Robbing Peter (and John, David, Mary, etc.) to pay Paul

One criticism I’ve had about Maryland’s budget system is its lack of flexibility. There are a lot of money pots out there besides the General Fund, and Martin O’Malley seems to want to take money out of every one of them to balance his FY2011 budget. This from Americans for Prosperity:

As you know, the Senate Budget & Taxation Committee will be holding a public hearing this Wednesday on SB141. This bill, the Budget Reconciliation and Financing Act, will transfer nearly $1 BILLION from the state’s 382 special funds to cover Gov. O’Malley’s budget deficit.

(snip)

One of the funds Gov. O’Malley is proposing to raid is the Transportation Trust Fund (TTF). Started in 1971, the TTF is the account used to pay for road, bridge and infrastructure repairs. It is primarily funded by the gas tax – each time you fill up at the pump, you are contributing to road repair…or so you thought. This year, O’Malley has decided to take $125 million of those taxes and use it to paper over his $2 billion deficit.

Stealing from the Transportation Trust Fund becomes even more problematic next year, because the TTF is already under-funded. When the fund runs dry you can bet that the liberal politicians will want to raise taxes. Senate President Mike Miller has been pushing the idea of a gas tax hike for the last few years.

Another fund that O’Malley has decided to attack is the Injured Workers Insurance Fund (IWIF). IWIF is a low-premium insurer for many businesses who provide workers compensation to employees. It is financed by the premiums each policy holder pays on a quarterly basis.

Not only is the legality of the state confiscating $26 million from a private insurance company in question, but this move will hurt small businesses. Again, when the fund is drained, the premium rates will rise to replace the stolen revenue.

Small businesses are the engine of our state economy – they employ nearly two-thirds of the workforce in Maryland. If we expect an economic recovery with job growth, the government cannot continue to put undue burdens on businesses. The last thing small businesses need right now is to be paying higher insurance premiums or gas taxes.

382 special funds in the Maryland budget? WTF? Anyway, the Maryland Senate Republican Caucus also weighed in:

Entering the 2010 legislative session, there were few remaining reserve funds left to tap. They have all been depleted. O’Malley has exhausted all available reserves except for the Rainy Day Fund. Tapping the Rainy Day could jeopardize the coveted Triple A bond rating which would cause great embarrassment to the administration.

So O’Malley turned to the Injured Workers Insurance Fund to tap a reserve of $20 million. Problem is – the IWIF reserve is not state money. It is not taxpayer dollars. Instead it is overpayments of insurance premiums from small businesses throughout the state.

Then is it legal? A 1968 opinion of the Attorney General’s Office states that reserve funds of the State Accident Fund (IWIF’s predecessor) are not state funds accessible for general purposes. Established as a nonprofit insurance company, IWIF is a quasi-public agency and state use of insurance overpayments as a fund swap would be unconstitutional.

To cover their tracks, the O’Malley Administration has now introduced bills (Senate Bill 507 and House Bill 1008) that would give the Governor authority to transfer the $20 million this year just as long as it’s never done again. Go figure!

So, not only do we have the BRFA bill but now another bill in order to fix things for this year. Sheesh.

The larger question is what we’ll need to do next year to fill in all of these pots. With the federal portion of the state budget now eclipsing 60 percent, one would think that Barack Obama may bail out his cohort if he’s reelected this November. But with these funds come strings and that lack of flexibility will probably preclude O’Malley being able to make up the shortfalls with federal money next year.

Three years ago, Governor O’Malley called a Special Session to address this issue and its result was a number of tax increases which were supposed to correct the state’s structural deficit. However, the increase in the sales tax, cigarette tax, and a (since-repealed) “tech tax” on computer services were counterbalanced by a huge increase on spending which attempted to bring health insurance to thousands more Marylanders.

