Governors, as the title implies, are expected to govern. For much of his first year in office, Maryland Gov. Wes Moore seemed stuck in campaign mode. His daily public schedule was crowded with speaking events and media appearances, sometimes two or three a day.
He was a hot item on TV and radio shows, understandably so. He is the nation’s only Black governor, he is young, personable, articulate, knowledgeable, energetic, and only 30 miles from the studios in the nation’s political hub.
But lately on his daily public schedule released for the following day, it says “no public schedule.” And many of the events that are on the schedule happen in or near the State House.
It’s time to govern. And the principal instrument for governing, besides his staff and the hundreds of officials the governor appoints to run the departments and agencies, is the $63 billion state budget.
The big news is that Moore’s budget for the coming year is actually 2% lower than the current budget, and despite a projected shortfall, it proposes no tax increases.
On top of that, Moore is concerned that the Maryland economy has been stagnating in the past few years and needs to be growing more to sustain budget growth. This was also one of the conclusions of a report from Comptroller Brooke Lierman about Maryland’s economy.
Moore had been warning of the need for “fiscal discipline” as early as last August in a speech to county officials. Here’s what he told reporters who pressed him with questions about tax hikes before he released his budget.
High bar for tax hikes
“Any conversation around taxes, people need to understand that my bar for that is very, very high,” Moore said. “The top priority that we have is making sure that we are modernizing government and being good stewards of taxpayer dollars … that we’re using every single dollar wisely, and we cannot grow the government, and we cannot grow our economy on the backs of working families.”
“I think we have to be disciplined. I think we have to be fiscally responsible. I think we have to do it in a way that we can actually get our economy growing, because our economy for the past five years has not been growing.”
While there seems to be more sentiment for raising taxes in the House of Delegates, Senate President Bill Ferguson is on the same page with Moore. “I don’t see any need for wholesale tax increases in any way,” Ferguson told reporters.
“Maryland provides more services than many other states. And so we have a more robust budget, but we have to be competitive. And so that’s something that’s really going to drive us. I think it’s more important that we look towards sharpening our pencils and maintaining (service) with the resources that we have this year.”
“This 2024 General Assembly session is really can be characterized as this is getting back to normal,” as the federal funds that flowed in during the pandemic have dried up.
“We stockpiled cash to make sure that we would be prepared either for a downturn or for situations like this where our revenues under-pace our expenditures. And so this is a year of tightening things up. As we look forward, this is also a year of trying to project places where we can trim on the edges for future costs.”
Ferguson recently returned from a meeting with 27 other state Senate presidents from the country where most of them were talking about cutting taxes.
“That’s not the position that we’re in, but we have to be very realistic and mindful of the context in which we are operating. If we are a place where our cost of doing business is higher and objectively that is the case, then we also have to say that we have the best services in the country.”
Rebuffing “Fair Share” advocates
Moore’s opposition to tax increases is a direct rebuff to Fair Share Maryland, a broad coalition of unions and progressive groups advocating seven ways to “close tax loopholes” and raise taxes on high earners. These groups include labor unions like the state teachers union that actively supported Moore’s election.
“It’s time to make the wealthiest 1% and big corporations pay their fair share,” says the group’s website.
The group’s seven proposals include changing the method of taxing corporate profits, though Maryland has a higher corporate tax rate than its neighbors, taxing all estates over $1 million, and a surcharge on capital gains, such as profits on stock sales that are taxed at a lower rate than wages.
Moore is not opposed to increasing fees for services such as birth certificates and professional licenses. He also has not taken a position on tolls for bridges, tunnels and express highways lanes. There is already a shortfall in the transportation fund as was discussed here last month, so the tolls cut under Republican Gov. Larry Hogan are likely to rise.
But the need to grow Maryland’s economy and stay competitive with other states runs contrary to other positions Moore has advocated. The best example is accelerating the increase in the minimum wage to $15.00 an hour in January, a 13% increase Moore pushed in his first session over last year’s $13.25. This is higher than all of Maryland’s neighbors and economic competitors — except the District of Columbia.
Moore and Ferguson both know that Maryland taxes are already high compared to most states and the cost of doing business is high. Yet they both want to fund programs like the Blueprint for Maryland’s Future, the increase in education funding that will cost the state and counties billions more in coming years to make Maryland schools “world class.” How to both grow the economy and grow the budget will be the challenge in governing for the next decade.