April 22, 2011

Broader sales tax a good idea to fix deficit, Senate Budget chairman says, and O’Malley likely to propose tax hike to fund transportation

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By Len Lazarick
Len@MarylandReporter.com

Sen. Edward Kasemeyer

Sen. Edward Kasemeyer

Widening Maryland’s sales tax to include more services is “the place to go” in fixing the state’s persistent structural deficit, the chairman of the Senate Budget and Taxation Committee said Thursday.

Sen. Edward Kasemeyer, D-Howard, also said, “I’m assuming some kind of revenue increase” will be part of a transportation package Gov. Martin O’Malley will sponsor in the fall special session of the legislature that he will call to deal with congressional redistricting.

O’Malley press secretary Shaun Adamec confirmed that next Friday in Howard County, O’Malley will “convene a roundtable on transportation needs” involving business leaders and legislators to develop a transportation proposal, and revenues “will be part of the discussion.”

Kasemeyer was speaking in Annapolis to a legislative wrap-up organized by Maryland Nonprofits, which represents many nonprofit charities and service agencies. The group has been pressing for a broad array of tax hikes to prevent cuts to state services and even expand them.

But Kasemeyer predicted that fiscal 2013 is “going to be another year of belt tightening.”

Taxing more things

“We’ve got to tax more things,” Kasemeyer said, and broadening the sale tax to cover more consumer services is “where we might end up. … I see that as the place to go.”

Kasemeyer said it might be hard to get there. “It’s difficult to get people to agree,” he said, and requires getting six or seven people sitting at the table. “To a great extent, it’s a political decision.”

He noted that in the 2007 special session, the governor had proposed taxing a few services such as lawn cutting, and “we couldn’t even get there.” The session wound up with a few legislators sitting at a conference committee table – Kasemeyer was one of them as then vice-chair of B&T – and putting in the computer services tax that was repealed in a few months. He said that might not be the best way to do things.

Expanding the 6% sales tax to cover services has been proposed by many liberal Democrats, and opposition to it was one of persistent campaign themes for Republican ex-Gov. Bob Ehrlich in 2010 as he sought to reclaim the State House from O’Malley. Ehrlich would display charts naming the dozens of services that could be taxed if Democrats prevailed.

Transportation funding

The need to replenish the depleted transportation trust fund has been recognized for years as highway projects small and large have gotten delayed. But instead, O’Malley has taken the money out of transportation to pay for other state programs in recent budgets.

“We still haven’t found an adequate way to fund transportation,” said Kasemeyer. Senate President Mike Miller has pushed for a gas tax hike for years, and House Speaker Michael Bush frequently notes the tax hasn’t been raised since 1992.

There was a push in January to put the transportation trust fund in a “lockbox” and to raise the gasoline tax along with other fees to pay for both highways and transit. In the 2007 special session, O’Malley proposed indexing the tax to inflation.

Despite strong support from business groups, none of the proposals have gained widespread support among legislators, especially as gasoline prices have risen sharply.

“There is a clear and defined and identified need to explore solutions,” Adamec said. “We have no idea” what the governor’s transportation proposal might look like, but “we need to begin the dialogue.”

“There are a thousand options out there,” he said.

  • John

    The need to replenish the depleted transportation trust fund has been recognized for years as highway projects small and large have gotten delayed. But instead, O’Malley has taken the money out of transportation to pay for other state programs in recent budgets.

    Why don’t we cut those “other state programs” NO NEW TAXES!!!!!

  • Anonymous

    Why am I not surprised that legislators want to tax on “more things” to pay for “more things”! What happened to their sage predictions at the special session raising the sales tax 25% that our money problems would be fixed? Or how about that the lottery would fund schools? Or the political games played over gambling that resulted in behind the times “slot parlors” while WV, PA & DE run Vegas style casinos & DC goes for online gambling? Or that the new alcohol taxes would go to fund the developmentally disabled, mental health & substance abuse and not PG & Balto City schools that lost funding due to Thornton (a program passed but not funded by the legislature)?

    Past governors & the legislatures depleted the transportation trust fund to fund shortfalls in an ever increasing state budget. They don’t look at cutting the budget or at money that was previously allocated for programs but not spent (look at Busch’s rewarding unused allocated funds to pet project in Annapolis).

    As long as they can raid the trust fund, they will. No new taxes!!!

  • Didn’t they tell us that same fairy tale about fixing the deficit the last time they raised the sales tax, less than four years ago?

    My proposals for fixing the deficit:

    1. Progressive tax on campaign contributions over say $100.

    2. Make elected officials personally liable for funding appropriations that exceed expected tax revenues.

    3. Require a filing fee, say 10% of expected revenues, to be paid out of legislator’s personal funds before any proposed tax increase bill is filed.

  • Tax Paying Fool

    And this is why the quality of life in Maryland is dropping like a rock. Businesses and successful people are fleeing. The problem with democracy is that when your lower class exceeds your middle class the votes to suck money out of hard working people exceeds the votes to control entitlements for those who consume services out of proportion to their contributions.

    The streets aren’t safe, the schools are dangerous, illegal immigrants get drivers licenses and vote, judges let murderers out of jail so they can kill again….

    Ah, nothing like a state where one political party rules without competition.

    Well, I am moving to Virginia. Already moved my business there. it is like day and night.

    Farewell, Maryland, good luck.

  • Caroleejam

    SO many mentions of broader sales tax and nobody says, “except for basic foods”. My Senator Kasemeyer and the Governor cannot possibly be so inclined, I hope

  • Nobody’s fool

    Why is it that the only tax increases our so-called Democratic Governor and legislators want to talk about are increases in regressive taxes like the sales tax. Why not tax those who can most afford a increase in their taxes and who benefit most from what government spends the vast majority of it’s revenue on (education, law enforcement, transportation, etc.). Our problem in Maryland (and the country as a whole) is NOT that the government spends too much, but that revenue has declined over the past 30 years due to tax cuts for large corporations and the very wealthy. And while the rich get richer, the rest of us are getting the bill.

    The structural deficits can be reduced simply by establishing a genuinely progressive income tax and by enacting combined reporting for the corporations like Walmart, who pay no income tax to the state. Call it “class war” or what ever you want, but ordinary middle class folks have been getting screwed over the past 30 years, not by the poor, but by the rich. And forget the nonsense that businesses and the wealthy will flee the state if we tell them to pay their fair share. In the time that Maryland had the millionaires’ tax, the number of millionaires in the state actually increased. What will drive the wealthy and the businesses out is a deteriorating social structure (schools, transportation, law enforcement) – precisely the things that will be cut if new revenue can’t be found.

    Tired of being the fool

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