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Doomsday for Maryland?

Martin O’Malley’s budget failure.

May 14, 2012, Vol. 17, No. 33 • By KATE HAVARD
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First, he signed the Maryland DREAM Act, which grants in-state tuition to certain illegal immigrants or, as O’Malley calls them, “New Americans.” Then it was time to invite Lady Gaga to the governor’s mansion “to discuss eliminating bullying in MD.” Next up: gay marriage, which the governor signed into law on March 1, after a botched attempt in 2011

But the governor doesn’t need legislation to attract media attention. Since becoming head of the Democratic Governors Association, he’s been making the rounds of the news shows. In the furor over the Obama-care regulation requiring religious institutions to provide free birth control, O’Malley—a Catholic—said on CNN that opponents of the measure, including members of the Catholic hierarchy, were doing “too much hyperventilating.” Asked about Virginia’s record of job creation, O’Malley quipped, “Nothing says jobs like transvaginal probes.” 

Virginia is a touchy subject with O’Malley. “You see the governor on television saying Maryland is creating jobs at 2.5 times the rate of Virginia. That’s just flat-out malarkey,” said former Republican candidate for governor Ellen Sauerbrey. Now co-chair of Maryland Business for Responsive Government, Sauerbrey says that while O’Malley’s been spending time on issues with appeal to Democrats nationally, Maryland’s economy has suffered. “In the 2007 session, he had the largest tax increase of anyone in Maryland’s history, and $800 million of that was direct hits on Maryland business. You just hear constantly that Maryland is not a friendly place to expand.” 

Sauerbrey’s list of businesses that have left Maryland or decided not to come here since 2007 is impressive: Northrop Grumman (gone to Virginia), Black & Decker (Connecticut), Hilton USA (Virginia), Volkswagen USA (also Virginia), and SAIC (Virginia again). “Here, businesses are seen as collateral damage to the goal of growing government,” Sauerbrey said.

And grow government has. In his five years at the helm, O’Malley has proven himself the paradigm of the tax-and-spend governor. Between 2007 and 2011, annual spending adjusted for inflation grew nearly 11 percent. The state’s structural deficit now exceeds $1.1 billion. This year, O’Malley proposed hundreds of millions in tax, fee, and rate increases, including a sales tax on gas and a “flush” tax. While some observers called his budget courageous, critics complained that another round of tax increases was a bridge too far. “The rank and file Democrats were palpably annoyed,” says House of Delegates minority leader Anthony O’Donnell. “They didn’t want to walk the plank for O’Malley. He doesn’t have to get elected again, and they do. These Democrats care about their state, and he’s leaving it in a state of decline.”

Christopher Summers, of the Maryland Public Policy Institute, notes that Maryland has gotten into the bad habit of spending more money than it takes in, then satisfying the balanced budget requirement by raiding its dedicated funds, especially the Transportation Trust Fund. A critical component of the governor’s failed revenue plan would have applied Maryland’s sales tax to gas, adding about 18 cents per gallon. This would replenish the Transportation Trust Fund, O’Malley said, to pay for improvements in infrastructure.

“The Maryland taxpayers have already paid for the infrastructure improvements,” Summers said, “and the Maryland politicians have spent it on other things.” As the governor’s own blue ribbon commission points out, “approximately
$1.1 billion” transferred from the transportation trust into the general fund “has not been, and is not scheduled to be, replenished.” 

O’Malley and Speaker of the House Mike Busch say the revenue bill failed not because of fed-up Democrats, but because the senate president, Mike Miller, held the bill hostage in an attempt to force through a series of bills extending gambling in the state. Miller asserts that the House of Delegates simply didn’t have the votes for the governor’s tax bill. Either way, O’Malley is already battling the perception that the collapse of the budget was a result of his incompetence.

A recent editorial in the Washington Post claimed the legislative session fell apart because Maryland Democrats were “distracted by ego contests among their leadership,” and urged O’Malley not to call the special session, suggesting that “Doomsday” might actually be healthy for the state: “The truth is that if lawmakers in the General Assembly were to stay home … the effect would be to cancel plans for a tax increase; spare the state a senseless expansion of casino gambling; eliminate some dubious spending programs; and ensure that Maryland’s $35 billion budget still manages to grow by a respectable $700 million, about 2 percent. None of that sounds exactly like doomsday.”

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