“Everything is on the table,” is the mantra around Annapolis these days. That is legislatorspeak for “I’m not committing to specific cuts.”
They must to balance the budget. But we wish they would think bigger than just getting through next year.
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With a $2 billion budget hole projected for 2010, now is the time to make structural changes to Maryland’s budget to make the state more attractive to residents, businesses and investors. Then revenues will flow into the state treasury.
» Improving Maryland’s Economic Competitiveness: Policy Reforms to Promote Economic Prosperity
» The General Assembly
» Funding Accountability and Transparency
» Department of Budget and Management
Historic tax increases failed last year. Higher taxes always fail — something legislators could have learned from history — because they discourage work and investment, even in a state like Maryland whose proximity to Washington commands a premium.
Besides, even if legislators wanted to raise them again, there is insufficient political arrogance to overcome citizen rage.
So that leaves making a thousand tiny cuts this year and every year in the future, and rethinking how our state spends our money. For a road map on how to ensure the long-term (and short-term) health of the state, legislators should read “Improving Maryland’s Economic Competitiveness: Policy Reforms to Promote Economic Prosperity.” The new study, published by the Maryland Public Policy Institute, shows how higher-tax states underperform their lower-tax counterparts on a host of indicators including employment and new business creation. It also shows how higher state spending per person translates into slower economic growth.
That’s why rescinding the melee of new taxes that took effect in 2008, and returning to 2005 tax policy is essential for Maryland, said Donna Arduin, a former state finance and policy adviser in California, Florida, Michigan and New York. She is one author of the MPPI report who spoke at a policy forum in Annapolis last week. Maryland’s economic climate was slightly below average for the nation before the tax increases and now is the fourth-worst in the nation according to the Tax Foundation.
Even our close ties to Washington can’t save us from that ranking when businesses can move to Pennsylvania or Virginia and improve their profitability by more than 50 percent.
Cutting taxes and spending generates wealth. Presidents Kennedy and Reagan knew it, and so does President-elect Barack Obama, who has proposed $300 million in tax cuts. How long must we wait for Maryland legislators to get it?
