The State of the State of Maryland
Does Governor Martin O’Malley’s recent business trip to India indicate that he is finally getting serious about bringing business to Maryland? Clearly something is wrong as demonstrated by Bechtel and Northrop Grumman, which have both left the state for Virginia – taking hundreds of jobs with them. This is consistent with Maryland’s recent ranking of 50th in the nation in terms of job creation. This is not surprising since Maryland was ranked 37th as a business friendly state – a mere 36 states behind Virginia, which was ranked #1 overall.
If the Governor was really serious, shouldn’t he and our elected leaders be learning from “what works” in other business-friendly states, and applying them here? Shouldn’t the Governor, for example, be looking at emulating Virginia’s Corporate Tax Rate, which is more than 25% lower, and more appealing to business when compared to Maryland’s 8.25% rate?
If the Governor was really serious, shouldn’t he and the Democratically-controlled legislature be taking more aggressive steps to curtail spending? In times of a fleeing tax base, and fewer federal dollars, the state budget was increased by 11.4% (far higher than most states, including Virginia). As a result, Maryland will be spending about $14.7 billion – a $1.5 billion increase over the previous year.
Where will this money come from to pay for this huge increase in spending? The danger is that the legislature and the Governor will attempt to pay for the spending increases through increased taxes directly or indirectly on businesses and individuals. And, by doing so, it will only further exacerbate an already bad business climate in Maryland.
It is clear that Maryland’s taxpayers are hurting and are already fleeing to other states. Maryland’s sales tax of 6% does not help, nor do the mumblings of yet another possible sales tax increase. Virginia’s is 5%. Gas prices are also higher in Maryland due to a higher excise tax (41.9 cents per gallon, compared to 38.4 cents per gallon in Virginia). This situation will only get worse for businesses and residents in the state, if Governor O’Malley is successful in increasing the excise tax by .05 cents a gallon over the next three years, which would make Maryland’s excise tax 7th highest in the nation.
None of this bodes well for the Maryland state budget and debt situation. One wonders how Maryland’s $44.2 billion plus debt can be paid ( Virginia’s total state debt is less at $28.5 billion). Maryland’s state debt per capita has been estimated as high as $4677 (per resident), and when coupled with the $43,000 debt per capita owed at the federal level, it would seem almost impossible to ever get our fiscal house under control.
In these times of austerity and economic difficulty, the Governor and the legislators should adopt proven policies that are working in other states, like Virginia. The bottom line is the remaining taxpayes can no longer afford the cost of riding O’Malley’s economic trajectory – even if they don’t know it yet.
Alexandra Brown
MCGOP CONVENTION!