By Patrick McGrady
Special to The Dagger
Flash back to Spring 2006– The General Assembly has just left Annapolis, and the fiscal future looks sound. No new taxes, and Governor Ehrlich’s final budget as Governor has a $1.3 Billion surplus going into the election.
Governor O’Malley defeats Governor Ehrlich in the November 2006 election and then presides over his first regular session of the General Assembly. He implements a variety of huge spending programs (including legislation that forces government contractors to pay higher wages for contracts and increased spending on the environment, education, and public safety) without having verbalized a plan to pay for them. Therefore, the Maryland government has spent away the entire surplus and we are now looking at a budget deficit of $1.7B.
So now (November 2007), after the regular session of the General Assembly, Governor O’Malley and the Democratic Leadership in Annapolis (Maryland has never held a Republican Majority in either the House or Senate, so the fingers cannot be pointed there*) has to hold a “Special Session” of the legislature in order to close the gap between spending and taxes.
This is where your memory kicks in– the tax hikes!
The infamous result of the Special Session called by the Governor was the largest tax increase in Maryland history. Now it’s all coming back to you, right? Let me list the jabs to your wallet:
–20% Sales Tax Increase, from 5% to 6%
–Computer Services Tax (later repealed)
–18% hike in Maryland Corporate Tax rate, from 7% to 8.25%
–20% increase in Titling Tax, from 5% to 6%
–100% increase in MD Cigarette Tax, from $1.00 to $2.00 per pack
–Slots approved (and therefore, hundreds of millions of dollars of tax collection planned)
–32% increase in tax on “Millionaires”, raised from 4.75% to 6.25% (see the failure of this sunsetted tax here: http://online.wsj.com/article/SB124329282377252471.html)
And after this painful $1.4 Billion taxing spree, the big-government Maryland Democrats were still not finished expanding the size and scope of government.
Back to August, 2011– Since O’Malley’s first budget, spending has soared, all while the economy– and tax revenue– has floundered. Check out the chart here:
The chart shows us that our spendthrift legislature and Governor have continued to grow government without paying for it. Maryland currently faces a budget deficit for the upcoming year of $1.1 Billion. This number increases in the out years, while costs shoot upward.
We could talk about past Special Sessions and big-government Maryland politicians all day long, but what is important is that we are facing a Special Session this October. On the face of it, the legislature will convene to handle the Congressional redistricting, but there is a very real possibility of huge tax hikes. The Governor and legislators will put a Band-Aid on the huge spending problem we have in Maryland and look for ways to balance the budget without cutting anything.
Potential “revenue sources” (TAXES) during the Special Session include the following:
-Taxes on Snack Foods
-Gas tax increase (currently 26.5 cents per gallon)
-Expanding the sales tax to many/all of the following industries currently free from State sales and use tax: Cellular Telephone, Cable Television, Motor Vehicle Maintenance & Repair,Tax Preparation, Barber and Beauty Services, Dieting Services, Temporary Help, Tanning and Massage Services, Real Property Management, Public Relations, Commercial Cleaning, Gym Membership, Employment Agency, Dating Services, Business Consulting, Security Systems, Pay Per View Television, Management Consulting, Interior Decorating, Business Brokerage, Mobile Telecommunications
-Internet goods tax — This is a doozie– and warrants a discussion all it’s own.
For years, Maryland politicians have spent money that they don’t have –ultimately calling emergency “Special Sessions” to resolve their short term budget crises.
Start calling your Delegates and Senators today at: 410-946-5400 to find out what they are predicting in legislation, and tell them what you want to happen. If you prefer email: http://mlis.state.md.us/mgaweb/mail32.aspx
Maryland can solve these long-term fiscal problems without tax hikes, but in order for our legislators to get anything done right, it is going to take a lot of input from involved citizens and taxpayers.
In next week’s column I will detail the Internet Sales Tax (Amazon Tax) and cover in further detail the expansion of the sales and use taxes to a multitude of services that we use.
*In fact, Ehrlich tried to stop the Democrat’s move leftward in Maryland, during the 2004 Special Session. He vetoed a handful of bills and during a Special Session, the General Assembly overturned the veto. The Republicans have a Super-minority in both Houses of the Legislature and could not stop this.
Discuss this topic live with Patrick McGrady and Maynard Edwards at 8 a.m. Wednesday on WAMD 970 AM.