For political wonks, tomorrow is a momentous day in Maryland. It is the first day of the 446th session of the Maryland General Assembly in the oldest continuously operating state house in the United States.
Amid the celebratory atmosphere pervading the State House, with family members trying to figure out what their parents or spouses or partners do in the corridors of power, an underlying current will be roiling close to the surface of the bonhomie.
The centerpiece of legislative machinations will be taxes. Sound the groans. The worse is yet to come. Sadly so, dear readers.
Gov. Wes Moore has rung the alarm bells. The state faces a $400 million budget crunch in this fiscal year, rising to $761 million in the next and $1.8 billion in five years. While revenue is expected to rise by 3.3 percent annually, expenses are to go up 5.1 percent, according to the Maryland Department of Legislative Services. In Annapolis lingo, this picture portrays a “structural deficit.”
Federal largesse tied to Covid stimulus dollars has dried up. Spending on new programs, when money was flush and flowing, must grind to a stop, at least for now. “Discipline” is urgent, according to Gov. Moore.
Counties will absorb a substantial portion of the $3.3 billion in cuts in transportation projects. That is a setback. Counties cannot foot the expensive cost of roads, highways and bridges.
The huge Blueprint for Maryland’s Future, a bold education initiative—albeit an unfounded $4 billion mandate calling for universal pre-K and higher teacher salaries—will chew up a chunk of available funding. My preference would be block grants to superintendents to determine the chief priorities of their public-school systems.
My stance is a non-starter.
Of course, crime will command attention. So will health care. And so will climate control. And so will tax benefits for military families.
Legislators and the governor will need to agree (or not) on schemes to increase revenue through taxes to cover unfunded expenses. This wrenching effort will test legislative backbone. No politician wants to support higher taxes and anger an unforgiving constituency.
One proposal would raise taxes on the extremely wealthy whose annual wages exceed $775,000; increased taxes on stock gains are under consideration, as are increased estate taxes.
Allowing internet gaming is another potential revenue producer. I am bemused that the state would consider milking money from IT gaming to fill its coffers. While granted that gambling is an intractable part of the human condition, the state would be benefiting from, and cultivating a vice.
Is that good public policy? Technocrats would argue that taxpayers would be more amenable to tariffs on gambling, especially those who gamble on the stock market and comfortably accept losses in anticipation of eventual gains.
I also question the wisdom of taxing millionaires. Doing so will encourage e the rich to change their residences to Florida. It is a common reaction to increased taxes on the part of people who love Maryland but are ready and able to spend six months and a day (required to be a so-called non-resident) in retirement haven in Florida.
Another downfall of losing residents to Florida and other tax-friendly states is a drop in philanthropy. People typically give where they live, except in the case of their universities.
Another observation, dear readers. State legislators perform more responsibly when the state budget is strained. They make more prudent decisions. They feel constrained in funding large multi-year program. Interest groups will face disappointment.
As is my custom prior to the General Assembly, I urge readers to follow the legislature’s twists and turns. Particularly when taxes are in the mix.
While increased taxes are necessary to fund increasingly expensive services, they warrant public scrutiny and input.
Follow the money. It may lead back to your wallets.
Columnist Howard Freedlander retired in 2011 as Deputy State Treasurer of the State of Maryland. Previously, he was the executive officer of the Maryland National Guard. He also served as community editor for Chesapeake Publishing, lastly at the Queen Anne’s Record-Observer. After 44 years in Easton, Howard and his wife, Liz, moved in November 2020 to Annapolis, where they live with Toby, a King Charles Cavalier Spaniel who has no regal bearing, just a mellow, enticing disposition.