Newsletter subscribe

Chairman's Message

Spend and Spend, and Tax and Tax, and Elect and Elect

Posted: January 7, 2012 at 8:31 pm   /   by   /   comments (0)

The day after Republicans gained 81 seats in the House of Representatives and 6 seats in the US Senate in 1938 in a bruising rebuke of the New Deal, the New York Times quoted Franklin Roosevelt’s longtime principal political adviser Harry Hopkins’ response: “We will spend and spend, and tax and tax, and elect and elect.'”

Keep those words in mind when following the preview to the upcoming Maryland General Assembly session. The pages of the playbook may be yellowed and torn, but in Maryland, at least, nothing has changed.

Pre-session news accounts of Governor O’Malley plans report that “action will be necessary to address the state’s $1 billion structural deficit.” At the same time O’Malley is planning to boost transportation funding by $500 million with a 15 cent a gallon tax increase over three years.

The hand wringing about the Maryland budget’s “tough times” ignores that in the current fiscal year Maryland’s general-fund spending increased by over 11%. This was the seventh-highest increase nationwide. According to a study by the National Governors Association and National Association of State Budget Officers the nation average increase was just 2.9%. Had Maryland held spending growth just to the national average; our spending would have been a billion dollars less. That number matches Maryland’s so-called “structural deficit.”

Over the years Democrats have amended the “spend and spend, and tax and tax, and elect and elect” formula to include bait and switch. This involves raising taxes ostensible to pay for one purpose, but then spending the money for something else. Governor O’Malley resorts to this approach because expanded Medicaid benefits have been one of the principal drivers of our higher state spending. Rather than raise taxes for Medicaid, special purpose funds have been raided instead. With the Transportation Tax Fund depleted, the Governor and the Democrats offer to restore the missing money with higher gas taxes and tolls. They then cross their collective hearts and earnestly promise that the new revenues will never be diverted again from their intended purpose.

Consider what happened just last year with the alcohol tax increase. Throughout the legislative session the proposed sales tax increase to 9% was presented as a source of dedicated revenues for the disabled. Advocates lobbied hard for added funding for many of Maryland’s most vulnerable citizens; developmentally disabled persons are children and adults with Down syndrome, cerebral palsy and autism.

Yet when the alcohol tax passed the General Assembly, most of the money went to new school construction. The legislature did not even wait a decent interval to reprogram the funding because of budget “special circumstances.”

How did the state legislators come up with the formula for their sleight of hand maneuver to reallocate the tax revenues intended for the disabled? The allocation was divvied up based on politics, not on need. As Marc Kilmer of the Maryland Public Policy Institute has pointed out, in the first round of school construction projects approved by the Board of Public Works, every project was located in a district represented by a legislator who supported the tax hike. Legislators from Montgomery and Prince George’s counties, and Baltimore City, overwhelmingly supported this tax hike. On the Eastern Shore, only Democratic Del. Rudy Cane voted for it.

Baltimore City, Prince George’s County and Montgomery County received $9 million each. The entire Eastern Shore will received $1.25 million. In per-pupil terms, the Eastern Shore gets $27.07 for every student while Baltimore City gets $114.48.

A full measure of the cynicism associated with the “higher alcohol tax for the disabled ” bait and switch strategy, though, was revealed later last year when auditors uncovered funds already available these programs had gone unspent because of state government mismanagement.

“We had no idea that this mismanagement was taking place,” said Nancy Pineles, developmental disabilities managing attorney for the Maryland Disability Law Center told the Maryland Reporter. “What’s very hard to swallow is that at the same time that the services were underfunded, we were advocating our support for the alcohol tax.”

Maryland Democrats are now pushing for a higher gas tax. They will promise that they really, really will never spend the money for anything other than transportation. When you hear their words, you will hear an echo from Harry Hopkins from 1938:”We will spend and spend, and tax and tax, and elect and elect.”

Mark Uncapher
Montgomery County Republican Chairman