Race to the sales tax bottom

In 2007, a special session of Maryland’s General Assembly enacted a slew of tax increases designed to deal with the state’s structural deficit. Among them was a 20% increase in the sales tax rate, which increased from 5 cents on the dollar to 6 cents.

For years, merchants along the Eastern Shore have complained about the disadvantage they labor under because Delaware businesses charge no sales tax. It’s no accident that the seaside resort of Rehoboth Beach has also become a shopping hub. Or take a drive north from Salisbury along U.S. 13 and you’ll notice a number of stores selling big-ticket items located just across the border. While Maryland residents who buy items in Delaware are supposed to remit a tax to Maryland, the law is rarely enforced.

(continued on my Examiner.com page…)

The lone wolf

In the political world oftentimes a primary election has a prohibitive favorite who, tacitly or not, has the support of party brass. Here in Maryland a recent example on the Republican side was Michael Steele’s U.S. Senate run in 2006, where Steele won 87% of the vote against nine opponents because the GOP establishment was firmly behind him. While other candidates may have been more appealing on the issues, Steele locked up most of the donors through the connections being a party insider provided.

As a party chair who just recently stepped down, Jim Pelura could be considered part of the Maryland Republican Party establishment. But as published reports indicated yesterday, Pelura has chosen to support upstart Brian Murphy for the GOP nomination rather than Bob Ehrlich. Pelura cited the need for “new blood” as part of the reason for his support.

(continued on my Examiner.com page…)

Offshore drilling unlikely in Maryland waters

Despite the chants of “drill, baby, drill” from thousands of Marylanders upset at surging gasoline prices, the prospects of Maryland becoming an offshore oil producer like states along the western Gulf coast is remote.

While the new plan wouldn’t allow for exploration until at least the latter half of this decade, Maryland’s top statewide elected officials have made it clear they don’t support the prospect of oil exploration off our Atlantic coast.

(Continued on my Examiner.com page…)

Celebrating achievement

I’ve blogged about this a couple times before, but tonight Americans who have no life and still believe in the discredited radical environmental movement will sit in the darkness and gloom to “celebrate” the so-called “Earth Hour.” The Competitive Enterprise Institute poked fun at this last year by creating Human Achievement Hour and putting out this video.

As has been tradition around this time, I engaged in the enjoyment of being there last night while thousands of watts of amplification and lighting was expended to boost the local economy of Ocean City and the personal fortunes of dozens of starving artists who are better known as musicians. (Most people call this Skip Dixxon’s Spring Luau.) My point is that it takes energy to grow an economy, but apparently those who want to curtail our usage and bring us back to a 20th or even 19th century lifestyle consider that offensive to their earth goddess.

Needless to say, I stand foursquare against those who would use the force of the state to infringe upon our freedom. Granted, Earth Hour is voluntary (for now) but even exhibiting the mindset of following like lemmings gives them the illusion of popular support and the desire to make what are now suggestions into laws.

In Maryland, this sort of thinking is leading us into even more restrictive stormwater regulations, which only curtails the production of jobs and ironically may reduce the urban development so-called “Smart Growth” advocates desire. At one point there was a compromise reached by the General Assembly which would allow existing projects to continue under the old regulations but that is now out the window – much to the displeasure of those who help to provide private-sector economic growth.

Instead, developers may have to go back to the drawing boards, instituting needless and unnecessary delays and the costs associated with them; yet the benefits are dubious and difficult to measure. Let’s face it – is Chesapeake Bay ever truly going to be clean enough for the radical environmentalists without depopulating the entire watershed? I doubt it, because solving the problem of Bay pollution would put them out of business and the lobbyists and lawyers who depend on their patronage would have to find more honest work.

So I’m going to do my part and celebrate Human Achievement Hour in some way – it may be as simple as leaving a couple extra lights on around our place – and I encourage all of you to do the same. Yes, it’s a little wasteful but the point made is that with progress comes energy demand, and that’s a fact we can’t avoid.

For the record, the state of Maryland is participating in this idiocy, along with the cities of Baltimore, Frederick, Gaithersburg, and Greenbelt; as well, Baltimore and Frederick counties. Governor O’Malley noted in a statement on the Earth Hour website:

“Maryland is an official Earth Hour state, and Katie and I will be turning off our own lights in support of this global movement. By joining us, our fellow citizens will save energy, reduce their carbon footprint and demonstrate to the nation and the world the commitment and leadership of Marylanders on this critical issue.”

So I encourage all right-thinking residents of those areas to instead participate in Human Achievement Hour, and demostrate a call for economic leadership through progress, not regressing back to the Dark Ages.

