ANNAPOLIS -- Maryland Gov. Martin O'Malley used his State of the State speech Wednesday to tout the accomplishments of his six years in office, including fixing the pension system, making big spending cuts and having the nation's top rank in median household income. He neglected to mention, though, that Maryland has some of the highest income tax rates in the nation, and critics dispute the idea he's fixed the pension system.
"The governor is good at making up numbers, spinning magical tales, with no basis in reality," said Larry Hogan, chairman of the conservative think tank Change Maryland. "But, sadly, the governor's real legacy is a record of lost businesses, lost jobs, higher spending, record tax increases and broken promises."
O'Malley touted his state's highest-in-the-nation median household income of $83,823, but according to the nonpartisan Tax Foundation, Maryland ranks in the bottom 10 states in income, unemployment and property taxes -- with the ninth highest overall tax burden in the country.
O'Malley's administration has raised taxes and fees 24 times since taking office, including increasing income taxes on Marylanders earning more than $100,000 last year and raising the sales tax 1 percentage point to 6 percent in 2007.
The pension system's finances have improved this fiscal year as the stock market rebounds. The Maryland pension system's assets have climbed 7.1 percent as the Dow Jones industrial average has risen 8.3 percent, but the system is counting on an expected annual return of 7.75 percent to avoid a deeper funding hole.
The state owes current employees and retirees $58 million but doesn't know how to pay for $21 million of that. Last year, three credit ratings agencies threatened to downgrade Maryland's pristine triple-A bond rating if that didn't improve. In an effort to relieve itself of one pension burden, O'Malley shifted some of the burden of teachers' pensions onto the counties last year but did little else with pensions last legislative session.
The governor also said he has cut spending more than any other governor in modern Maryland history.
While his administration has made cuts to agencies and programs, Maryland's overall budget has increased $9 billion during his time in office.
O'Malley also pointed out some of Maryland's well-deserved accomplishments.
He touted the state's fifth consecutive year being ranked No. 1 in public schools and the lowest tuition increases for public universities in the nation.
O'Malley also pointed to his proposed budget for the upcoming fiscal year, which eliminates most of the state's structural deficit and increases money set aside in the rainy-day fund.
"The state of the state is strong, and we are getting stronger still," O'Malley said.