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O'Malley mistreating us all equally

January 28, 2012|By TIM ROWLAND

If Gov. Martin O’Malley, as conservatives like to say, is waging a war on rural Maryland, he is also (if taxes are your guide) waging war against the cities and suburbs, the rich and the poor, dogs and cats, and pretty much everything in between.

If it counts for anything, we’re all being mistreated equally.

Central to this breakfast bar of taxation is a $1 billion revenue shortfall, which will be driving pretty much all financial decisions in Annapolis this session.

Most emblematic of the tax proposals would be hikes on cigars and snuff; doesn’t matter if you’re puffing on a Cuban in a country club or spitting Copenhagen from a pickup, you’re going to get caught in the net. It will also cost you twice as much to die, as the price of a death certificate goes to $24. The only two certainties in life are now one and the same.

To fill the hole in the budget, other tax increases have been proposed or implied on gas, septic systems, six-figure salaries, coal mines, telecoms and selected online retailers. Moreover, local jurisdictions will now be responsible for half of their teacher pensions.

If this is divide-and-conquer strategy, there is early evidence of its success. The Washington Post has already suggested that the gas tax hike is a decent enough idea, but the tax hike on its wealthy Montgomery County subscribers, not so much. The Carroll County Times, meanwhile, was more concerned that a doubling of the state’s flush tax would generate poor returns on the dollar for rural communities.

There are “savings” in this budget, mostly achieved playing footsie with Medicaid numbers, and the aforementioned teacher-pension switcheroo, which could only be considered a cut by an Annapolis state budget analyst.

In fact, the state is simply washing its hands of $240 million worth of pension payouts, telling local jurisdictions that from now on they will have to split the bill.

First, no one should be surprised by this; lawmakers have been warning this day would come for about 20 years now. All it took was a financial crisis of a great enough proportion to force the state’s hand. Second, it’s not a bad move from a policy standpoint. Now, local jurisdictions must be more responsible for deals they negotiate with their teachers. Simply put, this means that if a county in another part of the state is recklessly generous with salaries and benefits, we in Washington County would not have to help support this poor financial discipline with our tax dollars. At least not as much.

So, predictably, rural counties, where teacher salaries are not as high, are more comfortable with pensionomics than are the delegations from the densely populated suburbs, where salaries are driven up through competition.

O’Malley has an answer for this, and it’s charming, even by state government standards. A state-produced worksheet shows Washington County taking a $2.5 million hit (second largest in the state) under the pension split, while Montgomery County somehow comes out well in the black. This is because of “fiscal relief” measures the governor is proposing to ease the pain of the pension transfer.

If you guessed that “fiscal relief” is the new euphemism for taxes, congratulations. Remember that richer residents of Montgomery County are staring down the barrel of an income tax increase, which means that Montgomery County government will get a share of the loot through a corresponding increase in local income taxes. So, voila, Montgomery’s $41 million pension loss turns into an overall $18.1 million win for the county budget.

In announcing his budget, O’Malley did, however, say something of interest, that being that these tax hikes are necessary “to get us through this recession in advance of other states ...”

States are said to be the laboratories of the federal government, so here is an opportunity to witness an experiment. The question becomes, is it preferable to raise taxes to maintain financial integrity while feeding the big-government beast, or is it better to treat every tax as a pox and make do with substantially gutted programs, services, environmental policies and infrastructure.

If Maryland does indeed come out of the doldrums in advance of other states, we will have our answer. And the only thing it will cost us to find out is our money.


Tim Rowland is a Herald-Mail columnist. His email address is timr@herald-mail.com.

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