Money and Using Money


THE LINOWES Commission report on state tax reform gives Senate President Thomas V. Mike Miller and House Speaker R. Clayton Mitchell the chance to write their names into the history books as two of Maryland's great legislative leaders. The question is whether they will seize that opportunity.

When the General Assembly convenes in Annapolis next month, the president and the speaker will have their hands full. Based on the Linowes Commission's recommendations, the Schaefer administration will present a package of proposed revisions to the state's deeply flawed tax structure. Those recommendations have already sparked statewide controversy. A fierce and partisan debate will rage throughout the session.

The commission has proposed that the legislators do the unthinkable -- raise taxes! It has called for more than $1 billion in new or increased taxes and $248 million in tax reductions. The package would produce a net total of over $800 million of additional annual tax revenues for the state.

The plan would (a) simplify and lower local property taxes, (b) slightly raise income-tax rates for the wealthy, (c) increase the sales tax by one-half percent to 5.5 percent, (d) eliminate a host of irrational sales-tax exemptions covering cigarettes and services ranging from beauty salons to auto repairs, and (e) impose a 2 percent annual personal-property tax on motor vehicle and boats.

Tax increases always frighten politicians. But the commission's proposals would actually reduce taxes for most Marylanders. Local property taxes would be cut by $180 million statewide. Two thirds of all taxpayers would pay less state income tax. The state would allocate $100 million in additional funds to Baltimore city and the state's 11 poorest counties. But legislators and voters both know that $800 million in net new revenues must come from somewhere.

Some $548 million will come from the proposed increase and expansion of the state sales tax. This proposal reveals the difficulties and opportunities that Messrs. Miller and Mitchell will confront. In January, a horde of high-paid lobbyists and generous campaign contributors will descend on the General Assembly to argue that their businesses or industries should remain exempt from the sales tax. Although none of them really deserves special treatment, their specious arguments might still outgun reason and fairness.

The increased and expanded sales tax, however, has a powerful justification. The state will spend all the new money on elementary and secondary education.

The proposal therefore raises for President Miller, Speaker Mitchell and every other legislator the central challenge confronting America today: Can this country summon the political will to tax itself to make the public investment in educational infrastructure which is economically essential in a knowledge-based global marketplace? If we cannot or will not, the Japanese, South Koreans, Singaporeans and West Germans will mercilessly exploit our growing educational mediocrity.

Wake up, Marylanders! Our state underfunds education. We have the fourth-highest per-capita income in the nation. But we rank only 24th in per-capita state and local expenditure on education. This year we will spend on education a smaller proportion of the total state budget than we did in 1984. In the last six years it has dropped from 32 percent to 28 percent. It would take $250 million just to make up the difference.

The resulting educational deficiencies are most heavily concentrated in Baltimore city and the other poorer subdivisions. The consequences of those failing school systems undermine our entire state's economy. Furthermore, our educational problems are not limited to the poorer regions. They're statewide. That fact was revealed by the recent state board of education "report cards" which evaluated all the state's 24 school systems. Even Howard and Montgomery counties failed to win a single rating of "excellent." Many of the other systems didn't even earn "satisfactory" ratings on important educational criteria.

President Miller and Speaker Mitchell now have the opportunity to lead the General Assembly toward a historic linkage between tax reform and educational reform. Following the earlier suggestions of the Sondheim Commission, the Linowes Commission specifically recommended that the state should hold local school systems accountable for the effectiveness with which they used the new state funds generated by the broadened sales tax.

Accountability is the critical component about which dubious legislators and voters will and should demand assurance before agreeing to the new sales-tax revenues. Many legislators are frankly skeptical that more money will make any significant difference in school systems bogged down by ineffective administrators, sluggish bureaucracies, incompetent but unremovable teachers, and timid and unimaginative school boards.

The state must demand educational accountability in return for the increased sales-tax revenues which will fund new programs in the city and county schools. The state should simply stop paying for programs that fail to produce results. Marylanders, however, cannot expect to improve educational performance without substantially increased investment. The Linowes Commission's proposals would provide the money. The governor and the legislature can fashion the accountability controls.

This combination of money and accountability can put our state's education systems back on track. Messrs. Miller and Mitchell must lead the legislature toward that result. If they do, the state will praise them for many generations.

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