Monday, January 28, 2002

It seems that, despite the recession and the terrorist attacks, analysts are forecasting, at the very least, a modest recovery this year. This is indeed good news for taxpayers. But are the politicians listening and responding in ways that make sense? Virginia Gov. Mark Warner appears to be half listening. While he and the General Assembly are planning statewide budget cuts this year and next, they plan to delay phasing out Virginia’s dreaded personal-property tax on motor vehicles, better known as the car tax. Similarly, Maryland Gov. Parris Glendening proposes delaying the final 2 percent of the 10 percent reduction in the state’s income tax. That cut was to take effect this year, but unsurprisingly, Mr. Glendening and some of the state’s most powerful lawmakers say that delaying implementation of the tax cut is unavoidable because the state might need the estimated $175 million in added fiscal 2003 revenue they expect to gain from keeping tax rates higher. What Maryland taxpayers’ lame duck governor isn’t saying, however, is that he already plans to spend not save that money.
The spending side of the ledger is also an ongoing problem in the District, where school-budget deficits and huge hits to the tourism and hospitality industries because of the terrorist attacks now have city leaders considering the same thing as their Maryland and Virginia counterparts: that is, increasing taxes. They shouldn’t dare go there, however. In light of all the good news that we learned in recent days, there is plenty of proof that officials should move in the opposite direction especially as the city stands on the verge of a busy tourism season. Also, despite the fact that the nation is in the midst of a recession, significant indicators point to a modest recovery already in the works for the Washington region in general and the District in particular. For starters, Federal Reserve Chairman Alan Greenspan told Congress Thursday that the economy is on the rebound.
On Friday, both The Washington Times and The Washington Post published stories that should ease many people’s fears. “Even though the nation’s economy is in a recession, we are not,” Stephen Fuller, a professor of public policy at George Mason University, told Chris Sicks, whose article appeared in the Friday Home Guide of The Times. “The Washington area has slowed down some, but we have the lowest unemployment rate of any major metro area … Nationwide, there are only three major metro areas with positive job growth Houston, Dallas and Washington, D.C.” Moreover, Mr. Fuller said that “The job market will be even stronger in 2002 than 2001, primarily due to hiring among government agencies and defense contractors. War is good for real estate, because it is bringing to town the kind of professional workers who buy houses. The jobs that were lost due to [September 11] were primarily low-wage workers, not folks who typically buy houses.”
To be sure, the pre-September 11 factors that made 2001 a good year for the housing market in the region low interest rates, plenty of buyers and a strong local economy remain in place. Those factors led to the busiest, fastest and highest-priced year ever in the Washington area, with sales of new and existing homes reaching nearly 125,000. Better still is the fact that the federal government will release its home sales numbers today, too, and they portend more good news. All of this proves that there really and truly is no need repeat, no need to roll back tax cuts, as politicians prefer to say. To be sure, the surpluses regional governments have reaped in recent years simply aren’t there. However, that is chiefly because politicians chose to lavish more zeros on the spending side of the ledger to expand their bureaucracies and increase salaries.
For some time now, D.C. officials have been meeting behind closed doors, rubbing their money-grubbing hands together and trying to figure out how to grab even more of your tax dollars. The public won’t get an inkling of how much more, though, until next month, when the D.C. Council begins fiscal 2003 budget hearings. So, it seems, taxpayers had better start speaking up now on behalf of their wallets.

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