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Governor hits the road to push plan

The Baltimore Sun

He hasn't been seen in a suit coat in days, and he hasn't said a word about his tax plan within 30 miles of the State House. Instead, Gov. Martin O'Malley has been taking his message to the people - and he'll keep it up, aides say, as long as it takes.

Nine months into his term, O'Malley is making a $2 billion gamble on his political future, believing he can raise enough money to erase Maryland's $1.7 billion budget shortfall and increase spending on health care, transportation and the environment without losing the support of the middle-class voters who swept him into office.

"For the last few years, working people have really been taking it on the chin, with stagnant wages and with this other method of taxation by fees, taxation by toll, taxation by college tuition," O'Malley said over coffee and cookies in a Baltimore County family's bungalow last week.

"At the end of the day ... even when we remove this $1.7 billion obstacle to our progress, the majority of Marylanders will be paying less," he said.

Republicans say the Democratic governor is engaged in doublespeak worthy of George Orwell's novel 1984.

"He's selling it as a tax cut," said Sen. J. Lowell Stoltzfus, an Eastern Shore Republican. "It's absurd."

In carefully choreographed images this past week, O'Malley has been sitting at dining room tables in suburban communities, sleeves rolled up, pitching his plan for a sales tax increase, property tax cut and income tax restructuring that will have top earners paying much more but others getting a slight break. At stop after stop, he insists that most people will pay less.

The model for the governor's sales pitch - and his simultaneous effort to translate public support into votes in the General Assembly - could be Robert Penn Warren's Bible and cautionary tale for ambitious governors: All the King's Men. So far, O'Malley appears to be following the narrator's advice to a politician trying to sell a tax plan: "Just tell 'em you're going to soak the fat boys, and forget the rest of the tax stuff."

O'Malley has been unabashed at doing just that, saying that millionaires will pay more but that regular folks won't.

"A lot of people think that's fair, that millionaires pay the same as everyone else pays, but I believe in a more progressive taxation," O'Malley said in a Howard County dining room on Thursday.

There's a reason he's being careful about how he presents his plan. Taxes have been one of the few issues Republicans have used successfully against Democrats in Maryland. Republican Ellen R. Sauerbrey nearly beat Democrat Parris N. Glendening for governor in 1994 with a call to cut the income tax, and her appeal was so strong that Glendening pushed a reduction of his own through the legislature just before his rematch with her in 1998.

Republican Robert L. Ehrlich Jr. won the office in 2002 with a pledge not to increase the sales or income tax, and he routinely pilloried Democrats as tax-and-spend liberals.

But the way O'Malley has presented a tax package that will bring in billions in new revenue has been shrewd, said Matthew Crenson, a retired Johns Hopkins University political science professor.

"He's making this look like it's not about a tax increase, it's about an increase in tax fairness, so the tax burden is shared more equitably," Crenson said. "I talk to people in the supermarket. I don't think they're fooled, but I have to give him credit: This is a real star performance."

O'Malley's campaign-style events evoke the public push for a tax increase in 2004 by then-Virginia Gov. Mark Warner. After months of talking to voters about the $1.4 billion plan, he ushered it through the Republican-controlled legislature to wide praise.

O'Malley has his work cut out for him to win support for his proposal in the legislature, but he spent much of his time last week aiming his message at the public. There's a good reason for that, said Baltimore County Councilman John Olszewski Sr.

The state's budget problems have been brewing for years, dating to before Ehrlich's term. Members of both parties agree that the state has gotten to where the problem can't be put off any longer, and it's O'Malley's misfortune that it happened in the first year of his term.

Olszewski, a Democrat and O'Malley supporter who represents the traditionally blue-collar Dundalk area, said those circumstances put the governor in a risky position, particularly with the Baltimore County voters who helped swing the 2006 election.

"In Baltimore County, you've got a lot of naysayers out there because [Ehrlich] was from Baltimore County, and he still has a lot of supporters there who are going to say, 'Oh, Martin's in there and now all he wants to do is raise taxes,'" Olszewski said.

The political and philosophical desire to avoid such a backlash appears to have driven much of the governor's strategy in putting the package together.

He didn't call in a consultant or empanel a blue ribbon commission. Instead, aides say, the package was hashed out by the governor, Budget Secretary T. Eloise Foster and a few other aides. Members of the group would throw out ideas, and the budget department would crunch the numbers until they came up with a combination of proposals they believed would raise enough money without socking the middle-class voters they promised to protect in the 2006 campaign.

O'Malley has proposed taking what is essentially a flat income tax - all earnings above $3,000 a year are now taxed at the same rate of 4.75 percent - and creating a new structure that charges lower- and middle-income Marylanders less but top earners much more. O'Malley also wants to increase the sales tax rate from 5 percent to 6 percent and to broaden that levy to cover more services. He would cut the property tax by 3 cents per $100 in assessed value, double the cigarette tax to $2 a pack and increase the car titling tax.

A curious element of O'Malley's sales pitch is that he simultaneously argues that Maryland can afford to invest more in government services because it is the wealthiest state in the nation and that most Marylanders won't be hurt by his plan because the burden will be borne by the wealthy.

The question of just who counts as wealthy could be a problem for O'Malley, said Anne Arundel County Executive John R. Leopold, a Republican. The difference between the middle class and the upper-income households the governor is targeting isn't as great as he implies, Leopold said.

In 1992, former Gov. William Donald Schaefer pushed through a surcharge on high-income earners, much like the one O'Malley is proposing now. Schaefer's was temporary; O'Malley wants his changes to be permanent.

But Leopold said that what O'Malley considers a top earner hasn't changed much from what Schaefer advocated 15 years ago. Under Schaefer's plan, the higher income tax rate kicked in at $100,000 for individuals and $150,000 for married couples; under O'Malley's plan, the thresholds are $150,000 and $200,000.

"In Anne Arundel County, the average price of a home is close to half a million dollars now," Leopold said. "You've got a lot of families that are clearly going to be in that [income] category, and it's an increasing number."

Montgomery County Executive Isiah Leggett, a Democrat, expressed similar concerns.

But as O'Malley seeks to build public support for his plan and to translate it into votes in the legislature in a planned fall special session, advocates for the upper-middle class aren't his biggest problem. The faction that could stand in his way is made up of Democrats who believe that the tax system should be re-made to relieve pressure on low- and moderate-income families.

A "Gang of 14" in the Senate sent O'Malley a letter this summer pitching ideas to make the tax system more progressive, and they and their counterparts in the House of Delegates have expressed wariness about raising the sales tax and legalizing slot machine gambling, the two biggest components of the governor's plan.

Sen. Paul G. Pinsky, a Prince George's Democrat and leader of the Gang of 14, said hearing the governor pledge on Friday to close corporate loopholes made him less worried about the elements of the plan he dislikes.

"I'm not 100 percent or saying it's nirvana," Pinsky said. "But each time he makes a stop like today, it does make me feel better."

andy.green@baltsun.com

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