O'Malleynomics Strike Back

Low and behold, look which failed economic platform reared its ugly head again:

Gov. Martin O'Malley unveiled yesterday a proposal to invest $1.1 billion over the next decade to cement Maryland's status as a pre-eminent hub for biotechnology research, including stem-cell studies aimed at finding breakthrough medical advances.

The funding, which would build on existing tax credits and grant programs, would be used to create a biotechnology center, finance capital projects and make equity investments in start-up companies. O'Malley, a Democrat, said the money could transform Maryland - where the human genome was mapped in 2001 - into a global leader in personalized medicine or the use of genetics to tailor treatments.

That's right boys and girls, O'Malleynomics are back. Once again, Governor O'Malley is going to stick the state's nose where it doesn't belong, in the private sector, and reallocate taxpayer dollars in order to fund unnecessary state priorities.

Don't get me wrong, I am very much in favor of science, and I am comfortable with the idea of tax credits to encourage further business growth in the state. But will O'Malley and state Democrats ever learn their lessons when it comes to government investment in private businesses? What role should government have in financing capital projects for private businesses? Why should the state gamble taxpayer dollars as part of venture capital schemes?

What's even further damning about O'Malley's plan is that it comes on the heels of higher taxes and reckless spending during the previous General Assembly session. The most important tax raised by the Democrats during that session was the "Millionaire's Tax" that disproportionately impacted Montgomery County, the very area most likely to benefit from O'Malley's largesse. The irony, of course is that it is likely that the necessity of these proposed state investments in biotechnology probably could have been avoided had O'Malley and company not created incentives for companies and entrepreneurs to relocate to Virginia due to Maryland's profligate tax and spend nature and the impact of the O'Malley Recession.

Time and time again, instead of encouraging private development of economic resources, instead of allowing the market to create a sustainable environment for economic growth, Governor O'Malley has returned to the failed policies of O'Malleynomics to try and earn political capital and to prop up industries that he favors. Time and time again, we have seen the impact of O'Malleynomics produces higher taxes and lower disposable income for middle and working class Marylanders, and the benefit, if any, from O'Malley's plan to throw money at this project is going to be infinitesimal, if such benefit exists at all.

If you missed the policies of economic failure, they are back with a vengeance...

Avoidance

Fortunately, John Leopold was told to take his tax hike and shove it:

Anne Arundel County Council members yesterday scrapped the proposed boost in the hotel tax and severely scaled back an affordable housing initiative yesterday as part of a laundry list of cuts to afford a pared-down budget for the school system.

After two weeks of deliberations and hearings, school officials who met with the county auditor determined that they needed $21 million - not $51 million - to close a budget gap.

I'm not saying I necessarily support all of the Council's decisions: I mean, Kevin Maxwell has somewhat been rewarded for his bad behavior and fiscal mismanagement in this regard as well. But I am glad to see that both Republicans and Democrats united to find other contingencies in the budget, and told Leopold to keep his tax hike. And he doesn't like it one bit:

Mr. Leopold condemned the council's actions, calling them "indefensible."

"They've taken the cold fiscal reality of 2009 and made it decidedly colder for 2010," he said.

No, what is indefensible is Leopold, a self-proclaimed fiscal conservative, always resorting to tax increases to cover spending instead of presenting the County Council with a balanced, responsible budget. What is going to make 2010 cold for Leopold and for all of us is the fact that Leopold was able to pull the wool over Republican eyes in the 2006 primary.

Of course, on the issue of taxes John Leopold is the biggest con man in the Republican Party. Always talking about being tax averse and being for the taxpayer, then trying to find new and creative ways to take more and more money from taxpayers. And remember, this is the same Leopold that supports Martin O'Malley's tax policies.

Leopold's behavior on the issue of taxes betray him as the unrepentant liberal that he has always been....

John the Destroyer

Tax-hiker John Leopold looks like he wants to be at it again, with the proposed hotel tax sparking well-deserved outcry:

Anne Arundel County Executive John R. Leopold's proposal to raise the hotel tax to generate revenue for the financially strapped school system has drawn sharp opposition from state and local tourism officials, who say it would have a devastating trickle-down effect on the county's economy.

The measure - which combined with Maryland's 6 percent sales tax would give the county the state's highest checkout fee and one of the steepest in the country - will drive visitors to competing destinations, officials predicted, saying they've seen it happen elsewhere in Maryland.

"People will be laid off, they will lose jobs, shops will close, and hotels will go bankrupt - the mid-size hotels that can't survive this - if we have a decline in visitors coming here," said Connie Del Signore, president and CEO of the Annapolis and Anne Arundel County Conference and Visitors Bureau.

Of course, Leopold tries to defend this, but there is a noted change in his rhetoric from previous years:

"Because of the well-established aversion to any increase in property and income taxes here, it requires me to secure revenue for our public school system through other means."

Once again, Leopold is going to blame country residents opposition to higher taxes as a justification to raise the hotel tax. But as usual, Leopold fails to see the forest for the trees. Yes, people are opposed to higher income and property taxes. But they are also opposed to liberal County Executives trying to tax businesses out of existence too. The Convention Bureau is correct in that the tax will destroy the local tourism industry. And when you think about how many people cycle into and through Annapolis, and cycle through the hotels at BWI each year, such a tax would have a devastating effect on the economy.

What's even more ridiculous about the proposed tax hike is the fact that Leopold is trying to have it both ways on school funding. He wants to be able to tell Superintendent Kevin Maxwell to pack sand on Maxwell's egregious and outlandish budget proposals, but still wants to raise taxes in order to increase the education spending that he himself has proposed.