Ideas for the right direction

On Thursday the BrinkleyPipkin budget reduction act (in Maryland that’s SB1004, Budget Reconciliation and Balancing Act) had its hearing. When I got the release on this hearing this was the part which jumped out at me:

The Brinkley-Pipkin budget reduction act had a hearing before the Senate Budget and Tax Committee today. By taking significant steps to further reduce spending in this year’s budget process, the Brinkley-Pipkin plan buys additional time to constrain spending to the existing available revenues without the need to raise taxes.
A key feature of the plan is the elimination of built-in statutory increases in state programs. This feature and an additional $75 million in spending constraint over the next three years would allow current revenues to “catch-up” with spending, thereby bringing ongoing spending and revenues into balance.

Many lobbyists and county officials testified today against additional cuts to state spending. Representatives of unions also opposed the Brinkley-Pipkin plan of additional cutbacks including the removal prevailing wage from state projects. The majority of citizens and taxpayers who testified supported all efforts to cut back government overspending. (Emphasis mine.)

So once again we have the government and big-government interests (i.e. the lobbyists) vs. the people. The information I was provided also had a chart showing the difference between our current budget path (which will certainly lead to higher taxes) and the Brinkley-Pipkin projections.

In theory, at least, the Republicans’ proposal not only balances the budget but creates a small surplus.

Obviously the counties were there to argue that the budget would be balanced on their backs and perhaps they have a point. But this should also lead the local governments into an effort to prioritize what services they wish to deliver, with the public being involved by determining how much they want to pay. For example, it would fan the flames of the ongoing debate here in Wicomico County regarding the revenue cap the county currently employs.

Government cannot co-exist with a free society as a cure-all. Every dollar taken out of your pocket to pay for services they wish to deliver is a dollar that you cannot use as you wish, despite the fact it was freely given to you. (In more and more cases, however, that dollar was given to you by the same government who wishes to take it away.)

It’s way beyond time to consider that role government has to play and amend it accordingly. Maybe not all of the cuts in the Brinkley-Pipkin proposal are wise, but they can begin this vital discussion of the role our state government plays in our lives.

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.


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.

Republicans united?

As the Church Lady would say, isn’t this conveeeeeeenient? I talk about Republicans divided in an op-ed then talk about uniting hours later. But Daniel Vovak makes a good point at a time when unity would be necessary.

The Republican Primary on September 14, 2010 has produced a spirited contest for the office of U.S. Senator, facing the probable Democratic primary winner, Barbara Mikulski. According to official reports and announcements, on the Republican ballot will be seven candidates, including: Carmen Amedori, John F. Curran, John B. Kimble, Daniel W. McAndrew, Jim Rutledge, Corrogan R. Vaughn, and Eric Wargotz.

Daniel “The Whig Man” Vovak has proposed a “Statement of Unity” for the Republican candidates to sign, and has pledged $250 to the primary winner, should that person sign his form. Vovak says, “Although I will not be a candidate for U.S. Senate in 2010, I was a candidate in 2006 and I remember perfectly well how Michael Steele treated the primary as a mere formality, never reaching out to any of his nine primary opponents, which hurt our Party in November 2006. In 2010, it’s a different situation because the Republican primary is a wide-open contest. It’s not that Maryland Democrats have been successful, it’s Maryland Republicans who lose statewide seats through internal division. Once these candidates unify behind the primary winner, any Democrat can be defeated.”

Vovak says that following last week’s U.S. Senate candidates’ debate in Montgomery County, every Republican candidate sought his support.


In spite of losing statewide (among Central Committee members who selected a new party chairman in the wake of Jim Pelura’s resignation last year), Vovak sincerely congratulated (current MDGOP Chair Audrey) Scott following her decisive win and offered his help. Vovak says this “Statement of Unity” is something he practices and believes. He says, “If I had won the chairman vote, I would have proposed this same Statement to position Republicans for winning, long before Election Day. I have no doubt Audrey Scott shares the same goal.”

Currently, three of the seven candidates have indicated they will sign the Statement. Because Vovak has not been able to speak directly with all of them, he said he will wait until all have been given ample time to respond before releasing their names, though those candidates can speak freely at any time with their supporters and the media, should they desire to do so.

Within the Maryland Republican Party Constitution, under Article 11, Section 2, d(2), Maryland’s Republican Chairman must show no “partiality or prejudice” towards any Republican candidate before a primary. Article 2, Section 2 states that the Party “works towards the election of Republican nominees.”

It’s an admirable goal, and perhaps we will see all of the contenders sign this agreement before all is said and done September 14.

But this election is somewhat different than Steele’s 2006 campaign as there is no de facto favorite. A couple have run previous bids for the Senate that drew little support (Kimble and Vaughn, both also-rans in the ’06 race with Vovak) and a couple others are perhaps dark horses due to lack of name recognition or fundraising prowess – I’d put Curran and McAndrew in that category. The other three (Amedori, Rutledge, and Wargotz) to me are the leading contenders, with Amedori perhaps being the “establishment” candidate based on her tenure in the House of Delegates.

I happen to agree that the Maryland GOP shouldn’t take a stand to support any candidate pre-primary. I know some disagree with me because they fear the voters may select some David Duke-esque radical as the party’s representative but I place a lot more faith in the party electorate than apparently these officials do. I already lived in one state which tried to bribe and cajole good Republican candidates like Ken Blackwell out of the race to avoid primary fights and I don’t want a repeat in Maryland.

