When I first envisioned doing this post, my intention was to bounce it off a speech Martin O’Malley delivered a couple weeks back at the MACO convention in Ocean City, sort of a parody where I’d state the speech text and then tell the reader what he “really” meant.
However, after thinking about it in recent days I decided that tactic wasn’t going to work well. Instead of writing 2500 words myself about a 2500 word speech, honestly I can sum up the speech in one sentence: Martin O’Malley will raise taxes without making an appreciable dent in state spending, and the counties will feel the pinch. I saved 2,480 words and I can hear a collective “hurray!” from the readership now.
Instead I decided to tackle the subject in a different manner. Today word came out (in the Sun, among other outlets) that Maryland is now the wealthiest state per capita in the country with a median income of $65,144. While it may not appear so because in so many ways I doubt people think of me as an “average” Marylander, truth is that my income’s not too far off that figure, it’s within 10%.
So I got to thinking about how the tax increases that are likely to be passed this fall and become official in 2008 would affect me. The two biggies being considered are a 1 cent on the dollar increase in the sales tax and a 12 cent per gallon increase in the gasoline tax.
Considering just a direct impact on me, I guessed that on average I spend about $8 a week on sales tax – most weeks it just hits me for a buck or two at the grocery store, but the occasional big-ticket item bumps the average up. So that cost to me would increase from $400 a year to $480 a year – obviously a 20% increase to match the jump.
With the gas tax, I drive about 12,500 miles a year and my car gets around 25 MPG. That works out to 500 gallons a year, and a 12 cent gas tax increase takes $60 a year out of my pocket. On that basis my share of, as Governor O’Malley concluded, “relinquish(ing) the comforts of today in the name of a better tomorrow” works out to $140 annually. It’s only about 0.2% of my roughly average Maryland income. So what’s the big deal?
Well, it’s $140 of disposable income I can’t spend someplace else. My bills won’t go down in the interim so what gets cut out can be the fun extras in life. Maybe I don’t take that overnight trip to see my ballteam play, or perhaps I skip on purchasing that nice chair for my deck. Or put another way, that’s two months of my average electric bill or half a month’s groceries.
However, the sales tax increase as some have proposed has another indirect effect on me. Because of the push to expand the scope of the sales tax to services, it will affect the fee my employer charges. And with the competition in the architectural market, it’s doubtful at best that we can charge 6% more for our services so by necessity that cuts at the company bottom line. It’s less money to hire new employees or buy more efficient computers and that eventually diminishes the quality of service we can provide. And it will be yet another business-unfriendly move made by the O’Malley administration and the Democrats in the General Assembly.
For their part, Maryland Republicans take a step in the right direction. From the August issue of Free State Republican:
Senate Republicans have also recommended a plan to close the budget gap by limiting the growth of state government spending by 1.5%.
“By restraining spending we can close the deficit without the massive tax increases proposed by the Democratic leadership,” Senate Minority Leader David Brinkley said in a statement. “These tax increases will cripple Maryland’s working families and make Maryland less competitive in attracting jobs.”
While Brinkley is correct and the GOP’s heart is in the right place, I question whether slowing the growth of spending is enough. But there’s a reason I try to convince the younger generation as I do, because most of us in the Boomers and Generation X will look at “only” increasing government spending by 1.5% annually as draconian cuts. Like Pavlov’s dog, we’ve been trained to expect more and more services to be provided by government to a point where it’s hard to imagine our daily lives being run without it.
I think the question needs to be not how slowly we increase spending, but where we can get the government out of our lives completely by ending programs or turning functions over to the private sector. To me a prime example is education.
According to Maryland: A Guide to the Issues, “Currently Maryland spends one-third of its general fund on aid to education. Education is the single largest expense category and has grown 59 percent since FY 2002…Left unchecked, aid to local education will consume 36 percent of the general fund budget by FY 2011, crowding out other spending priorities.”
Instead of striving to cut the growth rate to 1.5% a year (difficult to do under Thornton) why not look at allowing the free market into the education program? By adding choice to the equation it provides parents an opportunity to reject failing schools and eventually could even help the best teachers make a lot more than even their generous union contracts allow. Why not a scenario where the state gives parents 3 years’ advance notice that the public school system as we know it will cease to exist – but in return state money follows the child and parents can spend it where they feel best? Even if the stipend is automatically indexed to inflation, the cost to the state would almost certainly decrease because layer upon layer of bureaucracy disappears.
But I can’t pin all the blame on Governor O’Malley nor at the moment take to task Republicans who “only” want to increase spending 1.5 percent. A large part of Maryland’s problem comes from the whip being applied to its hindquarters by DC bureaucrats and regulations that mandate a lot of our state’s spending. Thus, the reason why we need a sea change in the general attitude – one that only will be effective with long-term thinking and convincing today’s and tomorrow’s youth of the benefits to them of limiting government’s influence on their lives. In reality, Governor O’Malley is just being like most of the Boomer generation that he’s at the tail end of – a “me first” generation that learned from their parents to expect more out of life and that government would gladly give it to them in return for ceding a little bit of control over their own lives.
It’s my hope that the next generation decides it’s time to take things back. Sure, the increased taxes may cost you and I a small percentage of our incomes next year but the increase in government influence will cost our children and theirs a lot of their freedom to enjoy life.