Leopold's usual run towards hypocrisy and tax increases is becoming more and more ridiculous. Leopold wants to take money out of the pockets of Anne Arundel County's businesses through higher taxes that will drive businesses and visitors out of our county. Unfortunately, it seems that the closer we get to 2010, the more it is starting to look like 1998....

Of course not, that would be helpful

It's not liked anybody expected the O'Malley Administration to do anything to benefit taxpayers, but still:

With gas prices continuing to reach new heights, the part of the cost controlled by federal and state governments is coming under increasing scrutiny as some politicians lobby for a break during the summer driving season.

Officials in Gov. Martin O'Malley's administration, however, caution that any reduction in gas tax revenue - which is dedicated solely to transportation spending - would hurt the government's ability to maintain roads.

"It might be a 'penny wise' and a 'pound foolish' at this point, especially since we've seen chronic underfunding of our transportation system," said Rick Abbruzzese, the governor's press secretary.

No, because god forbid the taxpayers of Maryland actually get a break after the Democrats pillaged them time and time again over the last few months. What's even more absurd is that Rick Abbruzzese actually talked about the chronic underfunding of transportation when the O'Malley Administration raided the Transportation Trust Fund to cover the excesses of their profligate spending!

Maryland taxpayers need a break, even if it is a largely symbolic break on state gas taxes. The fact that O'Malley and Maryland Democrats refuse to take even such a minor step to benefit the citizens of Maryland shows the kind of contempt these people hold taxpayers in: you are an ATM to benefit their pet projects, enrich their cronies, and keep them in office, and nothing more.

Bologna Boy still full of Bologna

David Paulson, of all people, has a column up at PolitickerMD.com regarding "political courage." Now, never mind the fact that "Maryland Democrat" and "political courage" tend to be oxymoronic, I want to highlight this comment, which highlights why Paulson doesn't get it:

It is easy to whine, gripe, attack and predict disaster is at the doorstep. Having the courage to solve real problems is hard and sometimes costly. After all, there is always someone or some group ready, willing and able to do what's easy.

You're right David, it is easy to whine, gripe, attack and predict disaster. So why, David, do you instinctively defend Martin O'Malley at every turn? All the Governor does is whine about Governor Ehrlich, gripe about how hard his job is, attack anybody who even remotely opposes his bad ideas, and predicts disaster if the people of Maryland don't roll over for his whims, and right now.

And you're right David: having the courage to solve real problems is hard and sometimes costly. I just wish that Maryland Democrats had some of this courage that you speak of, because they sure as hell didn't show it during the General Assembly session. Instead of reducing the size of government and assuring the people of Maryland that our state was under prudent financial stewardship, they instead rubber stamped O'Malley's profligate spending, sticking the citizenry with a higher tax bill as a result. That's certainly not leadership, that is, in fact, doing what's easy. Maryland Democrats are good at that.

Paulson later goes on to say something even more patently absurd:

In the end they couldn't even agree with each other on the Smith Island Cake. Some belittled our new "state cake" as a complete waste of time for a General Assembly facing serious issues. They must have forgotten it was a Republican sponsored bill in the first place.

Paulson forgets three key points:

1. Just because something is sponsored by Republicans doesn't mean it's a good idea. There are a lot of ideas from the moderate wing that aren't exactly beneficial to our side, nor are any number of bills that Republicans sign-on to as co-sponsors at all representative of our ideology;
   
   
2. Republicans actually have the testicular fortitude to call each other out when they go astray: Democrats outside of leadership have been for all intents and purposes been politically neutered in Maryland for some time now; and,
   
   
3. The Smith Island Cake was not the issue for a lot of people; it was Page Elmore's sellout of his vote for O'Malley's profligate budget to get the Smith Island Cake bill passed that was the real key issue.

What's odd is that David Paulson would spend his time kicking us while we were already down. I just wish that Paulson would spend less time psychoanalyzing the Republican side of the aisle, and instead spend more time trying to explain and justify why Martin O'Malley and Maryland's Democratic leadership want to tax Marylanders right out of the state and why these "leaders" want to destroy Maryland's Middle and Working Class Families.

The Morality of Taxes

Sun reporter Michael Dresser provides virtually glowing commentary in beginning his article about the new "Millionaire's bracket":

It's quite an exclusive club, Maryland's new millionaires' tax bracket. A little more than 6,000 households statewide qualify for the distinction - more than 40 percent of whom reside in Montgomery County....

...With the General Assembly's passage of the new 6.25 percent top tax rate on incomes above $1 million, and Gov. Martin O'Malley's signing of the bill yesterday, Maryland has apparently become the first state to create an actual millionaires' bracket.

Some other states have created high-income tax brackets - some paying rates that make Maryland's levy look like a bargain - but they kick in at lower thresholds. For instance, New Jersey residents in the top income bracket pay a rate of 8.97 percent but don't receive the cachet of being in a millionaires' club because it applies to all income above $500,000.

Democrats even found the opportunity to trot out cheerleaders to talk about how great it was that Annapolis was going to screw them tax them more:

"I've had numerous people come up to me in the course of these last few months and whisper to me that they are in that highest bracket of millionaires and they are willing and they are able to pay their fair share," he said.

By the end of the session, the idea of taxing the rich wasn't looking so bad to many of the Assembly's leaders. O'Malley jumped aboard the repeal bandwagon and re-endorsed the millionaires' tax.

Ed Hale, chief executive of First Mariner Bank in Baltimore, said he told O'Malley the computer tax had to go - even if he had to pay more in income tax.

"Any self-respecting person that was wealthy enough could pay more tax just because of the quality of life in the state of Maryland," he said. "It's much ado about nothing for a very few people."

