Message from the Chairman: Our Reagan Centennial  Celebration

Maryland Public Policy Institute: Enron Accounting

http://mdpolicy.org/

Originally Published in the Frederick News-Post 

by Marta Hummel Mossburg

MARCH 30, 2011

The Maryland House overwhelmingly passed a $14.6 billion operating budget last week by once again billing residents later for the party today.

For years legislators and the governor have technically balanced the budget while piling on debt and transferring money around from fund to fund to hide deficits like the accomplished Wall Street thieves whose imprimatur turned junk bonds to platinum -- until they weren't.

The Chicago-based Institute for Truth in Accounting analyzed Maryland's assets and liabilities as of June 2009 and found that "Almost $40.9 billion of state employees' retirement and other costs have been pushed into the future, and thus onto our children's and grandchildren's backs." The institute pegged the per-taxpayer share of the debt at $20,300. Things have only gotten worse in the last two years.

In large part it is because our elected officials always see good times ahead in the market and in tax revenue and never cut spending.

As Eileen Norcross pointed out in a recent article for The Maryland Journal (a publication of the Maryland Public Policy Institute, where I am a senior fellow): "Since the end of the recession of 1991-1992, Maryland's budget has grown an average of 5 percent a year in real terms. Spending has doubled in real terms from $15.2 billion to $32 billion since 1998. The only year the budget decreased in real terms occurred in 2008. With federal stimulus funds, by 2009, spending was 11 percent higher than in 2006."

Despite all of the serious talk about the need for shared sacrifice and tough decisions, this year's operating budget is 10.6 percent larger than last year's! Bigger government means the only people sacrificing anything are taxpayers.

It also "highlights the tentative nature of Maryland's budgetary balance," as Norcross, the lead researcher for the State and Local Policy Project at the Mercatus Center at George Mason University in Arlington, Va., said.

Tax and fee increases and more borrowing will balance the budget this year, but they will not cover long-term overspending in the same way slots can't fill the hole. Marylanders should expect another round of across-the-board tax increases like in 2007 -- the year Gov. Martin O'Malley promised they would stabilize Maryland's budget forever.

There is no way the state can continue to replace operating expenses with debt without new taxes and without seriously endangering the state's coveted AAA bond rating, which allows it to borrow money at favorable rates.

Higher taxes will also have other long-term negative consequences. As IRS data show, wealthy people are leaving the state and being replaced by those who earn less. Higher taxes will only exacerbate the trend and make Maryland's already unfriendly business climate worse.

If that is the legacy O'Malley wants to craft, he will have a hard time selling it to the nation if or when he seeks higher office. Americans have had enough of hope, change and shady accounting -- even if Marylanders still buy it.

Wind Energy Boondoggle 

Michael Enright, Martin O'Malley's former Chief of Staff, now Wind Power Plan Beneficiary 

Maryland Republican Senate Caucus

http://www.mdsenategop.com/ 

It appears that Gov. Martin O'Malley has cajoled enough legislators to get an abridged version of his offshore wind energy bill through the General Assembly during the last two weeks of the 2011 session. Obviously, when the governor controls the drawing of lines for the legislative redistricting plan that he will introduce next January, he retains considerable leverage over reluctant legislators.
 
That's too bad. Under anyone's objective analysis of recent economic reports about Maryland's energy needs, the O'Malley offshore wind energy bill is a boondoggle.
 
In 2007, the Public Service Commission paid $3 million for a comprehensive study of Maryland's energy future. Wind power ranked at the bottom of the list for prospective energy sources that would help reduce consumer electric costs.
 
What's happened in the last four years to make wind power sexy? Nothing on the economic side. It is only beneficial to ambitious politicians attempting to get national attention for going green.

Alcohol Tax "Bait-and-Switch" Sen. Kittleman Full-DDA Funding Amendment Fails

Maryland Republican Senate Caucus

http://www.mdsenategop.com/ 

At the beginning of the 2011 session, health care advocates touted a "dime a drink" alcohol tax to fund the pressing needs of the developmental disabilities, mental health programs and related health care agencies. Through health care rallies, mass emails, letters and phone calls to legislators, the grassroots citizens lobbied for the desperately-needed funding that has been cut by Gov. Martin O'Malley over the last 4 years.

As the legislative session winds down, Democrats hope that those grassroots advocates are no longer watching. Most of the early session advocacy from the health care community ends up for naught.

Yes, the alcohol tax still passes. However, the majority of proceeds from the tax are no longer dedicated fund health care.

The old trick of legislative "bait-and-switch" is being played on those grassroots advocates. Instead of funding developmental disabilities and mental health, most of the alcohol tax revenues are hijacked to fund public school expenses in Baltimore City and Prince George's County. (To see the report from the National Alliance of Mental Health newsletter, click here).

Fees Are Taxes, But What Is a "Toll"?

Maryland Republican Senate Caucus

http://www.mdsenategop.com/ 

Gov. Martin O'Malley promised during the 2010 campaign to not raise taxes during the first year of this term.

He also slammed home the campaign theme that "fees are taxes." Through radio and television advertising, O'Malley cohorts posing as people on the street kept saying, "Everyone knows a fee is a tax," "fees and taxes are one in the same," and "if it comes out of my pocket, it is a tax!"   
 
They also inferred that Martin O'Malley would never, ever raise your fees. Because raising fees is just the same as raising taxes. And Martin O'Malley promised to NOT RAISE TAXES!
 
But did they mention tolls? Apparently not!

 
O'Malley's transportation authority announced plans last week to raise $70 million through increased tolls for bridges and tunnels throughout the state to take effect during the first year of O'Malley's current term.
 
To read about the timetable planned for these toll increases, see Michael Dresser's "Drivers in Md. to see toll increase starting in October" in the Baltimore Sun
 http://www.baltimoresun.com/features/commuting/bs-md-tolls-timetable-20110327,0,1640835.story
 
Add another notch to the broken campaign promises from O'Malley to not increase fees, tolls, assessments, fines, taxes and anything else that "comes out of my pocket!"