To the surprise of everyone – except those with a little bit of economic common sense – these new levies didn’t bring in as much money as the so-called experts predicted. In all that’s not so bad, but other previous taxes like property and real estate transfer taxes also declined. Making matters worse (but certainly not unexpected) is the outflow of capital due to the “millionaire’s tax” – again, from the Senate GOP Caucus:

According to an Associated Press article posted at Examiner.com, Montgomery County has experienced a 27% decline in tax returns from high income earners. This decline has contributed to a loss of $4.6 billion in taxable income: “County Executive Isiah Leggett says some wealthy residents who own homes in other states are establishing residency elsewhere. Officials believe the state’s millionaire tax is a factor.”

You think?

Unlike the perception progressives attempt to create about TEA Partiers as people who want to get government services without paying for them (a description more apt for Democrat voters,) most don’t mind paying a fair share in taxes. But what we want in return are efficient services which perform necessary functions, and too often we find that government at all levels fails to deliver on one or both sides of the equation.

If Martin O’Malley truly decided to live within his means, he would gain the intestinal fortitude to make cuts such as the insurance program he started. Obviously it’s a decision which affects a large number of people, but so would increasing taxes and fees. Raising the gas tax, for example, would disproportionately affect poor and middle-class Free Staters and rural residents like those on the Eastern Shore would pay more of a toll than city residents along the I-95 corridor.

One issue sure to come up in this year’s campaign will be fiscal accountability, and while Bob Ehrlich wasn’t the poster child for frugality the state was in much better financial shape when he left office than the potential mess he inherits should he be re-elected for a second, non-consecutive term.

Perhaps a solution would be to bring in some solid fiscal conservatives for the General Assembly in with Ehrlich, hopefully to keep his free-spending tendencies in check. Mark my words, if Martin O’Malley is reelected 2011 will be a rerun of 2007 – a session devoted to raising taxes and killing off whatever recovery the state is scratching out by then.

Friday night videos episode 24

After a week off to recharge the batteries, FNV is back with a good mix of politics and music once again.

Health care continues to be a sore subject in Congress. But while Democrats used the sob story to make their point yesterday, our side adds some facts to the emotion. This comes from the fine folks of Americans for Prosperity:

As I often ask, which Americans are against prosperity?

The health-care summit yesterday was a dud; then again that was the expectation from Republicans like Rep. Michele Bachmann. From the Washington News-Observer:

And the National Republican Congressional Committee added a dash of humor to the “Blair House Project”:

Yet there is other news on the conservative front as well. Last week over 70 conservative leaders got together to sign the Mount Vernon Statement. Here’s what I thought of it
but the players had their say as well. Again from WNO:

Nor have they forgotten foreign policy. Our best UN Ambassador in recent times spoke to WNO about his thoughts on the Obama relationship with the world.

If you follow me on Facebook you know what I’m usually doing Sunday nights at 9:00 – listening to Local Produce on the radio. This remake of “The Legend of Wooley Swamp” (originally done by the Charlie Daniels Band) is done by one of the co-hosts, Bob Daigle, and a couple of his friends. He definitely has an interesting YouTube channel!

The second of two music videos tonight is fresh stuff I recorded last Saturday at the Brumbley Haiti benefit. The sound quality is markedly better, and not just because Not My Own played well. Maybe I’m finally getting this video recording stuff!

That’s a wrap for another version of Friday night videos – hope you enjoyed it!

AFP has ‘action packed’ meeting

Tonight, Julie Brewington was speaking to “my favorite people in the world.” I presume that comes after her family, but that was how she opened up the February meeting of Wicomico County’s Americans for Propsperity chapter.

Now that the group had a regular meeting date and location, over 60 attendees had the opportunity to hear a number of speakers in a briskly moving program. One thing the group wasn’t going to do, though, was send a bus to tomorrow’s Blair House meeting even though the national AFP was protesting at the site.

Yet, noted Julie, “if it weren’t for us, health care would’ve passed in June.” Our focus, though, was going to shift a bit to more local issues since “the only votes that matter are at the city, county, and state level” in 2010. “We have power in local issues,” added Julie later.

The two most immediate concerns were finding volunteers to attend city and county council meetings and helping to organize the Salisbury TEA Party April 15 – we need people with “organizational skills.”

