MARYLAND GOV. Larry Hogan was elected on promises to cut taxes and nudge the state toward a more business-friendly posture by restraining spending. Now, albeit in baby steps and with his signature lack of detail, he’s pushing an agenda in line with those promises, to predictable howls of overreaction from the Democrats who control Annapolis.
In a sneak preview of the $17.1 billion budget he will propose soon, Mr. Hogan announced he will seek $400 million in tax cuts over five years — an impressive number until one considers that it amounts to half of 1 percent of annual spending. It pales even further when weighed against tax increases enacted during the two terms of Gov. Martin O’Malley’s (D) administration, skewered by Mr. Hogan and the GOP, which state legislative analysts valued at nearly $8 billion.
Characteristically, Mr. Hogan avoided the policy weeds, making no mention of what taxes he will trim other than to say they’ll be “modest.” If Mr. Hogan’s proposed tax cuts amount to austerity, it’s bearable austerity. And in a solidly blue state, he’s wise to push gently for his conservative agenda.
He was less reticent about claiming credit for the state’s rebounding economy and revenues, which provide a cushion for tax reduction. In fact, the governor, having taken office just a year ago, is no more to credit for Maryland’s rebounding economic outlook than he is to blame for the spike in homicides in Baltimore over the last 12 months.
Mr. Hogan’s potentially more consequential initiative — also offered in gauzy terms at a news conference Thursday — is a plan to roll back state formulas that dictate annual spending increases for schools, health care, public safety and other priorities long regarded as sacrosanct by liberal lawmakers, public- sector unions and other special interests.
As Mr. Hogan pointed out, those mandates account for more than 80 percent of the state’s annual spending, which means that governors have relatively little budgeting leeway.
There is a sensible argument to be made for trimming spending when state revenue falls or fails to meet projections. It was the absence of the flexibility to do so, in the last decade, that contributed to a massive structural deficit and, later, sharp tax increases as formulas dictated ambitious spending targets, especially on public schools. In the last election, Mr. Hogan’s victory was built partly on many Marylanders’ conviction that they are overtaxed.
Democratic lawmakers, who have used mandates as a means to protect priorities even during economic slumps, attacked Mr. Hogan’s proposal as a power grab. It’s true that “mandate relief,” as he calls it, would accord him (and future governors) more discretion. It’s also true that while other states mandate annual spending increases, few have gone as far as Maryland.
Tacitly, the legislature itself has acknowledged as much since 2008 with one-time annual tweaks to spending rules, which lawmakers have negotiated with the governor. While some Democrats argue that automatic spending trims in a recession are an abdication of the tough decisions lawmakers need to make, the same can be said for formulaic annual increases. The fact that 83 percent of state spending is formulaically mandated is, as Mr. Hogan pointed out, unsustainable.