Which is fantastic. Maybe Ed Hale can pay my taxes too if he thinks it's so awesome. And just to prove the point how awesome this all is in the eyes of the Sun and the eyes of Annapolis Democrats, let's go to an example:

The average income reported by those in the new bracket was $3.1 million. That translates to an extra $15,000 a year for three years until the surcharge sunsets - or just about the $45,000 that would put a mid-range BMW in the three-car garage - compared with the law at the beginning of the session. (In some cases, some of that extra cost could be offset by federal tax deductions.)

That argument is, of course, ridiculous. It is ridiculous to think that a millionaire is being hosed out of a BMW because of the new O'Malley taxes. The millionaire's are going to miss the money just like anybody else is. Of course, what cheerleaders for the O'Malley tax won't tell you is the fact that $45,000 out of the pocket of somebody who qualifies for this tax bracket may be reducing that individual's capability to send that money directly back to the community, whether it be in the form of charitable donations or continued reinvestment into the local economy. That $45,000 could be better spent on job creation in the private sector than it will certainly be spent in the black hole that is Annapolis.

But the conversation we need to be having here has nothing to do with how poorly government wastes money, or how much better the private sector can spend it. It actually deals with the moral questions of taxes. How can government retain the moral high ground, particularly a government that claims that it is for the working men and women of Maryland, when most of the impact of the O'Malley Recession is being felt by these same work class folks? To paraphrase George Bailey, the working class people who are most hurt by what O'Malley and company are doing, they are the ones who do most of the working and paying and living and dying in this state.

So how come a disproportionate burden is placed on the middle and working class families of Maryland to pay for programs that make rich urban liberals feel better?

What we have right now in Annapolis is a situation involving taxes and the question of morality. How can government remain moral when government is doing its part to make it impossible for Maryland's working class families to survive financially? Why should parents who want to raise their children in the same communities in which they grew up be forced to choose between making ends meet or moving to another state in order to relieve themselves of the financial burden of living in Maryland? Why should the middle and working classes be forced to pay for unnecessary programs to which they receive no benefit? And how can Government maintain maintain its own sense of morality when it continues to ask more and more of citizenry in the middle of an economic downturn when this same citizenry is already overburdened with oppressive taxation at all levels.

The moral question of taxes is whether or not taxes in and of themselves are moral. The question is whether or not those who make tax policy, those who think that the citizenry is nothing more than a checkbook, those who believe that by taking more and more money away from taxpayers government can make taxpayers more economically viable, have the moral compass to do the right thing and reduce the oppressive burden on Maryland's taxpayers. And given the position of O'Malley and the legislative leadership, by their actions to raise more taxes and spend more money when we can least afford it, I think we have the answer to those questions.

Beerfest!

Glad to see that Attorney General Doug Gansler has solved all of Maryland's problems regarding crime, punishment, and ensuring that we prosecute criminals to the fullest extent of the law. Gives him plenty of time to deal with this:

Attorney General Douglas F. Gansler and public health advocates launched a campaign Tuesday to make sure drinks like Mike's Hard Lemonade and Jack Daniel's Black Jack Cola are considered legally the same as liquor, not beer.

Yes, the Attorney General is concerning himself with the consumption of alcohol and how one defines said alcohol. Seriously. And, of all things, the entire controversy seems to revolve around two things: tax dollars and teenagers.

The legislature is considering a bill backed by alcohol manufacturers and distributors that would classify the beverages as beer, overruling an opinion that Gansler issued this month declaring such beverages -- loosely termed "alcopops" -- to be spirits under the law because of how they are made and because of evidence that they are popular among teenagers. The opinion effectively changes the way the drinks have been regulated in the state for decades.

Lobbyists for the liquor industry, who deny the drinks are marketed to teens and argue they should be classified like beer because of their alcohol content, have been pushing hard for the bill, which passed in the Senate with little fanfare.

Well, frankly I couldn't care less how the alcopops are classified, seeing as how I don't drink them. And frankly, I don't see the need to differentiate the level of taxation one alcohol is subjected to versus another.

The good news is that apparently Doug Gansler is applying his crack skills as a beer expert on this case:

"Beer is yellow with foam," Gansler told reporters at a news conference, holding up a bottle of Smirnoff Source, which is described this way on its label: "contains pure spring water + alcohol."

"This is not beer," he added.

Well, glad we cleared that up, though I assure you that connoisseurs of Guinness, Killians, and about 3,000 other different kinds of ales, lagers, and darker brews would beg to differ.

All kidding aside, I am disparately trying to figure out how Gansler's knee-deep involvement in this issue is doing anything to about the tough issues that Maryland faces. Regulating alcopops as liquor instead of beer isn't going to do a thing to curb underage drinking, and anybody that thinks it will is an idiot; it's not like the reclassification is going to stop the legal adults buying the stuff from giving it to those underaged kids. Nor is this argument really going to do that much to abate the state budget problem; it's not like the increased revenue from taxing the products as liquor instead of beer is going to do much to abate the O'Malley induced economic jumble.

So.....realistically I have no idea what the hell Gansler thinks he is doing and how this is going to benefit the people of Maryland. But I am glad to see that Gansler thinks that he has accomplished all he can do to stop crime, promote public safety, and put criminals behind bars. Because I suppose it shows that we really need an Attorney General who cares about real public safety issues instead of getting his name in the paper...

Hosing those who can leave, and other fiscal silliness

So, here is the proposed tech tax solution:

Gov. Martin O'Malley and top leaders in the General Assembly are lining up votes for a plan to replace Maryland's new computer services tax with an income tax surcharge on top earners and cuts to transportation and other spending.

The plan has the backing of Senate President Thomas V. Mike Miller and Sen. Ulysses Currie, the Prince George's County Democrat who chairs the powerful Budget and Taxation Committee....

