How is O'Malley managing the budget crunch?
Monday on the Rodricks show on WYPR (FM-88.1) at 1:00 we'll be discussing the budget problems facing Maryland and Baltimore and this post I made last week: Union should be thrilled with furloughs, not outraged.
Talk about it here. Or call us on air after 1:00 at 410/662-8780. Here is some homework to put things in perspective and give you some ideas.
-- State spending will decline for the second year in a row for the fiscal year that ends in June, to under $14 billion for the General Fund. Two years ago it was $14.6 billion.
-- Gov. O'Malley has cut more than $4 billion in spending since he took office. (The slide says $3.5 billion, but it has gone up.)
-- Until now he has cut more than 2,000 positions with state government, but hardly any were layoffs. Last week the Board of Public Works approved layoffs for a couple hundred state workers as well as more extensive furloughs for those who remain.
-- Even with the cuts announced last week, there is probably still a gap between projected revenue and projected spending.
-- To avoid layoffs and reduce furloughs, the government employees union wanted the legislature to approve combined tax reporting for businesses.which reduces companies' opportunity to game one state's tax system against another's. But the assembly can't do that until next year, and O'Malley faces a budget crisis now. Combined reporting would raise between $40 million, on the low end of estimates, to more than $100 million a year, on the high end. In a vacuum, combined reporting is a decent idea, but O'Malley already signed off on huge tax increases two years ago, including on corporations. It'll be tough to raise corporate taxes again now.
-- After the 2007 increases, Maryland's state and local tax burden is 4th highest in the nation, according to the Tax Foundation.
Comments
When it comes to business taxes, The Council on State Taxation (run by business people) reaches the opposite conclusion as the Tax Foundation. According to COSTs most recent report, Maryland businesses pay a lower percentage of the state and local tax burden than businesses in any other state:
http://www.cost.org/Page.aspx?id=72322
Posted by: Delegate Al Carr | August 30, 2009 9:12 PM
Since the democratic legislature would not not allow Ehrlich to (a) cut their sacred cows from the budget or (b) have the political victory of implementing slots when conditions were most favorable they kicked the can down the road and all the budgetary problems have landed scarely in the lap of O'Malley.
I'm all for O'Malley getting credit for fixing this problem but first he has to fix it.
As they say, political irony is often the sweetest.
Posted by: Dan | August 31, 2009 8:14 AM
I REALLY wish that O'Malley raises college tuition. Despite the economic crisis, college loan debt is still considered by most (except maybe by the NY State Bar in one particular case) to be "good" debt.
I'm not an apologist for the inefficiencies of the USM system, but a tuition hike is the most straightforward method to raise money.
Posted by: Laura | August 31, 2009 11:09 AM
As one of the State (University) employees slated to be laid off on October 1, 2009, I can tell you that I appreciate what the Governor is trying to do. At the same time, I am six months short of 15 years of service with the Unviersity (will be 15 years April 2010). At nearly 60 years old and with MS, I am struggling to figure out how I will make my mortgage payments. It's a difficult time for everyone. I hope we find the solutions.
Posted by: M Neuman | August 31, 2009 1:08 PM