus by FY 2011. The Republican proposal does not include tax increases

"The impulse of our Democratic colleagues is to raise taxes and that simply is not necessary" said Minority Whip Christopher B. Shank. "They are proposing to take money out of the pockets of Maryland's taxpaying families. Taxes hinder a family's financial progress.

"The structural deficit means that our spending has outpaced our revenues" said Delegate Gail Bates, the Ranking Member of the House Appropriations Committee. "The Democrats want you to believe that there is a revenue problem - the truth is that they have a spending problem."