....O'Malley, a Democrat, discussed ways to repeal the $200 million levy in a closed-door meeting with legislative leaders Tuesday night. The consensus that emerged was to try to raise $100 million by creating a new income tax bracket of 6.25 percent for people earning more than $1 million, according to those who attended the meeting.

An additional $50 million would come from the state's $400 million Transportation Trust Fund, and the rest from additional budget cuts.

So, we are going to go ahead and try to further fleece those Maryland taxpayers who are simultaneously most able to pay more taxes and able to pick up and move someplace that their tax burden won't be so high? This is what passes for fiscal responsibility in the minds of Maryland Democrats?

What cracks me up even more is the fact that the 6.25 percent tax bracket will be a "temporary" tax bracket. Does anybody really believe that this crew in Annapolis would ever repeal this new bracket?

What's bizarre is the fact that the tax solution calling for a higher tax bracket is now being joined by $300 million in proposed cuts:

House and Senate leaders began this morning to hash out a deal over the fiscal 2009 budget that is expected to include more than $300 million in cuts, although negotiators largely put off until tomorrow discussions over the most contentious funding questions.

"We're making good progress," said Sen. David R. Brinkley, the Senate minority leader from Carroll and Frederick counties, who is one of eight lawmakers on the budget conference committee. "It's a tough budget year, and there are a lot of hard decisions to make across the board."

So far, lawmakers and legislative staffers said, the differences between the spending plans are not as formidable as they have been in previous years. They predicted that much of the rancor over budgetary issues will come not from these negotiations, but from the question of how to make up for a repeal of the sales tax on computer services.

So now we are going to cut more money from the budget than the tech tax would raise, but legislative leadership still wants to replace that money with more taxes? Is that logical?

I hope that the taxpayers of Maryland are paying attention to this charade in Annapolis, because I hope that it is becoming clear to them that their elected leaders in Annapolis don't have the financial interests of the taxpayers first and foremost in their minds.....

Let's try it

I had a thought this morning reading this story about House opposition to the cell phone ban:

Del. Pamela G. Beidle, an Anne Arundel County Democrat, voiced her support for the bill at the hearing, saying she had just watched a TV report demonstrating the hazards of teens trying to drive while text-messaging.

"I think it's very, very necessary that we take whatever distractions we can from drivers," she said.

Well, this driver is distracted by the insanely high taxes that legislative Democrats want to continue to shove down our throats. Can somebody jump on that, please?

Spend it like ya stole it

It's becoming apparent that fiscal responsibility has no place in Annapolis, despite the best efforts of our Republican minority:

The Maryland House of Delegates yesterday rejected a series of Republican-sponsored budget amendments to curb spending on transportation, education and other programs as the state prepares for a new fiscal year amid significant economic uncertainty.

The most sweeping proposal, by House Minority Leader Anthony J. O'Donnell (R-Calvert), sought to cut $560 million from a $31.2 billion spending plan expected to be approved by the Democrat-led House today.

"A lot of these programs are good ideas, but we can't afford it right now," he said during preliminary floor debate. "We have not done enough to rein in the growth of spending in this state....."

.....O'Donnell said he was seeking to reduce proposed spending growth rather than make outright cuts to the budget. Under his amendment, he said, the overall budget would grow by 2.5 percent next year.

It is getting more and more amazing each day that these Democrats in Annapolis think they are invincible. They believe that they are beyond reproach, that they cannot be be beaten, and that they will continue to run roughshod over the people of this state. The fact of the matter is that the longer these Democratic legislators are in power in Annapolis, the further detached from reality they become.

The General Assembly seems to be completely of incapable of making the sacrifices they so readily ask us taxpayers to take. They seem to be incapable of making the tough decisions, and they are certainly incapable of spending with the state's means. And nothing proves that point more than the General Assembly's overwhelming rejection of common sense spending cuts proposed by the Republican minority.

It is, unfortunately, going to have to wait two more years until the voters get an opportunity to correct this imbalance. It will take us until 2010 when we the voters go to the polls with the opportunity to truly elect representation that puts people before politics, and get the opportunity to send leaders to Annapolis who actually understand that Maryland needs to spend less and to spend more responsibly. Until then, we are just going to get more and more of this irresponsibility from the legislature....

This one's a bad idea...

I think that I have been pretty clear about my support of privatizing toll roads and through private construction of new toll roads. However, this idea is something that is a bridge too far:

Regional transportation and political leaders are increasingly coming to the conclusion that the only way to keep the chronically congested Washington region moving is tolls, and plenty of them.

A report to be released Wednesday pushes a regionwide system that would place tolls on most existing area highways, bridges into the District, the Baltimore-Washington Parkway, George Washington Memorial Parkway and such major District thoroughfares as New York Avenue. The key to success, the authors say, is the comprehensiveness of the network.

Officials, pointing to the lack of any sizable investment in the region's transportation infrastructure by Virginia, Maryland or the federal government, say they see no other realistic options to keep traffic moving, accommodate newcomers and get desperately needed money to pay for new roads and improved transit. The tolls could generate more than $2.75 billion a year, according to the report.

This idea is problematic for a number of reasons. One is the fact that the roads that have been proposed to have tolls added to them are already existent. Certainly I have never suggested that roads that are already part of the existing non-tolled infrastructure. We already have roads that are clogged, roads that are already used by commuters; how is adding tolls to existing non-tolled roads going to solve traffic? Clearly, it's not.

One other problem with this concept comes from a misconception that is quoted in the article:

Toll proponents say users should pay for the true cost of highways. Unlike traveling by Metro or airplane, users can take roads for free, and there is no financial incentive to reduce unnecessary trips, adjust timing, carpool or use transit. Roads in the region are so overused that they no longer operate dependably.

