Maryland's tag-team taxers

Tuesday, September 28, 2010

THE RACE FOR governor in Maryland has reached a strange juncture: Each candidate smells blood in the other's most responsible, and in some cases unavoidable, acts of fiscal prudence.

The issue is taxes, and the heart of the debate is that both candidates -- the incumbent, Democrat Gov. Martin O'Malley, and his Republican rival and predecessor, Robert L. Ehrlich Jr. -- raised them. The truth is that both did so for good reasons: to pay for cleaning up the Chesapeake Bay (Mr. Ehrlich); more health coverage for the needy (Mr. O'Malley) and a massive, unfunded and long-term expansion in education funding enacted before either took office (both Mr. Ehrlich and Mr. O'Malley). Having increased state revenue to cover equally pressing priorities and, in the case of education, an unavoidable obligation, each candidate is now beating up the other for it.

In a more honest political world -- in other words, one that doesn't exist -- Mr. Ehrlich and Mr. O'Malley would acknowledge the needs and obligations each inherited, acknowledge the other's fortitude in meeting them and agree to a ceasefire on the issue. Instead, each suggests the other's record proves he is an untrustworthy steward of state finances.

Mr. Ehrlich took office in 2003, just after the General Assembly passed legislation requiring additional state spending on K-12 education of $1.3 billion a year once it was fully implemented. That money was intended primarily to address woeful student performance, particularly in the state's downtrodden and minority school districts, and dramatic funding gaps between richer and poorer schools. He also inherited a depleted transportation budget.

In response, Mr. Ehrlich spent his early years in office mostly holding the line on other spending while at the same time increasing revenue by raising state taxes on property, corporate filings, vehicle registrations, and sewer and septic use. He also tried repeatedly to legalize slot machine gambling, to no avail.

Mr. O'Malley took office in 2007 facing a sizable structural deficit, which he addressed by calling a special session of the state legislature that raised taxes on personal income, sales, corporate income and cigarettes. The recession, which hit a few months later, put Maryland back in a hole, like most states. But Mr. O'Malley is right that the hole would have been far deeper had he not buttressed the state's revenue stream in 2007.

Now Mr. Ehrlich, in the Tea Party era, is rebranding himself as a tax-cutter. He promises to roll back Mr. O'Malley's 20 percent sales tax increase, eliminate the state income tax on military pensions and spare state workers the pain of further furloughs.

Mr. Ehrlich's promises would cost the state a hefty $700 million a year, mostly in lost revenue. How would he pay for all that largesse? "We live in the land of the doable," he says sunnily. By that, we are left to assume that Mr. Ehrlich would take a meat ax to already badly depleted state spending. But by not saying where the ax would fall, he tries to make it all sound painless -- which it wouldn't be.

At the same time, he has attacked Mr. O'Malley for harboring a supposed plan to raise taxes next year. That may be plausible; Mr. O'Malley hasn't ruled out new taxes. But given that the state faces a $1 billion-plus deficit next year, the governor's position, while cagey, is prudent. As for Mr. Ehrlich's promises to cut taxes while faced with a gaping deficit and a Democrat-controlled legislature, well, don't hold your breath.

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