- The Washington Times - Friday, November 23, 2012


The only solution liberals have to today’s problems is spending money. Whether it’s crime, poverty or even unemployment, the answer for them is always to create a brand new program — never mind measuring whether similar efforts in the past yielded any positive results. An analysis by Maryland’s Department of Legislative Services shows how this strategy eventually runs out of money.

Annapolis closed this year’s budget hole by hiking taxes on families earning more than $100,000 annually (which counts as middle class in expensive Montgomery and Howard counties), sloughing off some public pension liabilities to local governments and expanding gambling opportunities. It’s not going to be enough, as the structural deficit is expected to keep growing and debt service will consume an ever-larger share of incoming revenues. Gov. Martin O’Malley and the General Assembly squeezed taxpayers so much, there’s pretty much no room left to cover future shortfalls.

Public spending in the Old Line State has risen steadily over the last several years, at an average of 5 percent annually, while population increased less than 1 percent. Contrary to lawmakers’ claims, this year’s ominously named “Doomsday budget” didn’t actually cut spending. Maryland’s budget ballooned by $3 billion this year to $37.1 billion. Deficits are equally massive, weighing in at $1.8 billion in 2012 and $1 billion in 2013.

Those gaps were all filled with temporary fixes, leading to an increase in the public debt to almost $28 billion, a burden of more than $14,000 for each Maryland resident. The cost of servicing that debt will increase from about 6.5 percent in 2013, to about 7.5 percent by 2018. The latest figures from the Department of Legislative Services predict a deficit of over $400 million for 2014 and 2015. Those numbers could easily grow, depending on the outcome of negotiations in Washington over the fiscal cliff.

Maryland’s economy is heavily dependent on Uncle Sam, with 5.5 percent of Marylanders receiving their paycheck from the federal government. Any real decrease in federal spending would inevitably affect Maryland’s economic growth, and therefore, tax revenues. This is why Maryland needs to become less dependent on Washington by encouraging businesses to relocate to the state.

An increase in the corporate tax rate has the opposite effect, sending entrepreneurs fleeing for the more business-friendly environments of neighboring Delaware and Virginia. Maryland has already earned the dubious reputation of being among the most business-unfriendly states in the region thanks to its high taxes and onerous regulatory burdens. Piling on more taxes only makes it worse.

Families are facing a tough time, with federal tax hikes scheduled to take effect Jan. 1. They’ll be slammed by this year’s increase in income taxes at the state level then with property taxes at the county level. All this hits while their own incomes fail to keep pace with inflation.

Instead of looking to further squeeze taxpayers, Annapolis needs to admit it’s broke, curb its appetite for spending and shrink the burden of government.

Nita Ghei is a contributing Opinion writer for The Washington Times.


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