Of course, roads are anything but free. We pay a pretty stiff fee to use those roads in the form of state and federal taxes. To say that these roads are "free" is, of course, poppycock. And to say that that there is no financial incentive to reduce travel and commuting time is even more farcical when you consider the non-financial costs of commuting that many folks already have to build into their daily lives.

Finally, nobody really answers the question as to who these tolls would be paid to. Will tolls be collected by the states or by the District of Columbia? Are the tolls being collected by the federal government, considering the proposed inclusion of federal parkways in this scheme. Or will the tolls be collected by an unelected multi-state entity? I certainly do not want to see toll dollars from drivers using roads in Maryland shipped off to a regional outfit that will misspend and misuse the money, when the money can be misspent and misused right here in Maryland.

While I am glad that the Metropolitan Council of Washington Governments is looking at ways to alleviate the region's traffic problems, the fact of the matters is that these Utopian proposal are nowhere near optimal nor practical. The Council needs to look at proposals that are practical and realistic, proposals that will reduce commuting time and not take additional funding out of the pockets of the region's working families, not the creation of additional mechanisms to take more money out of the pockets of commuters.

The Brian Griffiths Minute: 03-15-2008

Reckoning

Only now does it seem that Annapolis Democrats are finally beginning to realize the hole they dug for themselves during the Special Session:

A day after Gov. Martin O'Malley said he wants to repeal imposing a sales tax on computer services, Senate President Thomas V. Mike Miller, Jr., D-Calvert, warned that rescinding it could mean education funding cuts.

The movement to repeal the "tech tax" is growing in the Senate this past week as public opposition continues at high pitch. The General Assembly passed the tax last fall during the special legislative session, as part of a plan to close the state's $1.5 billion deficit.

However, Mr. Miller said yesterday there is little need to hike taxes in the last several weeks of the General Assembly session to cover for the estimated $200 million that would be lost if the tech tax is struck down. In fact, the senate president has previously declared no more taxes will be raised during Mr. O'Malley's term.

The statements illustrate a bigger quandary surfacing in the legislature. During the past three months almost all of the good things that were supposed to have come out of the special session have been threatened.

Which of course a lot of people on the right, including myself and my compatriots at RedMaryland were warning about before, during and after the Special Session. While a central theme of O'Malleynomics is that you can spend whatever it takes in order to achieve their liberal utopia, it is going to come at the cost of small businesses and at out of the pockets of middle and working class families.

The problem is that the tech tax is only the tip of the iceberg when it comes to the negative impact that the Special Session tax hikes are going to have on Maryland and are going to have on our economy. While the Administration and the General Assembly realize how bad of a decision it was to pass this one tax, they still refuse to reasonably acknowledge the need to cut spending. Senate President Mike Miller seems to be the only one who understands that, and I am sure that the O'Malley camp already has a new tax proposal in the works to cover the cost of the tech tax repeal.

I think for the first time Maryland Democrats are realizing that they are going to have to face a reckoning in November 2010. They are going to have to answer for the all of the harm they are causing Maryland's taxpayers...

Franchot's Gambit

Comptroller Peter Franchot has gone out a bit on a ledge in order to try to get the computer tax repealed:

Amid growing momentum for a repeal of Maryland's new computer services tax, Comptroller Peter Franchot released a broad interpretation of the levy yesterday, stoking fears that it will force businesses to leave the state.

Under the draft rules, computer services would be subject to the 6 percent sales tax even if the service provider is located outside of Maryland. That will make enforcing the law difficult and could encourage business customers to relocate computer-related operations, said Franchot, an outspoken opponent of the tax.

Clearly Franchot's release of this interpretation of the tax is designed to give more reasons for the General Assembly to pass the tech tax repeal and get this ill-designed law off of the books. But it is not without risk, both to taxpayers and to Franchot. If the General Assembly does not repeal the tax, Franchot's broad interpretation may mean thousands of jobs and millions of dollars will flow out of state. His interpretation of the tax, on top being bad for the economy, will they be used as a cudgel against him in the 2010 primary election.

It's an interesting gambit, and I hope it is successful is getting this foolish tax out of our lives...

Running on Fumes

Apparently, Congressional Democrats have drank the O'Malleynomic Kool-Aid, because they have decided to raise gas prices by taxing gas companies:

The House approved $18 billion in new taxes on the largest oil companies yesterday as Democrats cited record oil prices and rising gasoline costs in a time of economic troubles.

The money collected over 10 years would provide tax breaks for wind, solar and other alternative energy sources and for energy conservation. The legislation, approved 236-182, would cost the five largest oil companies an average of $1.8 billion a year over that period, according an analysis by the House Ways and Means Committee. Those companies earned $123 billion last year.

Anybody who thinks that these prices will not be passed on to consumers is also deluding themselves. But I find it very odd that Congressional Democrats would consider legislation to raise taxes on American working and middle-class families during an already existing economic downturn...

Cutting Crew

After raising billions in taxes and approving billions in new spending, the General Assembly finally realized "Hey, we have to cut some things in the budget":

Worried that a faltering economy could cause a worse-than-expected slowdown in the state's finances, Maryland lawmakers are exploring deep cuts in Gov. Martin O'Malley's proposals to bolster spending on the environment, health care and other programs.

Lawmakers have been looking for $200 million in cuts in O'Malley's proposed budget to compensate for the flagging economy, but now they are saying that could rise to $300 million or more when updated revenue projections come out next week.

The Sun story (which, incidentally, makes no mention of the half a billion in new entitlement programs approved during the Special Session) goes on to note this gem:

"The likelihood is, given the national economic downturn, that those difficult series of decisions will continue," O'Malley said. "Everybody is looking at the revenue estimates, and if they are coming in lower than projected, there will have to be further cuts."

