Maryland revenue needs are on legislators’ minds, but not on special session agenda

Maryland’s 188 legislators are now meeting in special session to draw new lines for the state’s eight Congressional districts. Final census counts were released in the spring, and they must decide the new district boundaries in time for candidates to file in January for the primary elections in April.

This would have been a good opportunity to get a head start on fixing Maryland’s future revenue shortfalls.

Once the legislature is in special session, it may consider bills related to anything. Earlier in the year, there was speculation that the special session would consider some new revenue measures. Now, however, that appears unlikely.

That’s too bad, because even though Maryland’s state budget is balanced through June, 2012 -- and there has been a bit of good news about revenue collections rising --in fact the cushion is thin, and new revenue shortages are looming in the next fiscal year.

Projected revenues for 2013 will be at least $500 million short – and maybe a lot more than that -- of what’s needed to fund the existing level of state services.

And keep in mind, the existing level of services already is much less than it used to be. Cuts of $5 billion over the past 4 years are jeopardizing public education, local transportation, healthcare funding, child care, and much more. They hurt the state’s ability to create jobs and build a strong economy.

That’s the reality that legislators will face in January when they come back to Annapolis for their regular session.

The Governor has signaled that he will propose an end to the cuts-only strategy and offer a balanced approach that includes revenue. A recent Gonzales poll found that 64% of likely Maryland voters support some combination of revenues and cuts – far more than favor a cuts-only approach.

There are sensible options for raising revenues, One is to reinstate the three-quarters of one percent tax on income over one million dollars that expired in 2010. Another is to plug loopholes in the corporation income tax that allow multistate companies to hide their profits from Maryland taxes.

The Governor and legislature should at least think about these measures while they are in Annapolis for the special session. Even better, they can talk to each other and their constituents about the serious damage that will come with further service cuts. They can identify the best options for adding revenue as part of a balanced approach. Then, when they come back in January, they should pass the bills to enact them.

My Visit to Occupy Baltimore: Listening to the Occupiers and Thinking about Fair Taxes

The million-dollar tax bracket is on the table – it should go back onto the books

People in Maryland and across the nation are angry and frustrated with the continued lack of jobs in the US economy. The “Occupy WallStreet” protest will soon be entering its fourth week.

I visited Occupy Baltimore on Friday, its third day in the city.  The folks there say they are prepared to continue their protest for the long haul. They are upset that ordinary people can’t find jobs, while big banks and oil companies are earning record profits. They are upset that these big businesses and the richest 1% of individuals get tax breaks while ordinary Marylanders suffer from cuts in vital services. 

They also point to many other problems: racial double standards in the criminal justice system, the lack of affordable housing, members of Congress and other public officials who are out of touch with struggling Marylanders. There is a gusher of dissatisfaction.

I asked some of the protesters, “What do you want to have happen as a result of this demonstration?” The answers were “I want change.” And “I want the big banks to give us our money back.” They have a sense that neither prosperity nor sacrifice are being shared equitably, that corporate executives and investors are enjoying a recovery while the great majority of ordinary Marylanders remain in an extended recession.

They are right.

The Capital News Service recently ran a story by JeffBenzing about millionaires being “stung” by proposals to increase taxes on high-income earners.Benzing quotes Washington Wizards and Capitals owner Ted Leonsis as saying,  “business leaders and anyone who has achieved success in terms of rank or fiscal success is being cast as a bad guy in a black hat.” I do think that the Occupy Baltimore protesters I spoke to are reacting in that way.

But the real case for requiring the top earners and the big corporations to help balance the state budget and reduce the federal deficit is not about punishing anyone. It’s about everyone pulling their weight. As Benzing quotes me: “Those who are doing the best ought to be paying the larger part.” Millionaires should pay their fair share for the public structures and services that help make their success possible.

A recent report from our friends at“United for a Fair Economy” helps to illustrate the impact.  Marylanders with incomes over $107,000 pay an average of 7.3% of what they make a year in state and local income, sales and property tax. People with incomes under $22,000 -- about the poverty level for a family of four -- pay  9.9% of what they make. What if the two groups traded tax rates? And what if the second-richest (with a 9% average state an local tax rate) and the second-poorest fifth (10% of income for state and local taxes) also traded rates? The result would be that state, county and city governments in Maryland would have an additional $5.3 billion a year for education, healthcare, roads and transit, workforce training, and other needs – all of which would help create jobs and build a strong economy.

To  move towards this goal, Maryland should reinstate the additional ¾% tax on income over $1 million that was in effect for three years and expired in 2010. And it should plug loopholes in corporation income taxes. It should also help low-wage workers by expanding the state earned income tax credit and giving income tax refunds to offset the disproportionate sales taxes paid by families with poverty and near-poverty wage levels.

The energy and enthusiasm at Occupy Baltimore is as tangible as the anger and frustration. Let’s channel it into positive policy change that will make Maryland a more prosperous state.