Why we tax

The Baltimore Sun

With Wall Street on a slide, the Federal Reserve cutting interest rates, record numbers of homeowners facing foreclosure and economists talking recession, people might very well be wondering if the tax increases approved last November by the Maryland General Assembly were ill-timed. Yesterday, Gov. Martin O'Malley used his annual State of the State address to offer a spirited, if somewhat belated, defense of that decision.

The governor's argument can be boiled down to two points. First, Maryland needed to correct a neglected structural budget deficit that spanned two previous administrations and was only going to get worse. That's a debilitating condition Mr. O'Malley inherited, and he acknowledged that his unpleasant medicine, while necessary, was not going to make him politically popular in the short term - as recent polls attest.

But the other point, perhaps the one most overlooked by prospective voters, is that without the recent budget-balancing moves, the outlook for essential government services would be grim. Is an economic downturn the time to weaken the social safety net, to ignore the growing numbers of people without health insurance, to raise the cost of college tuition, to do nothing to help those who are losing their homes?

In his speech, Mr. O'Malley unveiled a legislative agenda that even he has acknowledged is relatively modest in aspiration. (Here's a clue - when divesting pension dollars from Iran and promoting greener state buildings become top priorities, you know one's ambitions are not exactly overwhelming.)

But that's as it should be under the circumstances. Lawmakers bit off so much during last November's special session that they still have some chewing to do. For example, they may have approved $50 million for the so-called green fund - now properly known as the Chesapeake Bay 2010 Trust Fund - but they never got around to deciding exactly how to spend it. And one can only hope repealing the hastily considered tax on computer services is next on the menu.

There are some commendable proposals in the O'Malley agenda, of course. Strengthening critical-area laws, expanding law enforcement's DNA database, better regulating mortgage lenders, providing services to returning war veterans and developing a comprehensive and conservation-oriented statewide energy policy are among the most noteworthy. None, however, is likely to raise the ruckus that tends to accompany a major tax increase.

Yet many of these same proposals - quite a few of which will likely have bipartisan support in Annapolis - wouldn't be possible if November's deficit-reduction efforts had failed. The money simply wouldn't be there to pay for them. And that may be the hardest point to explain to the public - how much worse off so many Marylanders would be if Annapolis were now scrambling to close a billion-dollar-plus hole instead.

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