Recommended Cuts Threaten Maryland’s Prosperity; Alternatives Needed

As a flurry of recommended cuts by state fiscal analysts come down like quickly falling snow it’s becoming ever more important for lawmakers to avoid the temptation of tax cuts and preserve essential services when they develop the state’s spending plan for the coming fiscal year.

In particular, two proposals being talked about – cutting the corporate income tax and reducing the number of wealthy heirs that would pay estate tax – should be taken off the table. Supporters claim these measures would help the state’s economy. Instead they shoot the state’s prospects in the foot by taking away millions of dollars needed for schools, transportation and other investments that create jobs and promote prosperity. Those two tax cuts alone would cost the state over $100 million next year and more than $400 million after five years.

These proposals are especially troubling in light of reports warning that upcoming official revenue estimates might be lower than expected.

In response to those reports and their own analysis, the Department of Legislative Services now is suggesting more than $325 million in cuts from the budget Governor O’Malley proposed for the fiscal year that starts July 1. That’s an increase of about $225 million since early last week. The suggested cuts target both public services and benefits for state police, health care workers, and other public employees.

The DLS recommendations include reductions in Medicaid provider rate increases, which could threaten access to medical care for low-income Marylanders. That would be a big step backward, which highlights the need for the state to take a balanced approach to the budget – one that includes revenue instead of a cuts-only approach that threatens economic recovery.

State lawmakers should consider the full range of available revenue options.  One sensible way would be to end the ability of large, multi-state corporations to shift income made in Maryland to other states as a way to avoid taxes. Called combined reporting, this reform has been adopted in 23 states and the District of Columbia and makes it so big businesses can’t use subsidiaries to shift profits, harming local businesses and the state. Another option is to increase the cigarette tax.

So where exactly are the recommended cuts? DLS’s detailed Fiscal Year (FY) 2015 budget briefings  include $113 million in reductions in personnel and Administration expenses in state agencies and $106.7 million in cuts to Medicaid and other health spending.

Proposed cuts in public employee pay come on top of Governor O’Malley’s proposed permanent $100 million cut in funding for their pension systems, partially stepping back from a 2011 promise of additional funding for state employee pensions. 

Source: Department of Legislative Services; MDCEP staff broke out cuts by function. (Click to Enlarge)

As more cuts are recommended and new revenue projects are made by the state we will continue to blog about the impact on prosperity in Maryland and what the state should do to stay on track. Stay tuned. 

Proposal Would Improve Use of Local Law Enforcement Resources

The federal government’s increasing reliance on state and local enforcement of immigration policies is costing Maryland money that could be better spent in other ways.

As a new report from MDCEP explains, this is especially a problem with what are known as immigration detainers -- the practice of state and local police holding people for longer than otherwise required. Today, the Maryland Senate’s Judicial Proceedings Committee is holding a hearing on legislation (SB 554/HB 29) to limit the costly enforcement of immigration detainers in Maryland.

Immigration detainers are triggered when someone is arrested for what often is a traffic offense or other misdemeanor. Fingerprints obtained by local police are sent to a database maintained by the federal government. If an administrator at the Department of Homeland Security suspects the individual may be in violation of federal immigration law, they can issue a request that a local agency hold the individual for up to 48 hours (plus weekends and holidays) past the time they would otherwise be eligible for release, until Immigration and Customs Enforcement comes to pick him or her up. The result may be the deportation of someone arrested for something as little as a traffic violation, potentially breaking apart a family.

Compliance with immigration detainers is voluntary; local law enforcement cannot be compelled to honor them. Still, most local jurisdictions in Maryland automatically enforce every immigration detainer request they receive. Only Talbot County puts a limit on the practice, refusing to enforce detention requests against violators of traffic laws.

The cost of this detention is borne by state and local jurisdiction, and it adds up. Our report estimates that immigration detainers cost Maryland at least $1 million between 2010 and 2013.

The downside goes beyond the dollar cost to state and local government. There are social and economic costs too.  Those being detained miss work, lose pay, and are deprived of seeing their families.  A Colorado study found that state lost millions of dollars in tax revenue and economic activity by granting federal immigration detainer requests.

Blanket compliance with immigration detainers is also counterproductive for law enforcement because it diminishes the ability of police to work effectively in their community. For example, Latinos are less willing to cooperate with law enforcement in criminal investigations due to fears of racial profiling or jeopardizing the immigration status of themselves or their family, a University of Illinois study found.  

Most people held under immigration detainers are charged with low-level crimes. The ACLU of Maryland found that 77 percent of all immigration detainers are issued for individuals accused of traffic offenses and other misdemeanors; only 15 percent target suspected felons. Worse, more than 40 percent of those deported from Maryland had no prior criminal record, compared with 20 percent nationwide.

In light of the need to invest in such improvements to law enforcement, treatment, and public services more generally, Maryland cannot afford to spend money needlessly. Local law enforcement officials in Maryland should reevaluate their role in enforcing federal policies they are not required to enforce. State policymakers can follow the lead of lawmakers in Connecticut and California by enacting the Law Enforcement Trust Act, establishing narrower parameters for how local law enforcement responds to federal immigration detainers.

Finally, our report documents the difficulty of determining the true cost of immigration detainers because so little data is kept or made available on their enforcement. The Trust Act would also require local facilities to collect and release data on their enforcement of immigration, which will better inform decisions regarding the use of state and local resources in federal immigration enforcement and better account for the costs associated with it.

These reforms will help to provide a better understanding of the extent to which immigration detainers are enforced and their true cost, as well as reduce this practice. Maryland cannot afford to bear the significant social and economic costs of federal immigration enforcement at the expense of valuable members of its communities.