The meeting was then turned over to a number of speakers, first up being Ed Urban representing the Wicomico Youth and Civic Center. He started right out by saying he approached the county years ago with the suggestion that these operations be run like a business and they put him in charge of doing so.

Deftly keeping the conversation away from the recent purchase of five acres to expand the Civic Center’s parking lot (better known to my readers as Pollitt’s Folly) Urban instead spoke about the economic impact the WYCC creates along with other aspects of the county’s tourism, parks, and recreation programs.

The tourism department combined with the Civic Center creates $20 million in “rollover” economic impact. The county’s tourism bureau is supported by a room tax of 6 percent, with 2/3 going to pay for tourism programs and 1/6 to help the WYCC. Parks and recreation essentially support themselves through user fees, with the only county fiscal input being that of paying for the administrators.

But Wicomico County still has to subsidize the Civic Center to the tune of around $227,000 a year (averaged over the last three years.) The Civic Center “can be profitable,” Urban stated, but in order to be so the prohibition on alcohol sales there would have to be lifted. He noted that the site was originally slated to be a ballpark for local children, but that was built elsewhere – yet the no-alcohol clause remained.

Urban concluded his remarks by finally addressing the parking issue, saying that the County Council saw the need for additional parking; the only question was cost. There are only 900 spaces on the Civic Center lot, and any event where more than 2,250 attend would require more space. The developers who owned the land the county bought were threatening to charge $10,000 per month rent. (I’d have called their bluff, figuring that $1.5 million is 150 months’ rent.)

I asked Urban about the lifespan of the arena, given that many similar facilities only last 40 to 50 years. Urban thought that with proper maintenance the design was such that it could last several more decades – he “doesn’t see a 40 to 50 year lifespan.”

Speaking for the opposition, County Councilman Joe Holloway then briefly recounted his reasoning for voting against the purchase. It was “not a wise choice” for a number of reasons; in particular he again criticized the county’s method of land acquisition. Joe also noted the real cost to taxpayers would be $2.6 million when improvements are figured in.

Holloway also warned us that “we’re in trouble” financially because of what’s brewing in Annapolis.

John Palmer, president of the local group VOICE, spoke next. After vowing that “we will be going down to the Civic Center” and analyzing their finances, he got to the root of his presentation. In polling the audience and soliciting what we thought key problems were, the consensus was that Wicomico County didn’t spend money wisely – “unnecessary personnel” and an out-of-control Board of Education seemed to get much of the blame.

We could vote the people in charge out, but that would involve getting good people elected and those are tough to find. Instead, the approach VOICE is taking is that of petitioning for redress – “if you take control of the checkbook I guarantee things will straighten out in the county,” Palmer asserted.

The group has two ideas it would like to bring to voters: one is a prohibition on land acquisition and capital projects without the approval of county voters, and the other is reducing the number on County Council from seven to five by eliminating the two at-large posts.

Personally I don’t care for either idea.

In considering the capital improvements proposal, it seems to me that we have a representative government for a reason. While the idea of a referendum for capital improvements seems excellent in the wake of Pollitt’s Folly, the truth is that this would cripple county government’s ability to act in a timely manner. In addition, there would be the expense of frequent elections to consider as the county buys land and improves property on a regular basis.

As far as the changeover from seven County Council members to five, I don’t see where we save all that much in that the duplicity of services we already have would still exist. Obviously there’s a small savings in salaries, but I prefer the idea of having three Council members at my beck and call (my district plus two at-large) rather than one. The chances of having someone who agrees with my point politically are exponentially better this way, although I admit that since Joe Holloway happens to be my district councilman I have a pretty good advocate of my point of view already.

Palmer’s second-in-command, Johnnie Miller, spoke next – but on a completely different subject. He updated us on legislation he and Palmer have authored called the “Green Watt Program.” Based on a program in Tuscon, Arizona, this voluntary program would create a fund to promote energy efficiency. Miller noted Delaware pays a much larger share of costs for renewable energy projects; up to $31,500 for residential and $250,000 for commercial.

