O’Malley says gas and flush tax hikes may be part of 2013 budget

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By Len Lazarick

Gov. Martin O'Malley

Gov. Martin O'Malley

Gov. Martin O’Malley told reporters Thursday that “yes, perhaps” tax hikes would be part of next year’s proposed budget as part of a “balanced approach,” but he declined to be more specific.

O’Malley said that any increase in the $30 annual flush tax that funds cleanup of waste water flowing into the Chesapeake needs to be done “in a more progressive way that recognizes consumption and allows for some relief for someone that uses less.”

He said it was unfair that a senior citizen living in an impoverished area of Baltimore should pay the same as someone “living in a giant McMansion.”

Meanwhile, he said some sort of increase in the gas tax might be necessary since the flat 23 cents per gallon has been in effect for 20 years. He tied the gas tax hike to plans to spend more on highway and transit construction to create construction jobs.

Enhanced job creation “will be a product the art of the possible in the arena of political compromise,” O’Malley said, “where the legislature certainly understands and feels the pain that people feel from this recession, but also appreciates that a better tomorrow requires investments.” In other words, legislators might be reluctant to pass tax increases.

“Ever since this recession hit, we have been relying almost exclusively, with some exceptions, on cuts,” O’Malley said. “That’s why we racked up almost $6.8 billion in cuts.”

In past years, the O’Malley administration has sometimes referred to this as reductions in increased spending. The overall state budget has actually grown since O’Malley took office in 2007 from $28.7 billion to $34.2 billion in fiscal 2012, a 19% increase. But in order to balance the budget each year as required by the constitution, the governor has had to ask the legislature to cut mandated and automatic increases in spending or entitlements by a cumulative $6.8 billion.

O’Malley’s unusual roundtable with reporters covered a wide range of issues in a PowerPoint presentation focusing on the administration’s performance toward meeting its 15 major goals.

Governor defends audits

O’Malley also defended the administration’s response to a wide range of legislative audits in the past year finding millions in misspent funds, failure to collect federal dollars or identify fraud in a number of departments, especially involving the Medicaid program.

Perhaps anticipating questions about the audits, the StateStat office, which reviews the audits findings, produced a slide (not available online) showing that the number of critical findings by legislative auditors declined from 1,045 in 2007 to 844 this year. Repeat findings showing the same financial or performance problems “have steadily fallen from 45% in 2005 to 26% in 2011,” O’Malley said. “In other words, when they tell us once, they don’t have to tell us twice, or at least not as frequently.”

O’Malley said there were a number of specialized firms that “help us identify fraud and waste” with sophisticated technology, and “help us increase our recovering” of incorrect reimbursements.

Another problem is “very, very old legacy [IT] systems throughout state government,” that don’t keep track of payouts efficiently.

When he took office in 2007, “one of the biggest surprises for our team was how much further behind state government was behind city government,” said O’Malley, the former mayor of Baltimore.

“There’s still plenty of room for improvement in Medicaid and Medicaid recovery,” O’Malley said,” and a lot involves these legacy systems.”

Beth Bluer, head of the StateStat performance measuring office, said “the eligibility for Medicaid is one of the most antiquated systems we have in state government.”

O’Malley Chief of Staff Matt Gallagher said there were major appropriations in the coming budget proposal to improve Medicaid IT systems.

  • Has everyone conveniently forgotten the way O’Malley pilloried Bob Ehrlich over the “flush tax” during the election campaigns?

    Also, you just have to love his use of the word “McMansion.” 

    MO’M is the only politician I am aware of who is bold enough to use the word “libertarian” as a pejorative.

    • A very concerned citizen

      Not me and it starts with one.  Spread the news.  Keep pounding it like a drum beat.

  • Anonymous

    O’Malley aptly demonstrates the disconnect of the ruling Dem class in Annapolis & the rest of Maryland. Tax hikes MAY BE a part of the 2013 budget? I can guarantee that he will attempt to ram this through. Tax the working man on daily necessities while subsidizing schemes that benefit cronies & punish detractors or those who question the motives of MOM.

    • A very concerned citizen

      Demand a “RED Ribbon” audit of where our tax money went in the last 10 years before we give them anymore of our hard earned tax money. 

  • Pingback: Governor O’Malley Discusses 2012 Legislative Agenda with Reporters « Conduit Street()

  • Frank Van

    Remember the last tax increase was going to balance the budget???  Now we are at least (visible) $1 billion deficit and probaly a lot more.

    Also the remark about the unfairnes of one person paying the same “flush tax” as more people in another house???  So why not let the account holders pay pro rata.  Is that so difficult???  What if the same one person household flushes ten times a day, as quite a number of elderly people unfortunately have to do????  The pro rata increase may provide an extra incentive to save. All the information is aleady available.  

    So far that logic.  What have McMansion’s to do with it?  And please, what is a McMansion?   Anything over the mean of say a 1,500 square foot house???  There may be only one or two people in that “bigger” house as well, and they probably pay already more utility taxes based on the number of people in the bigger house, in addition to the real estate taxes (and state and federal income taxes) anyway.

    Maybe there should be a “FLUSH YOUR MOUTH WITH SOAP TAX”  for politiciens who do not speak the truth.

    Isn’t that a wonderful observation that the O’Malley administration “discovered” that the City of Baltimore’s administrative system is ahead of the Stae of Maryland’s system? THIS IN 2007.  WHAT HAVE THEY DONE TO CHANGE THAT. IT IS NOW 2011/2012????

    • A very concerned citizen

      This class warfare has to end.  Keep pounding the drum that O’Malley is a lazy governor, i.e. easy to blame others for his mistakes.

  • joe

    I have a super idea Democratic Governor O’Malley. Apply kitchen table economic principles when money is tight, as when a bread-winner loses their job. 

    STOP  INCREASED  SPENDING of funds on any new programs in FY 2013, freeze the proposed budget at the FY 2012 spending levels or less and make additional cuts to useless programs or delay programs till later. Then make sure that the FY 2013 revenue = FY 2013 budget, such that no increase in taxes is necessary!

    We taxpayers are not the state of Maryland’s ATM machine!

    • A very concerned citizen

      Nice rant…spread it each day.  Keep pounding the drum.

  • A very concerned citizen

    O’Malley lies.  Once a liar, always a liar.

  • Anonymous

    It appears as though O’Taxey is demonstrating more “courage” by raising taxes again.