Gov. Larry Hogan is showing that he wants to play hardball in his budget negotiations with the General Assembly. That's to be expected when you've got a Republican governor and a Democratic legislature, and it's entirely possible that the two sides could find a way to declare victory. Given how things have gone so far in the new era of divided government in Annapolis, that may even be probable. Both sides have a political interest in working this out.
But on the substance, there is no comparison between the two positions.
The Democrats who dominate the legislature want to restore funding Mr. Hogan left out of his initial budget for K-12 education and to maintain state employee salaries at their current level, among other things like restoring Medicaid coverage for some low-income pregnant women. They made a variety of cuts to his initial proposal — some wise, some not — to make that possible.
Mr. Hogan wants to be able to say that he cut taxes. That's not the same as delivering on the tax relief he promised Maryland voters in the election campaign last fall. Rather, he has submitted a supplemental budget that carves out funds to cover a few niche tax cuts or credits that he supports — some of which we agree with in principle, some of which we don't. And he's making it clear that the Democrats won't get the spending they want unless he gets some or all of the tax cuts he wants.
The bottom line here, though, is that the scale of what the two sides are trying to get is vastly different in fiscal terms and in terms of their effect on the state. The legislature wants to restore nearly $200 million in funding. It made offsetting cuts to the budget, and restricted the use of that money specific purposes. Reversing cuts to the Geographic Cost of Education Index (a discretionary part of the state's aid to local school districts) helps Baltimore City and 12 counties with a combined enrollment of more than 725,000 students, most of whom live in jurisdictions that voted for Mr. Hogan. Maintaining a 2 percent cost of living increase state employees got in January puts money in the pockets of about 81,000 people. Getting Medicaid reimbursement rates closer to parity with Medicare affects the ability of more than 1.2 million people to access the health care system.
Mr. Hogan wants to phase in an exemption for military retirement pay from state income taxes. There are a substantial number of military pensioners in Maryland — 50,889 of them, according to the Department of Legislative Services — but what Mr. Hogan is proposing to do would save them all of $69 in state income taxes next year, on average. He wants to do the same for retired police, fire, rescue and emergency services personnel. It's not clear exactly how many people that would affect, but the last estimate of retired law enforcement personnel in the state was about 13,000, and the projected cost of the legislation is just $3 million next year. Mr. Hogan wants to exempt small businesses from certain requirements of the personal property tax. Some 75,000 businesses could benefit — to the tune of $72 apiece. (And if the bill passes in its current form, big business could find themselves on the hook for much more based on an auditing provision for large firms approved unanimously by the Senate.)
Even if we take as gospel Mr. Hogan's campaign premise that Marylanders are being crushed by taxes and fees, none of the cuts he proposed are going to solve that problem, not even for the small subset of the state's population they affect. If he really wanted to live up to his campaign pledge on taxes, he would engage in the review of the state's overall tax structure being conducted by the well-regarded Augustine Commission on business competitiveness and come back next year with a broad package of reforms. Meanwhile, the spending he is resisting affects a wide swath of the state — urban, rural and suburban — and it can be accomplished while staying mainly within the parameters Mr. Hogan set for getting state finances under control.
It would be easy enough for the legislature to throw Mr. Hogan a bone and give him one or two of his tax breaks. He could declare victory and brag about promises kept. But that's the sort of political flim-flam we might have hoped to avoid by electing a non-politician as governor.