This isn't exactly breaking news, and the talk of a recession was going on during the Special Session where O'Malley insisted that the legislature do further harm to the economy.

Crazy thing is that, once again, Peter Franchot looks like the only prominent Democrat who understood what was going on during the time of the Special Session:

Franchot cautioned against holding a special session last year, saying there was no immediate fiscal crisis and that unintended consequences could stem from acting in haste to plug a projected budget gap.

So far in fiscal 2008, corporate income taxes are nearly 24 percent lower than at the corresponding time the year before, according to the letter. Though such tax receipts are volatile, they are lagging "well behind" expectations, Franchot wrote.

General-fund sales tax receipts were 5.5 percent lower in January than in the corresponding period a year ago, reflecting slow December sales. Franchot called that figure "surprisingly weak."

All of this really isn't that surprising when you consider that legislators were warned about potential revenue losses stemming form higher taxes.

The complete incompetence of O'Malleynomics is in full bloom in Annapolis ladies and gentlemen. The combination of tax increases and spending increases has served to hamstring the General Assembly. While I am glad that something is being done to curtail OMaley's profligate and ill-advised spending, I wish only that members of the Legislative Leadership will realize their foolish ways and roll back all of the historic and unnecessary tax hikes enacted during the Special Session...

More Fuel for Privatization Fire

Maybe the State of Maryland, even in our current O'Malleynomic hell, may really consider the concept of privatization:

And in the long-term, MdTA will be so saddled with debt it might even have to lease one of its facilities to a private partner, according to DLS. Over the next four years, the agency will issue $2.8 billion worth of debt to bolster its capital budget.

Now all of this is in a story about how MdTA might be ready to jack the price of tolls on the Bay Bridge up to $5.00 in the near future. But as I have argued before, the privatization of the Bay Bridge may make it cheaper for taxpayers and commuters to use the bridge, as a private toll facility operator will be able to operate the bridge at a far lower cost than the State of Maryland ever could.

Even ardent opponents of privatization don't want to see tolls doubled on MdTA facilities, and privatization may be a way to avoid that current inevitability.

Lots of Democrats and liberals talk about brining innovation to government. I can assure you that doubling tolls does not count as innovation in anyone's mind. But I think that one of the most innovate things that Maryland could do at this moment in time is to privatize our toll facilities so that we, both as commuters and as taxpayers, get the biggest bang for our buck.

Still Past Due

One of my earliest posts on this blog was about the need to repeal the tax on military pensions. Unfortunately, it's a battle that is still going on.

It has always been nonsensical to me that we would want to adopt tax policies that drive veterans out of the state of Maryland to states with a more hospitable tax climate. When you consider the number of high paying, high skilled jobs that are in this area, we should do what we have to do to appeal to those retirees who are qualified to fill those jobs to stay in this area.

Maryland is close to two major metro areas, has a wealth of retiree resources, and access to a number of local military health care facilities. It's a natural fit for retirees, but only if we do our part to be competitive with states that allow those who have served us to keep their retirement income free of taxes.

The Results of O'Malleynomics

One of the net results of the computer services tax that the Governor and the General Assembly railroaded through the Special Session is that it is becoming more and more attractive for tech businesses to cut bait and leave the state:

In January, just as anger over a new tax on computer services was beginning to boil over in Maryland's high-tech sector, Robert Epstein received a call from the Pennsylvania Department of Community and Economic Development.

"This guy called and said, 'I don't know if you've heard of the computer tax coming on board in Maryland. ... Have you ever thought of opening an office in our state or relocating to our state?'" recalled Epstein, president of About-Web LLC, a 52-employee, information technology firm based in Rockville.

After poring over maps last week with Pennsylvania officials courting his and other companies in Maryland, Epstein said he is thinking of moving a large chunk of his business to York, where employees can serve Baltimore-area clients. He's already committed to investing more resources in an office he has in Virginia.

Other technology executives in Maryland tell similar stories of being approached by officials from neighboring states and by commercial real estate brokers looking to capitalize on widespread discontent in the information technology sector over the new tax.

Of course, anybody with half a brain can understand that when you make the business climate less and less appealing by continuing to raise the cost of business, business leaders are going to do what they have to do in order to continue to keep costs low. If, as in the example above, businesses can serve Baltimore and still relocate to a place like York with lower taxes, they are going to leave much like so many folks who work in Baltimore have moved to the Red Lion and Shrewsbury areas the last fifteen years.

What's amazing is the fact that the O'Malley Administration is completely oblivious to the fact that business might actually take advantage of such economic benefits:

Gov. Martin O'Malley's secretary of economic development, David W. Edgerley, said yesterday that his office is aware that Pennsylvania and Delaware have recently targeted Maryland computer companies. He said he is "monitoring the situation" but does not believe it is widespread.

"It is standard operating procedure behind the scenes to try and take advantage of any opportunity," Edgerley said of states' business development agencies. "I don't think it will be very successful."

I'm not even sure how one could say that logically. Does Secretary Edgerley really believe that businesses are so tied down in Marlyand that it doesn't make economic sense for them to move? This is particularly true of small businesses. It might make more sense that a large operation with a number of sunk costs will not pull up roots and leave quite so quickly. But small businesses, the backbone of our local economy, tend not to have those sunk costs. If they can continue to serve (or even expand) their customer base and save money on the cost of doing business in the process, why wouldn't they?

And reasonable people understand that:

Greater Baltimore Committee head Donald C. Fry said that position betrays a naivete about the uniqueness of the computer services industry: "Whenever the business community raises concerns about taxes and talks about the possibility of leaving, the state government leaders seem to believe that that's just not going to happen because there are other compelling reasons for them to stay."

