January 12, 2012

Coaltion rallies for revenue hikes; O’Malley suggests sales tax

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By Megan Poinski
Megan@MarylandReporter.com

Save Our State rally

AFSCME Maryland Assistant Director Sue Esty, in red, and Maryland Budget and Tax Policy Institute DIrector Neil Bergsman, to her right, lead union members in a rally to promote fewer budget cuts.

How do you show bureaucrats and policymakers that it’s time to raise taxes?

Members of the Save Our State Coalition are hoping that putting problems caused by tight budgets on display will do the job, especially in light of a fiscal year 2013 budget shortfall that could be as big as $1 billion.

The Save Our State Coalition, — which includes members of the American Federation of State, County and Municipal Employees; the Maryland Budget and Tax Policy Institute; United Food and Commercial Workers; the Service Employees International Union; and the NAACP – kicked off the legislative session on Wednesday with a rally against the state’s cost-cutting budget balancing.

More than 100 members of the unions and other organizations chanted “Save our state,” “We are the 99%” and “A balanced approach,” before branching out and delivering a report to every member of the General Assembly detailing some of the areas where state services are worn too thin, as well as policy measures that could solve some of those problems.

Gov. Martin O’Malley echoed the same words Wednesday, when he began talking about the one-cent sales tax increase he may be proposing, his first mention of such an increase.

AFSCME Maryland Assistant Director Sue Esty opened the rally by asking the union members if it was fair that millionaires and corporations pay relatively little in taxes, compared with working people like them. The answer was a resounding “NO!” Especially, Esty said, because the state’s budget is constantly balanced by funding cuts, meaning there is less money to spend on personnel and supplies.

“There has been enough dancing around that there are not enough revenues,” Esty said. “There are revenues. We just have to charge them to the people who have the money.”

Balanced approach

Maryland Budget and Tax Policy Institute Director Neil Bergsman said that the state needs to stop balancing budget shortfalls through cuts – but not just because state employees deserve to be paid a living wage, “but because Maryland’s competitive edge calls for a strong workforce, strong schools, and quality infrastructure.”

Esty said that the coalition’s goal is not to get a bunch of government workers to agitate for specific tax increases. Because of budget cuts, teachers buy school supplies with their own money, parole and probation agents oversee too many clients, and thousands of state employees are handling workloads much larger than what they shouldered years ago.

“Legislators are acknowledging the extreme difficulties of providing services without revenues, and the real impact it has on people,” Esty said.

The impact on people
Valerie Williams, who has worked for the Division of Parole and Probation for 14 years, said that her caseload has exploded while she’s been there.  She has more than 200 active cases to follow up, about twice what she thinks is a good load for one person to handle.

“I’m here to talk about public safety,” Williams said. “Nobody likes to talk about parole and probation. But we have had so many funding cuts, and we have been cut so much. We’re losing secretaries, agents, managers.”

Williams said that many of the employees who start out working for the Division of Parole and Probation go to work for the federal government and Washington, D.C., where they are paid more and stressed less. And the General Assembly needs to understand that.

“They see the numbers, and they don’t want to deal with it,” she said.

Yvonne Cousin, who has worked with Parole and Probation for more than three decades, said that there is very little working technology in the offices, making it extremely difficult for agents to do their work.

The report

The report distributed to legislators’ offices on Wednesday puts together several statistics and facts about the state, as well as some potential solutions to raise more revenue.

According to the report, the state budget has a vast impact on the state’s economy. When budgets are cut, fewer people work, fewer contracts are drawn up, and household incomes go down. Citing the U.S. Census, the report states that state and local expenditures per person in Maryland are below the U.S. average.

Meanwhile, a majority of Marylanders support increasing revenues by increasing taxes paid to state coffers by businesses and millionaires. The report states that 72% of Marylanders support restoring the millionaires’ tax surcharge for income above $1 million. About two-thirds of state residents support closing corporate tax loopholes.

The report recommends:
·      Instituting combined reporting, which could get more corporate taxes paid to the state of Maryland.
·      Re-instating the 6.25% tax rate for personal income topping $1 million, which would bring in $87 million annually.
·      Re-aligning the sales tax, so that people who can afford it are taxed more fairly.
·      Taxing online sales

Sales tax increase?
O’Malley embraced none of those ideas on a Wednesday morning broadcast of Marc Steiner’s radio show on WEAA.

Instead, the governor made his first mention of a potential one-cent sales tax increase, bringing state taxes to 7%. No tax increase has formally been proposed from the governor’s office yet; from what O’Malley said both on the radio and talking with reporters later in the day, it is one of many potential measures to shore up the state’s financial status.

“Stay tuned,” he said.

O’Malley said that the proposed sales tax increase is another idea for the state to increase revenues. The sales tax was last increased in 2007, going from 5% to 6%. On the radio, O’Malley said that that increase was not popular, but it stabilized Maryland’s economic position during the economic recession. And, O’Malley said, nobody lost a job or a home because an extra penny of sales tax was being collected.

Of course, he said, any tax increase would need to pass through the legislature to become law.

“If any of us were capable of coming up with the perfect solution, we wouldn’t have to elect so many people to the Maryland General Assembly.”

“Increasing taxes has become a recurring theme of  his administration,” Kim Burns, President, Maryland Business for Responsive Government. “ They haven’t cut spending enough — it’s unacceptable.”

Senate President Mike Miller called the sales tax hike “a non-starter,” as opposed to a gas tax hike.

“The worst thing you can do is raise taxes,” House Minority Leader Tony O’Donnell, R-Calvert, told Capital News Service. “That’s a job killer.”

  • Anonymous

    Of course the Gov would love higher sales taxes, especially since the revenue would go into general funds. No raiding the Transportation Trust Fund required! Another false O’Malley claim that another penny will solve ALL our budgetary problems! When will these politicians wake up? Stop increasing the budget year after year, then crying that you need to make MD better for everyone. Baloney!

  • tom

    There is about 7% private sector unemployment in Maryland, with more unemployment coming as the federal government cuts back, meaning less state revenue,  State spending has increased in the last 5 years, not been cut. The 2013 state budget shoul be the same as that of  2012.

    The same Democratic liberal whining about schools, public safety etc are trotted out to try to get more money from the state’s taxpayers for new programs! Raising taxes to pay state workers and state contractors is wealth redistribution. The additional revenue will also disappear, not going for the intended purposes, e.g. the transportation fund.

    New state funded program spending should be zero until the recession is over. Once more people are employed strickly in the private sector to increase the tax base, Maryland can then spend more, also without increasing taxes.

  • How typical, piggy unions and their cretinous cohorts further robbing the 53% who pay the taxes in this wonderful state…I have an idea, why don’t they collect the increased taxes from their members. cohorts, delegates and senators, and all who support this tax increase and leave the rest of us alone !

    It’s time for a forensic audit of the books going back the last 25-30 years and criminal prosecutions of those who stole and mispent the money. Also, remember this when voting for bond issues in your counties !