I’m in California for a short vacation but tomorrow, the California Supreme Court will hear oral arguments in Gillette Co. v. Franchise Tax Board so I’ll be going to that. (If I can get in – the Court is also hearing...
- The Tax Policy Blog
- State Budgets: Maryland Tax Increases Can't Keep Up ...
State Budgets: Maryland Tax Increases Can't Keep Up With Spending Increases
In early 2008, Maryland raised just about every state tax to raise $976 million to fund additional spending and close a "structural" budget shortfall (the current budget is $827 million larger than the previous budget, or a 4.16% spending increase). Officials now estimate a $415 million shortfall this year and $1.9 billion next year, assuming spending grows at 0.7%. Most alarmingly, revenue from the 2008 tax increases (particularly on high income earners and cigarettes) is running 44% under projection, suggesting a loss of economic activity from the increases. O'Malley has conceded that he may have to scale back his plans for new education and health care programs (including health coverage for the uninsured and Chesapeake Bay cleanup) and end a tuition freeze at Maryland universities.
In the fall, O'Malley put a referendum on the ballot to authorize state-owned slot machines and pulled a Washington Monument stunt, warning that unless it passed, he would have to cut funding for disabled caregivers, reduce hours at the Baltimore Zoo, eliminate helicopter search-and-rescue efforts, and fire 283 police officers. The referendum passed, but apparently the $700 million annually it was projected to generate isn't enough. Meanwhile, Democratic legislative leaders are advising O'Malley to keep spending growth under 2.5% and to cut 1,000 state jobs.
More on Maryland here.
Get Email Updates from the Tax Foundation
We will never sell or share your information with third parties.
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.