The computer services tax is different, Fry argues, because the high-tech industry is "much more mobile. ... You don't have to bring in moving vans. You can do it electronically."

The irony of the computer services tax is rich when you consider how much time and effort state and local leaders have spent trying to turn Maryland into a player in the technology field. How many times have they tried to woo businesses to our state in order to create a Tech Corridor in Montgomery County, or try to woo businesses to downtown Baltimore. The administration seems to fail to realize that businesses that could be wooed here can also be driven out of town by decisions that negatively impact their bottom line in such a way that it makes it difficult for them to do business.

When will Maryland Democrats, particularly Governor O'Malley, learn that you cannot tax your way to prosperity?

At the end of the day, taxpayers still lose

It's not a good time to be in Anne Arundel County when the "Republican" County Executive and the Republican County Council are arguing just how they should bilk taxpayers:

The Anne Arundel County Council has offered a counterproposal to a massive set of increases to impact fees on new development proposed by County Executive John R. Leopold: raise the transfer tax rate to generate millions of dollars toward school construction and maintenance and reversing the effects of storm-water runoff.

On Monday, the Republican-majority council unanimously agreed to support a resolution that seeks state-enabling legislation to raise the transfer tax on property sales from 1 percent to as high as 1.5 percent. The resolution's sponsor, Republican C. Edward Middlebrooks, said the initiative could raise $25 million a year for the building and repairing of schools and restoring of streams. He estimated that about $18 million would go toward schools and $7 million toward cleaning up watersheds and waterways damaged by runoff.

Either way, taxpayers lose. Taxpayers will either foot the bill indirectly through higher prices on property or higher prices for services and business, or the taxpayers will pay the bill directly through the higher impact fees. Whichever side wins, it is going to drive the cost of living in Anne Arundel County up in times of financial uncertainty. Not a win-win strategy. It's not good when the Republican County Executive and County Council are acting like our Democratic Governor and General Assembly. You can barely tell the difference when both groups want to eschew reduced spending and go straight for raising taxes on an already distressed electorate.

Leopold's at it again

Look, John Leopold has found another way to want to bilk more money out of taxpayers:

County Executive John R. Leopold wants the state to lift the cap on license fees for food establishments so the cost of inspections and regulation are fully covered.

Under current law, local governments must license, inspect and regulate food establishments. Outside of Baltimore City, Montgomery County and Prince George's County, jurisdictions can only charge a maximum fee of $300 - regardless of the annual cost of doing business.

Anne Arundel County is losing about $225,000 a year by having the cap, said Sen. John Astle, D-Annapolis, who presented the bill to the Senate Finance Committee Wednesday.

"This is simply a bill that … would allow them essentially to break even on this essential service," Mr. Astle said.

Of course, ultimately it is going to be the consumer and the business owner that is going to pay for the cost of this hike in fees. What's even more disturbing is the fact that Leopold supports removing the cap completely; not just raising the cap. So what would Leopold's ultimate license fee be? Who knows, but you as a taxpayer willwind up footing the bill.

What's even crazier is that even Liberal Democrats are starting to criticize Leopold's anti-business approach:

By itself, the proposal sounds reasonable, said Del. Pamela Beidle, D-Linthicum, a former member of the county council.

But the wider economic picture also has to be considered, she said, including the impact on businesses from November's special session, where the General Assembly raised the sales tax and corporate income taxes.

Couple that with other initiatives from Mr. Leopold - such as a desire to significantly raise impact fees - and the business climate in Anne Arundel County could suffer with each new fee hike, Ms. Beidle said.

When you are a Republican and a liberal like Pam Beidle is criticizing your ability to provide a friendly business climate, then you are seriously in the wrong.

It's hard to take John Leopold seriously as a County Executive. His job performance in office resembles that of the performance of Janet Owens more and more each day. That's how far off the conservative reservation Leopold has strayed...

The Canary in the Coal Mine

You know that Maryland's Democratic leadership has made some poor choices on taxes and spending when one of their own starts warning that they may have sent the state economy into bad water:

Maryland Comptroller Peter Franchot (D) offered a bleak assessment of the state's economy yesterday, saying recent changes to the state's tax laws could negatively affect an already dire financial outlook.

Delivering Maryland's first State of the Treasury speech in recent history, Franchot, who considers himself the state's chief fiscal officer, said the subprime mortgage crisis, instability in financial markets and declining retail sales are driving the economy into "a period of profound uncertainty."

The full speech is available from the Comptroller's website. And true to form (and my opinion that Franchot is preparing a 2010 primary challenge to Governor O'Malley), the Comptroller railed against the tax package:

Furthermore, I believe that we must acknowledge that the sweeping changes to Maryland’s tax laws – which resulted from last Fall’s Special Session – have only added to this climate of unpredictability. As you know, I publicly objected to the idea of writing complex tax legislation in a frenetic and overheated political environment. Significant tax increases were essentially drafted behind closed doors and adopted without the benefit of substantive analysis, meaningful public hearings or consultation with stakeholders. And while I commend Governor O’Malley and the General Assembly for their shared commitment to resolving Maryland’s structural deficit, I remain deeply concerned about the potential of some of these tax measures to inflict harm on our State’s economy.

I am particularly troubled by the expansion of the Maryland sales tax to computer services. I spoke out in public opposition to this proposal when it was rammed through during the closing days of the Special Session, and I feel the same way today. This technology tax tax, if allowed to stand, will erode Maryland’s competitive advantage in the Knowledge-based economy.

What Franchot's endgame with his criticism of O'Malley and General Assembly leadership is anyone's guess. But it is significant that somebody who is probably to the left of just about every major elected official in the state of Maryland is being critical of O'Malley, the General Assembly, and the way business was conducted during the Special Session speaks volumes of how bad things are in our state. Politically, Franchot would have been expected to be on board with the historic tax hikes that we saw, but instead even he is concerned with the way everything went down.

