Friday, November 17, 2006

No Money, Mo' Problems

(Originally posted on The Old Line.)

The Post reports on the looming budget deficits awaiting Gov.-elect Martin O'Malley and the General Assembly next year:

According to analysts' projections, the state faces a shortfall of $413 million for fiscal 2008, which starts in July. That gap could be closed, lawmakers and fiscal analysts said, with relatively modest spending cuts or by dipping well into the state's "rainy day" fund.

Far more difficult choices are likely to occur in fiscal 2009, when projected spending is expected to exceed projected revenue by $1.6 billion.

The gulf, analysts said, remains largely attributable to major increases in education spending mandated by a 2002 law that was passed without a funding source.

In addition, the slowdown in the housing market is going to take the wind out of the economy, both in Maryland and nationally. And for his part, Bob Ehrlich mainly delayed the inevitable, by raiding funds meant for transportation and land preservation, while benefitting from a fortunate economic climate during his term.

Since there's only so many state programs that can be trimmed, and since O'Malley has a bunch of new policies he wants to fund, the debate is going to focus on how best to raise revenue, which, given the last few years, means talking yet again about slot machines. I had been meaning to comment on O'Malley's slots plan, as reported last week, and I hope that bringing slots just to race tracks will kill enthusiasm for the larger slots programs that Sen. Mike Miller and others have proposed. I've no beef with gambling as such, but as everyone should know, legalizing gambling as a means to raise money basically amounts to a regressive tax, to say nothing about the negative externalities associated with gambling. Unfortunately, something in human nature seems to regard direct taxation, no matter how fair, as distasteful, while not minding more harmful back-door taxes.

5 Comments:

Anonymous Anonymous said...

I think there is a proposed $1 increase in the tobacco tax (as a smoker, I think it should be $2-3). That will not be nearly enough of a revenue boost though.

Perhaps someone in DC will do something about NCLB or at least try to give it some meaningful federal funding.

Direct taxes might be the only solution. Of course, Democrats will be blamed, even when the unfunded Republican education mandate is the real revenue eater in the state. Oh well.

11/17/2006 03:57:00 PM  
Blogger Stephanie Dray said...

I actually have no problems with slots or gambling. I do object with slots and gambling being aimed at the poor and less fortunate, but ultimately I'm a civil libertarian. To a certain extent, people have the right to make bad choices.

11/17/2006 06:13:00 PM  
Blogger Rfustero said...

There is usually very little talk about raising the alcohol tax.

It seems that tobaco users are a group to be scorned and punished severly, yet alcohol users get a free pass.

I have not seen too many auto accidents due to people smoking cigarrettes, however - alcohol misuse----

11/17/2006 08:41:00 PM  
Anonymous Anonymous said...

According to a report from the Maryland Comptroller's office in 2004, 2/3 of the large corporations in Maryland pay no corporate income tax to the state.

Corporate income tax receipts have fallen from 13% in 1980 to 7.6% in 2003. Maryland closed one loophole 3 years ago (the infamous Delaware Holding Company loophole), but there are a number of other corporate tax dodges still being used.

If Maryland enacted a reform that 16 other states have adopted called "combined reporting," Maryland could raise close to $200 million annually and close the deficit this year without cutting services or raiding the "rainy day" fund.

11/18/2006 10:28:00 PM  
Blogger Rfustero said...

It has been reported, that if there was a way to tax internet sales,, Maryland could raise an additional 400-600 million dollars in sales tax.

This was an idea that was advocated during the 2002 gubernatorial race, yet no mention was made this year.

11/19/2006 08:07:00 AM  

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