Day: January 17, 2010

A parting on the left

This op-ed was intended for publication in Maryland newspapers, but after giving them a few days to use it themselves I’m placing it here.

Late note: I didn’t see this online, but the Cumberland Times-News indeed ran the article on January 17th.

As he closes in on three full years in office, it’s fair to say that Governor O’Malley has dealt with a full plate of problems – most particularly in balancing the budget.

While he had a huge budget reserve to work with when he assumed office, it took less than a year for him to spend it down to the bare minimum to maintain the state’s bond rating. Then he expended most of the rest of his political capital on shepherding through a series of tax increases and Medicaid expansion during a 2007 Special Session of the General Assembly. Since then, the fiscal record has shown little improvement and time and time again Governor O’Malley has needed to revisit the budget and make further cuts to keep it in balance.

Yet the Governor has been praised by those on the far left end of the political spectrum for expanding government as much as he can under the circumstances and signing legislation making Maryland a “greener” state. While the extra restrictions have done practically nothing to improve the quality of Chesapeake Bay, O’Malley’s allies on the environmental front have cheered these advances, emboldening him to further alienate the business community.

It’s this tumultuous three-year record which is sparking a fairly rare internecine primary fight against an incumbent Democrat. Certainly there are a few political cranks who regularly place their name on the ballot year after year with little hope for victory, but the challenge posed by fellow Democrat George Owings might be different and could cause Governor O’Malley some headaches on the campaign trail this year.

Owings has a very passable political resume as a former 16-year member of the General Assembly and as Secretary of Veterans Affairs under Governor Ehrlich, and could be best defined as a relic of a bygone era when the Democratic Party had a conservative wing not much different from today’s TEA Party attendees. His platform leans heavily on fiscal conservatism and cutting the size of government in order to address Maryland’s persistent budget problems.

The question for Governor O’Malley, then, is just how much attention he needs to pay to his challenger.

Given the governor’s tendency to blame all ills on his Republican predecessor, some in O’Malley’s camp might see Owings as a stalking horse entered into the race by allies of former Governor Ehrlich to set up a primary fight on the Democratic side. With Maryland’s comparatively late September 14 primary, the battle between O’Malley and Owings could take up a vast portion of the campaign season.

On the other hand, taking the challenge seriously could promote informative debate on just what functions are necessary for our state’s government to perform at peak efficiency before the final campaign between the GOP and Democrat primary survivors begins in mid-September. While the state of the economy is a issue most addressed on a national level, what a state does to attract jobs is something determined by its leadership in the governor’s office.

Under Governor O’Malley’s leadership, Maryland plummeted from 24th to 45th in The Tax Foundation’s measure of state business tax climates. And while the unemployment rate for the state as a whole remains below the national average of 10 percent, some of Maryland’s most rural counties have rates rivaling or exceeding double-digits.

Job creation and the impact of policies coming out of Annapolis are certainly legitimate issues worthy of debate. Let’s hope Governor O’Malley engages his primary opponent and doesn’t duck the issue because he feels entitled to his party’s nomination.

Clawing back for funds

It’s a new year and the economy can’t improve soon enough for cash-strapped cities, counties, and states across the country. With receipts from income taxes falling due to high unemployment, property tax dollars declining thanks to shrinking home values, and sales tax revenue flat despite increasing rates in many areas, state and local governments are searching hard for money to pay their bills.

When times were better, corporations shrewdly pitted cities and states against one another in a search for the best tax breaks. Local government was willing to give these large employers a break on some of their tax burden and help out with needed infrastructure in order to draw these companies and the employment they promised to provide to local communities. It was a win-win situation for both as companies had a willing partner in local government while politicians pointed with pride to the jobs they brought home to their districts.

Eventually the good times had to come to an end, however, and both employers and government struggle with trying to make ends meet. Yet those employers who took advantage of tax breaks to improve their bottom line have found difficulty meeting the numerical employee targets set by their agreements with local entities. Adding to their problem is having more and more local and state governing bodies use the “clawback” provision in their contracts with these corporations to cancel the tax breaks they gave away to attract the company in the first place.

Obviously a deal is a deal and local politicians rarely let the chance to add money to their coffers slip by, but perhaps in this case they are being a little hasty.

There are two categories of employers who have taken advantage of sweetheart deals with government to settle into a community. Some have never lived up to the employment promises made in their contracts for an assortment of reasons, but most were maintaining their employment numbers until economic conditions forced their hand, resulting in layoffs. Those companies are the ones who government should work with in order to find a suitable compromise measure instead of exacting a full penalty to a struggling company.

While economic conditions are difficult here, there are still hundreds of entities competing for large employers domestically, not to mention the siren song attraction of other nations who can woo manufacturers with the promises of cheaper labor costs and fewer regulations.

Certainly some companies who have never kept their word on employment numbers and feel pressured by local government to comply with their contracts to the letter may opt to bolt for greener pastures, but eventually that reputation will catch up to them and local politicians may be gunshy about believing the promises these scofflaws make. The ones who made the effort but decide to pull the plug because local authorities won’t work with them to find a sound middle ground for the time being would be the ones missed the most when they’re gone.

Unlike the popular perception created by Hollywood and the media, most employers attempt to be good citizens and improve the local cities, counties, and school districts in which they’re located. They give of their time through encouraging employee volunteerism and their money via charitable efforts as they strive to improve the places they call home. Shaking them down for a few dollars more may help the government’s bottom line, but that funding could come at some much larger expense if relationships become strained over a temporary setback.

Michael Swartz is a Liberty Features Syndicated writer.

Another in my continuing LFS series, this cleared back on January 6th.