Is this another salvo in an O'Malley v. Franchot gubernatorial primary? There is a long way to go before we can speculate too much about that. But it says a lot as to why O'Malley's poll numbers are sinking when ever those who are generally philosophically in league with where he wants to take our state can't support his tactics and methods...

The Sun doesn't learn

The Sun carries the flag again for Governor O'Malley today on the budget issue:

True to his word, Gov. Martin O'Malley yesterday unveiled his plan to keep a lid on overall state spending next year. Even his Republican critics will have to concede that while he may have recently raised taxes, he's not exactly a big spender, at least not in fiscal 2009.

Not only does Mr. O'Malley's proposed $31.5 billion budget fall well within the state's long-standing affordability guidelines, but it also reflects the smallest year-to-year increase in five years. And it does so by broadly reducing the growth of spending, including eliminating tens of millions of dollars in Thornton aid that was due to local school systems in the coming year.

Now, of course, the Sun thinks that this is a good thing

The 4 percent budget increase reflects the unpleasant reality of last year's tax increases - most of it was needed just to keep vital services such as education, transportation, health and public safety at existing levels, not to expand them.

Of course all of us on both sides of the aisle realize that current spending in those core issues need to be adjusted for the rate of inflation.

However, what about the Governor's discretionary spending? What cuts were made, other than 500 jobs that are being eliminated? Other than Sellinger formula money, what other spending levels were held in check as compared to the FY 2008 budget? If discretionary spending remains high, how can O'Malley say that we are in bad fiscal shape?

When you get down to it, the budget is four percent higher than it was last year. Which makes you wonder how anybody could objectively say that the massive historic tax hikes O'Malley and the Democrats just rammed down are thoughts were ever necessary at all.....

In which I offer praise to Andy Harris...

....for sponsoring SB8, the Maryland Taxpayer Protection Act, which would amend the State Constitution to require both houses of the General Assembly to adopt any tax hikes by a two-thirds vote.

My only criticism of the bill: go farther. Require that all tax hikes be approved by the voters at referendum.

The opposite of a surprise

The Sun does as expected; genuflecting on the awesomeness of Martin O'Malley;

Mr. O'Malley suffered the political misfortune of being the guy to set the books right. Maryland residents are belatedly paying the still-reasonable price for the government spending they wanted (and the state needed).

Setting the books right is only political misfortune if you decide that taxpayers need to spend more money to finance irresponsible, profligate spending. Let's face it; the price of living in Maryland is far from reasonable, and that price continues to get less reasonable as Governor O'Malley decides Marylanders are not entitled to the fruits of their labor. And I'm pretty sure that few Marylanders believe that O'Malley's energy plan or O'Malley's mortgage plan are affordable or desirable. And O'Malley's recent tuition freeze plan is trying to put off today what students will pay in tuition hikes tomorrow, as there is no offset in spending proposed to make the tuition freeze affordable.

Maryland under O'Malleynomics is not affordable, and will continue to get less affordable for middle class and working families as it gets put into practice. No matter how much lipstick the Sun puts on this pig...

O'Malleynomics

Governor O'Malley is going to release an energy plan as part of his legislative package, and once again it is going to be a case study in O'Malleynomics: spending lots of money to save less money;

Gov. Martin O'Malley's energy administration will release sweeping legislative and policy recommendations today that include new power-conservation laws, an estimated $100 million fund for environment-friendly initiatives and an emphasis on consumer responsibility for electricity consumption.

O'Malley, a Democrat who campaigned on the unfulfilled promise of undoing a 72 percent electricity rate increase for 1.2 million Baltimore Gas & Electric customers, appears likely to pursue an agenda in Annapolis that could further increase consumer costs in the short term. But administration officials say the proposals are needed to ensure long-term sustainability of Maryland's faltering power network and forestall the threat of blackouts as early as 2011.

Well, isn't that special? The Governor who railed against higher energy rates during his election campaign is going to propose legislation to....hike energy rates.

Of course, once again, the plan revolves around the idea not of generating new power sources, or making the business climate more appealing to energy companies, but tries to restrict the availability of power to consumers through forcible reductions in power usage and higher energy costs.

But just think about it for a second; passing tax credits to encourage the use of more efficient appliances. Carbon credit trading (even with the coming Federal Trade Commission investigation), with costs passed onto the consumer at the expense of more government revenues? New power-conservation laws? Does anybody for a second think that this is going to save power, reduce pollution, or do anything other than drive up the cost of living once again for Maryland's working and middle class families?

Of course, O'Malley's plan looks sensible compared to this lunacy:

Sean Dobson, the executive director of left-leaning Progressive Maryland, said lawmakers should give O'Malley's plan a chance to work.

"But if it turns out to be insufficient," he said, "the state should construct, own and operate its own ultra-efficient, clean-energy power plants and force utilities to pass along this electricity to consumers at a regulated, affordable rate."

I'm just glad that Dobson, in his role as head of Progressive Maryland, finally admits that Progressive Maryland is out to stick it to Maryland's working and middle class families.

The story in the Post has this gem:

Malcolm Woolf, the state's energy administrator, said that "we have ignored energy issues in the state" since the General Assembly agreed in 1999 to bring competition into the electricity market. He called the strategic plan an "opening salvo in a larger effort to take control of Maryland's energy's future."

He's right to a point; O'Malley did ignore the rate hikes he promised to stop and allowed the costs to be passed onto the consumer. But there are a couple of just odd statements in here (including the fact that competition was ever truly brought to the energy market). Can somebody explain to me what " larger effort to take control of Maryland's ene