Since the reports of Barbara Mikulski retiring were apparently premature, it looks like whoever survives the primary has the uphill fight of knocking out the entrenched, reliably liberal incumbent who may be keeping the seat warm for Martin O’Malley once he’s through being governor.

I believe there is a scenario possible where, if Mikulski wins and O’Malley loses in November, Barbara could retire in early January and Martin O’Malley could name himself  successor (or a placeholder to keep the seat warm) just before his term were to expire – leaving the possibility of two new Senators from the state in 2013 as Ben Cardin also runs for re-election in 2012 and the seat held by Mikulski is opened up for a special election by current state law. I think Martin O’Malley has aspirations beyond being Governor and this would be an opportunity for him to go national.

All that has yet to be seen but in any case it’s good for Republicans to put up a united front as they campaign to upend the Democrats’ apple cart this November.

Perhaps correct but symbolic

This comes from Delegate Don Dwyer, who represents Anne Arundel County in the General Assembly. He’s seeking to impeach current Attorney General Doug Gansler for a recent decision of his:

On Wednesday, February 24, 2010, the Attorney General released an official opinion allowing out of state same sex marriages be recognized under Maryland law. This action circumvents and usurps the authority of the Maryland General Assembly.

In 2007, after months of discussion and debate, Maryland’s High Court determined that the issue of same sex marriage was up to the General Assembly to decide.

By his actions today, the Attorney General has clearly violated his oath of office and has usurped the authority of the General Assembly.

Delegate Dwyer said, “Attorney General Gansler has violated the public trust by his actions and he will be held accountable.”

It goes without saying that this won’t go far as Republicans don’t have the necessary votes to bring the impeachment matter through. But it also brings out the differences of opinion regarding marriage and perhaps is a legitimate question about the separation of powers.

At its root, this is a case where the public sentiment may not be reflective of the sentiment of the General Assembly. Only its most liberal members would truly want to be on record supporting the concept, while Democrats from more conservative areas like the Eastern Shore and Western Maryland would be squeamish at best to support their fellows along the I-95 corridor should a bill legalizing same-sex marriage come to the General Assembly floor. This is why we haven’t seen that push, particularly in an election year.

So Gansler, in effect, is taking the bullet for his fellow Democrats since his odds of being re-elected in a statewide ballot are significantly higher than those of individual Democrats in conservative-leaning districts. At the moment, there’s no Republican running against Gansler. He also knows that the impeachment demanded by Dwyer won’t stand a chance in the highly partisan General Assembly so the decision was made knowing that he won’t be held accountable for it.

Taking the rumor seriously

On Monday, a slow news day in the nation’s capital because of the President’s Day holiday, a fellow Maryland blogger made a sensation by posting a rumor from an “impeccable source” that longtime Senator Barbara Mikulski was soon going to announce her retirement and not seek another term. (No, surprisingly the blogger was not Joe Albero.)*ahem* While I remain in the camp of “I’ll believe it when I see it,” I’d still like to see her days in the Senate come to an end soon, and preferably not feet-first.

It appears that one of those seeking to oust her is going to have some fun with the concept and provide another imaginative campaign tactic which shows he’s not going to stick with politics as usual.

On March 4th, the “Barbara Mikulski Retirement Party” will occur online. Borrowing a concept employed to great advantage by supporters of GOP Senator Scott Brown of Massachusetts – nice to be able to write that phrase – the campaign of Dr. Eric Wargotz will be setting off their own “money bomb” where they hope huge contributions will roll in from across the country.

Occurring as this rumor did on the heels of the surprise retirement of Indiana Sen. Evan Bayh, the Maryland situation is different than Indiana’s. Bayh’s last-minute decision not only shocked Democrats, but left them with no one on the ballot – state Democratic Party officials will decide the nominee as the one candidate who attempted to secure signatures against Bayh was short of the number needed in at least one of the nine Indiana Congressional districts. (One name floated as a possible candidate is musician John Cougar Mellencamp.)

However, Maryland’s late primary would give Democrats an easy opportunity to gear up a campaign should Mikulski call it a career before our filing deadline July 6th. 

And while Indiana Democrats might enjoy the lack of a contested primary while several GOP contenders compete for their nod, the Maryland rules make it much easier for candidates to get on a primary ballot – over the last several Senate cycles 2 or 3 minor candidates have popped up as opposition to an entrenched incumbent. Moreover, in 2006 Democrats had 18 primary contenders for an open U.S. Senate seat vacated by former Senator Paul Sarbanes, with just two (eventual winner Ben Cardin and former Congressman and NAACP head Kweisi Mfume) getting more than single-digit percentages in that year’s primary. It promises to be another free-for-all should Mikulski step aside.

In the meantime, Wargotz and his campaign attempt again to conjure up some of that Scott Brown magic – a shrewd step from perhaps the leading GOP contender.