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It's up to Maryland GOP to sell no-new-taxes plan

July 10, 2007

Today Maryland Gov. Martin O'Malley will announce about $200 million in spending cuts in the state budget.

Some of them - such as reduced Medicaid reimbursements for doctors - would cause pain, but all of them put together won't cover a projected $1.5 billion shortfall.

Avoiding new taxes and fees will depend on whether the General Assembly's Republicans can make the case that more cuts can close the gap.

The GOP will have to make that case to the public, because the legislature's Democratic leaders will more than likely seek tax increases.

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Earlier this year, Maryland Senate President Thomas V. Mike Miller called for a special session on the budget. The measures he said he would like to see enacted include:

Legalization of slot machines at the state's horse tracks. That would certainly increase state revenues, but as a short-term solution it's a bit like counting on oil revenue before you've started drilling the well.

A surcharge on high-income Marylanders. A "soak-the-rich" strategy has some appeal to those who aren't wealthy, but we worry about what it would do to the state's business climate. Will the state really be seen as business-friendly if the reward for being successful is a tax on top of a tax?

Increasing the state's sales tax from 5 percent to 6 percent and taxing some services. That recommendation echoes some of what was contained in the Linowes Commission, which studied tax policy under Gov. William Donald Schaefer.

Some would oppose taxes on services, particularly since small businesses such as dry cleaners would have a tough time avoiding it, while others such as law firms, could move across state lines and continue to serve their Maryland clients.

New taxes seem inevitable, unless the Republicans make a strong case to citizens that they aren't necessary. We recommend that they don't wait for a special session to do so.

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