An article last week in “Maryland Matters” painted a clear picture of the political conundrum facing the Maryland General Assembly: cut the budget deeply or raise taxes and fees to reduce the deficit.
Maryland Senate President Bill Ferguson is proposing, for public consumption, as-yet specified cuts in the governor’s $63.1 billion budget proposal and potential increase in fees. He signaled that taxes would not be on the legislative docket during this session. The timing is not right, he said.
What does he really mean? He and other leaders want more time to prepare and persuade the public to accept more taxes. The public is still reeling from inflation and economic stress, he opined. Taxes would add fuel to economic pain. Ferguson believes that patience is necessary.
But fees are taxes. No doubt about it.
Politicians believe that fees are more palatable. They target users, not all taxpayers. For example, closing corporate loopholes is a possibility. Increasing the state tax on inheritance and capital gains is another option. Relief for working families is part of the same tax package that is being considered. Revenue produced would be $1.6 billion.
When Ferguson speaks to the media, his audience includes Gov. Wes Moore, as well as his colleagues and interest groups. He wants the governor and staff to be on alert for legislative fixes, which Moore could always veto.
Ferguson also is pinging the rich; they may be targeted for greater support of a deficit-ridden state government. He also knows that enhanced taxes will generate heavy opposition from the well-heeled.
The danger in foregoing tax increases for another year is the loss of revenue for a year and continued expansion of the structural deficit, expected to increase to $1 billion in fiscal year 2025.
Taxes have toxic consequences for politicians hoping to be elected in two years. Constituents have long memories. A recent example happened in 2014 when Lt. Gov. Anthony Brown lost to Larry Hogan as retribution for Gov. Martin O’Malley’s more than 40 fee and tax increases during the Great Recession.
It is easy to forget that O’Malley also made heavy cuts. He faced an untenable dilemma not of his making. Now Maryland ‘s Attorney General, Brown paid a price for loyalty. He later became a member of Congress before being elected attorney general in 2022. He overcame an embarrassing defeat.
Economists often question the efficacy of cutting a way through a deficit. Government services suffer. While elimination of supposed government bloat may be beneficial, cuts often affect programs that a governor and his or her political base disfavor. Fairness is questionable.
Though I understand Sen. Ferguson’s shrewd calculation of the current political climate, I think the times also call for backbone supported by data. If the public views a tax increase as prudent, used for sound purposes—though that is in the eyes of the beholder—I think that an elected official’s re-election is not fated for failure.
An important consideration is the House of Delegates, typically more liberal than the State Senate. Budget negotiations can be difficult between the two chambers; compromise is essential. Though Democrats dominate both houses, they represent different parts of the state with significantly diverse interests and constituencies.
Civility normally rules.
Republicans have a voice, powerless though it might be. Frustration is a common malady of the GOP in Maryland. Gov. Larry Hogan, awarded with two terms, nonetheless endured automatic veto overrides on bills favored by the legislature. He was helpless in blocking vetoes imposed by an overwhelmingly Democratic legislature.
Heading into its second month of a 90-day session, the 2024 General Assembly will have its share of policy differences and political fireworks. Special interests will be vocal, mostly behind the scenes.
What seems certain often is not.
Democracy is noisy and messy. Maryland’s brand is no different.
Columnist Howard Freedlander retired in 2011 as Deputy State Treasurer of the State of Maryland. Previously, he was the executive officer of the Maryland National Guard. He also served as community editor for Chesapeake Publishing, lastly at the Queen Anne’s Record-Observer. After 44 years in Easton, Howard and his wife, Liz, moved in November 2020 to Annapolis, where they live with Toby, a King Charles Cavalier Spaniel who has no regal bearing, just a mellow, enticing disposition.