Md. governor’s tax proposals seek nearly $1 billion to balance budget, fund projects

For Maryland Gov. Martin O’Malley, 2012 was not supposed to be about raising nearly $1 billion in new taxes.

This would be the year O’Malley (D) would be remembered, backers thought, for taking the lead on legalizing same-sex marriage, advancing offshore wind power and tackling other progressive policy goals that would resonate with Maryland’s liberal base and bolster his political ambitions beyond the state.

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What Gov. Martin O’Malley is proposing and how will it affect Marylanders.

But with Maryland’s ongoing budget imbalance crowding his agenda, and with time slipping away in a second term bereft of big accomplishments, O’Malley’s year has been focused on an array of proposed tax, fee and rate increases needed to continue his record spending on education, health care and public works.

Saying that “everything has a cost” and that to invest in the state’s future he could not close a fifth consecutive budget gap with cuts alone, O’Malley last week asked the legislature to raise income taxes on anyone making $100,000 or more.

He also proposed that the state begin charging a sales tax on certain Internet purchases and said he would seek 18 cents more a gallon in state gasoline taxes to fund increases in road and transit construction that would create jobs. He also asked lawmakers to double water bill fees, boost electric rates and increase state borrowing for environmental projects, affordable housing and school construction.

O’Malley said the spending would position Maryland for growth and propel it out of the post-recession slump ahead of others — including Virginia, where Gov. Robert F. McDonnell (R) has focused more on cutting costs.

Weighing them individually, Maryland voters say they like several aspects of O’Malley’s revenue plan. But when they are taken together, and while the economy remains shaky, the burden of at least $951 million in new costs to the state’s households has taken on a gravity greater than the sum of its parts.

Political analysts say the passage of O’Malley’s tax plans could position him as one of the nation’s most liberal governors and set Maryland apart as one of the purest expressions of Democratic Party values in action.

Failure of large parts of his tax plan, especially if the legislature also bogs down again on same-sex marriage, could undercut O’Malley’s reputation within his party as an effective leader with national potential.

Whether O’Malley succeeds or fails, his ambition for a second major package of tax increases since 2007 risks reinforcing a tax-and-spend stereotype of the governor. In his 2010 reelection campaign, detractors distributed bumper stickers that read “Owe’Malley.” They had predicted he would raise taxes again in a second term.

If passed, O’Malley’s revenue proposals combined would rival his record-setting 2007 package, which included a one-cent bump in the state’s tax and adoption of a progressive income tax, and which together have brought in as much as $1.1 billion annually.

More damaging, however, than attacks from Republicans, who are a small minority in the state legislature, is the criticism that aspects of the governor’s proposals have drawn from key Democratic lawmakers.