General Assembly Journal – Special Session
Last Monday was a day of rallies, political meetings, and an evening Joint Session of the Maryland General Assembly
You already know why: a 10% income tax cut in 2000 and a $1.5 billion increase in spending in 2002 without a dedicated source of funds to pay for it, both at the end of the Parris Glendening administration.
The area known as Lawyers Mall was a dizzying parade of competing groups and messages, demonstrating the exercise of free speech and free assembly. There were groups opposed to slots, groups supporting slots, groups opposed to any tax increases, and a group supporting public education spending.
At one point, there were several hundred people rallying to oppose any tax increase, and 15 minutes after they were done, there wasn’t a shred of evidence that they’d even been there.
Baltimore radio host Ed Norris, formerly Baltimore City police commissioner, held court at Chick-n-Ruth’s Delly, my favorite place to eat in the Capitol. He was exhorting Marylanders to hold our own tea party, recommending the dumping of tea bags into the Bay in protest of the planned tax increases.
Wonder how much of his vitriol is due to his firing by then-Mayor Martin O’Malley, the architect of these tax increases? Regardless of his motive, he had a steady stream of listeners tromping through the restaurant all day.
Governor O’Malley’s tax package is a complicated assemblage of interconnected pieces, sort of a tax and slots card puzzle. Drop one piece, and the whole thing comes crashing down.
First up, the 800-lb. gorilla, otherwise known as the sales tax increase. The logic is predictable. Since Maryland has a lower sales tax than several nearby states, we should raise our tax rate. That’s the Keep-Up-With-The-Jones’ theory of tax policy, a patently dumb idea. Why not take the attitude that we’re better because we have a lower tax rate? Virginia will soon be running ads in the Maryland border counties encouraging us to shop over there!
A one cent (or 20%) increase in the state sales tax will generate over $650 million in revenue per year.
Next we have the income tax changes. A more progressive tax rate means that the wealthiest Maryland citizens will pay significantly more in income tax than they do now.
There’s a cigarette tax hike of $1 per pack. It will get dumped into the General Fund. There’s a bill to connect the gas tax to the construction cost index, something opponents refer to as a “perpetual” tax, since the legislature would no longer be required to approve increases, they’d just “happen” whenever the cost of construction increased (which just happens always).
Finally, a series of bills designed to target corporations. One taxes property transfers (I think I support this one), and one requiring corporations who do business in Maryland to file a tax return (and pay taxes) that they currently avoid (I know I support this one).
Since you can find this analysis anywhere, let’s focus instead on what you’ll only get here: some juicy insider gossip from the halls of power in Annapolis!
First, Curt Anderson (D, Baltimore City), an inner-city delegate representing southwest Baltimore, is leading a behind-the-scenes effort to derail the O’Malley tax package. That’s right, not a Republican, but a died-in-the-wool liberal Democrat.
Curt’s strategy is to build a coalition to do three things. First, kill the slots proposal – no referendum, no slots, nada.
Curt is building a coalition of the NAACP, black churches, southwest Baltimore civic groups, and already established slots opponents from across Maryland. Since this fight is several years old, there is a large but loosely defined opposition out there. He is seeking them out, and trying to build consensus. He’s joined by Maryland Comptroller Peter Franchot, the most outspoken opponent of legal gaming in the whole state.
Secondly: Kill the sales tax!
Curt believes (rightly) that the sales tax is a regressive form of taxation that disproportionately targets the working poor.
And thirdly, fully fund public education! In spite of past promises, one O’Malley proposal reduces the state’s commitment to education by over $100 million for a two year period. Delegate Anderson sees that as a betrayal and wants to address that.
If Delegate Anderson were successful in his three-pronged attack, he would gut the O’Malley tax plan. He was working the halls aggressively last week, and he seemed to be having some success. I spent sometime talking to him, as did others. He seems to be trying to put together an historic coalition. Time will tell just how big it is.
Remember that if the governor wants to send the slots bill to a November 2008 referendum vote, he will need 85 votes in the House. It’s not a majority, it’s a super-majority. Without the Republicans, and with so many concerned Democrats, I don’t think there are 85 votes out there.
Truthfully, it really doesn’t matter anyway. The O’Malley proposal on a slots referendum isn’t really part of the 2008 budget deficit solution, anyway. The money from his slots approach doesn’t come into the coffers until 2010 or 2011 anyway. It takes 18-24 months before these venues get built and start to operate, so this is really an academic argument at its core.
I’ve co-sponsored, and will support, a very different approach. The bill I’ve co-sponsored allows for an auction of licenses for slots gaming facilities, and generates $850 million up-front. That means that the money comes in right when we need it to balance the budget, not two years later after the bubble has passed.
One very interesting political twist is how tenuous the Democratic Caucus is over the whole question of revenue increases. We’ve talked about Curt Anderson, but didn’t mention his alternatives. He thinks a better way to raise more revenue is through the income tax code, with a much more progressive tax on the wealthy. Seems logical, as Democrats typically prefer to shift the tax burden from the middle class to the wealthy, right?
Not when the Montgomery County delegation, all of whom are Democrats, also happen to represent the wealthiest citizens of the state, and the people who will be asked to shoulder the bulk of an increase in the income tax rate. These delegates are very concerned about how their constituents will react having their income tax jacked up dramatically. Suddenly, the safest seats in the General Assembly might become extremely vulnerable!
I watched the chamber’s reaction to Governor O’Malley’s address to the Joint Session last Monday. First of all, he only spoke for about eight minutes. The biggest speech of his career so far, the shining moment of his gubernatorial term, and he could only muster eight minutes worth of commentary.
Now, I’m not sorry that he didn’t ramble on for an hour, but it just seemed like there should have been more, more detail, more strategy, more something.
He was not interrupted by applause one time during his remarks. Politicians are notorious for spontaneous applause, especially with the cameras running, and boy, the cameras were out in force. Maybe the reason for the lack of applause is that speech only lasted eight minutes, people didn’t have time to clap.
In reality, it was the subject that kept the chamber draped in eerie silence. What self-respecting politician is going to cheer and whistle during a call for more taxes? That would be like whistling at your own funeral.
The special session has now become a series of relatively dry (but very important) committee hearings. We were back as a full Assembly last Friday and will be again this week.
In the meantime, the governor will hope that the droning of budget analysts will lull the reporters into a stupor, and he’ll also be working to scuttle the efforts of Delegate Anderson and ease the fears of the Montgomery County legislators, who dread a liberal tax revolt back home.