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Chairman's Message, Editor's Choice, FreeState, Politics

Larry Hogan Delivers on No New Taxes Promise

Posted: April 20, 2015 at 7:24 am   /   by   /   comments (0)

markUncaphernewIn the final days that surround the end of the Maryland legislative session, the rhetoric gets heated. Reporters especially thrive on the conflict and drama of the run-up to the session’s end. To read some news accounts, one would think the end of the world might be at hand just before the clock strikes midnight on the session’s last day.

Few media outlets can match the fevered pitch of political columnist Barry Rascovar, who wrote on Wednesday “In his stubbornly conservative and highly politicized approach to governing Annapolis over the past week, Republican Larry Hogan Jr. took a step that may seal his fate as a one-term governor.” According to Rascovar, by alienating state workers, public school teachers, disability workers and Medicaid providers, Hogan is now “doomed” politically.

Excuse me Barry, but where do Maryland taxpayers figure in your analysis?

Laslo Boyd, writing for the badly misnamed media outlet Center Maryland, claimed that that because Governor Hogan was unwilling to compromise with the General Assembly, “it’s going to be a long four years, and definitely not eight years.”

Both writers dismiss the Hogan campaign’s focused opposition to tax increases. In Boyd’s words, it reflected a campaign “stunningly devoid of content.”

By failing to appreciate the basic reason that Maryland voters elected Larry Hogan, both are at a complete loss for a meaningful yardstick to measure his performance now that he is in office.
As Gov. Hogan observed, “We broke the streak after eight years of 40 consecutive tax hikes that took an additional $10 billion out of the pockets of struggling Maryland families and small businesses. There will be no tax increases in Maryland this year.”

Gov. Hogan has delivered on his campaign’s central promise by reaching his ‘no new taxes’ milestone. It was never easy, or a foregone conclusion. In preparing the FY 2016 budget, the Hogan Administration faced a budget gap of $1.25 billion over two years — $423 million in FY 2015 and $802 million in FY 2016.

Key sources of the budget gap were weaker than anticipated revenue growth in the current year, resulting in revenue revisions of $300 million and faster than anticipated growth in Medicaid enrollment requiring $200 million in additional funding. The Maryland economy has weakened as Federal government spending growth has tapered.

Hogan’s budget kept general funding spending growth to just 1.5%, well under the revenue growth rate of 3.5% in revenues. Governor Hogan’s budget reduced the projected baseline budget that had been expected to grow at 5%.

Even The Washington Post has taken notice, commenting that: “It’s clear that his arrival in Annapolis has re-framed the debate over spending and taxes. In less than three months – touting a mandate from the voters who powered his underdog victory – Hogan has forced the long-dominant Democrats to swallow a dose of budget frugality The focus has shifted from potentially raising taxes to trying to trim them.”

The Post’s point is worth underscoring. Historically Maryland Democrats have been the most likely to raise taxes during the first year of a governor’s term. It did not happen this year.
In fact, by the end of the legislative session, about 98% of the budget approved by the legislature is what Hogan submitted on January 22. At the margins, the Democratic alternative was to delay making $75 million in pension payments to enable more spending.

In 2014, Maryland Republicans promised that ending “One Party Rule” would make a difference in the state. Although Governor Hogan was sworn in less than 3 months ago, based on the results of his first legislative session, he can point to a solid achievements and the fulfillment of a core promise to hold the line on taxes.