Proposed Tax Increases Anger Conservatives

By Susan Kim

Conservatives are calling proposed tax increases and the state's $1.5 billion structural budget shortfall a lesson in asinine economics.
Anne Arundel County Delegate Don Dwyer (R-District 31) said he does not support any tax increases. Period.
"There's no doubt in my mind," he said. "We do not have a revenue problem in this state. We clearly have a spending problem. Any common-sense, logical-thinking individual knows you can't spend money you don't have and stay afloat. Not only do business leaders know this, but so does the average citizen."
In the past, the Maryland Chamber Political Action Committee (PAC) endorsed Dwyer, who was rated by the Maryland Accountability Project as the most conservative member of the House of Delegates. A 40-year resident of Glen Burnie, he owned and operated a small business there for more than 12 years and believes business leaders and citizens alike are angry along with him.
"The citizens of the state of Maryland are at the breaking point," Dwyer said. "They are outraged and I think they should be. We're asking the taxpayer to step up to the plate and pay for the incompetence of the state to manage its financial position. They're pretty pissed."

Chamber Weighs Options
Though the Maryland Chamber PAC endorsed Dwyer, the Maryland Chamber of Commerce itself has not adopted a blanket "no tax increases" stance, said Kathy Snyder, the organization's president and CEO.
Still, the business community, by and large, does not approve of tax increases. "The natural reaction from the business community is that out of a $30 billion budget there are certainly more cuts that could be made," Snyder said. "The chamber certainly agrees with that. We would like to see more cuts made before talk continues about increasing taxes."
Yet tax increases might be inevitable, she said. "We also believe in a practical sense that the legislature will look at some tax increases. There may be some tax proposals that wouldn't be as bad."
With such a deep structural deficit looming next year, some economists say that the gap between revenues and spending may exceed $5 billion during the next five years. Solutions have focused on new or increased taxes, the long-debated issue of slot machines and the likelihood of cutting government-funded programs.
Some policymakers are concerned that if there is even a perceived recession in the state economy, businesses may suffer.

Slowing Growth
Delegate Steve Schuh, a freshman Republican from Anne Arundel County who has emerged as one of his party's authorities on budget matters, has two words for tax increases: undesirable and unnecessary.
"We're already an overtaxed state," he said, noting that he and others are proposing slower rates of growth in spending, along with legalizing slot machines.
"We've gone through a very methodical exercise and demonstrated that this budget can be brought into balance with slower rates of growth in spending combined with a very limited slots plan," he said. "Taking those two things together, the budget can be balanced by 2010."
Republicans have proposed that 15,000 slot machines would be split among six venues and would generate roughly $600 million in upfront license proceeds. The slots plan also calls for auctioning the hold rate, or the percentage of revenue retained by the licensee.
Meanwhile, Democrats have considered increasing the state sales tax from 5% to 6% and raising the gas tax, which has not been increased since 1992. Democrats have criticized Republican budget solutions, claiming the plan fails to include concrete details about how to reduce spending when 80% of the budget goes to education, health and public safety.

Maryland's 'Credit Card'
Warren Miller, a Republican delegate from Howard County, said the state needs to stop spending money like it has a credit card.
"We passed the budget without the money to pay for the spending. I voted against the budget in protest," he said. "We, as elected officials, could have done a better job of finding ways to save money. I am under the school of thought that I know a budget increases annually, but we had an extreme increase of spending this year."
Miller resents what he views as taxpayers paying the state's overdue credit card bills. "We're at a point in time where the bill is coming due," he said. "The thing we have to look at is the ability of our taxpayers to bear this burden."
At the recent Maryland Association of Counties conference in Ocean City in mid-August, Gov. Martin O'Malley said the state's budget woes shouldn't be solved simply by passing them on to local governments.
Miller believes budget woes shouldn't be passed on to taxpayers, either. "There's a limit to what people can bear. I think the state collects enough money. There's a mindset that people just have the money and they don't need it. That's not true."