But one commentor made the point about government subsidy, and I think it’s a valid point. While it’s Miller’s business to promote solar panels and the like, it’s obvious that people would likely go another route for energy usage if this subsidy in Delaware (where Miller does most of his business) didn’t exist. Obviously Johnnie means well with his proposal, but if this were done by General Electric or some other large corporation we’d call it rentseeking.

Nick Loffer, representing the state AFP, began his remarks by quoting Governor O’Malley from late 2007 – “we passed a fair, long term solution to our budget problems.” Uuuuhhh, no.

His time at the podium was spent alerting us to the fact that the hearing on the Budget Reconciliation and Financing Act (BRFA for short – SB141 to the General Assembly) occurs Wednesday, March 3rd at noon and there would be a bus for those interested in attending the hearing or even testifying. (The bus would leave Salisbury around 9:30 a.m.)

“This is our chance to stop the budget,” opined Nick, otherwise, “a vote for this budget is a vote to raise taxes in 2011.”

Salisbury News blogger Joe Albero was next, and although I found his remarks may have been a bit self-serving he made some valid points. (Perhaps he underestimates the impact other blogs have on the conversation.)

One thing I found interesting – albeit anecdotal, of course – was his claim that Rick Pollitt said, “Joe, that will never happen” when asked if taxpayers would be paying for additional Civic Center parking at the Old Mall site. At the time, a land swap was discussed.

Having gone to Annapolis to watch testimony on sex offender legislation, Albero observed, “things are no different in Annapolis” than they are here. “I could do this (be a Delegate or local legislator),” Joe continued, but “I’m only one voice (out of many).” As commenters on his site, “we have an incredible impact on local government.”

“Things are turning around for the better,” said Joe, but we need to stay united. He relayed the fact that General Assembly Republicans had put up a budget alternative saving almost $830 million, including over $2 million just by putting a salary cap on state officials so none made more than the governor’s $150,000 salary.

The last of the slated speakers was Salisbury City Councilman Debbie Campbell, who told us “really important things were going on” in Salisbury. Mainly she decried a lack of accountability on the part of the city, and spoke of two egregious examples.

The city of Salisbury has accepted a dump truck and is using it – unfortunately they haven’t officially allocated the money to pay for it yet. And if that’s not bad enough, the Council president contracted for and signed two change orders for a $1.8 million housing project called “The Bricks” by claiming City Council approval when she had none, charged Campbell.

In all, said Debbie, the Council was “running roughshod” over taxpaying citizens, and she begged those attending, “please show up and support us.” Joe Collins later intoned that, “we’re lucky to have Debbie Campbell” on Salisbury’s City Council and as an AFP supporter.

Returning to the podium, Julie Brewington talked briefly about the issue of infiltration – the TEA Party movement was so successful that the opposition isn’t ignoring it anymore but trying to destroy it from within. She mentioned the ersatz Tea Party in Nevada, which gave me the opportunity to enlighten the group on the particulars of the situation.

Another observer, S.J. Disharoon, spoke about the lack of dialogue at Salisbury City Council meetings and thought we as a group should press for a rules change to allow more opportunity for the public to interact in a timely manner, not just after all is said and done.

G.A. Harrison related his recent experience with the GOP Central Committee regarding something he found offensive and told those gathered a Republican “has to earn your vote…Conservatives need to take back the GOP.” I agree!

Finally, Bob Harris brought up the two ways a referendum can get on the ballot – either by petition or by vote of the County Council. He encouraged the County Council (since Joe Holloway was still present) to put two items on the ballot – one for disclosure of members of a LLC which does business with the county and the other to start the process of getting an elected school board, to which Joe Holloway replied he “fully supports” an elected board of education too.

These meetings generally turn out to be rather long and a lot is said. But they’re really worth the time to cover because I feel that most of my readership has been crying for leadership on these and other issues and the AFP is attempting to provide it on a nonpartisan basis.