07.01.2008 0

The Tale of Two Dinosaurs

  • On: 07/20/2008 14:02:38
  • In: Fiscal Responsibility
  • Two endangered species of governmentus overspendus – Massachusetts and Maryland – after decades of trudging off to extinction in lock-step accord are now apparently parting ways.

    As the economy has hit hard times, and tax revenues have slowed, States are being left with two choices: to cut spending, or to raise taxes. So, will these Megasaurs of Big Government save their food, or gorge one last time before they perish?

    In Massachusetts, as the pinch has been felt, local cities and towns are making big cuts:

    “Town and city officials face a difficult choice: cut staff and programs, or ask voters to override Proposition 2 1/2 and approve still higher property tax bills. In Beverly, for example, officials tried to avoid a tax hike by drafting a budget that would cut 61 full-time positions and close two elementary schools.

    “’It’s very difficult medicine, and something we’d all rather avoid, but we’re on our own,’ said the city’s mayor, William F. Scanlon Jr., an ex officio member of the school board. ‘The state can’t help us, and we have to find a way to live within our means.’”…

    “About half of the school districts in Massachusetts are planning some reductions next year, and one in four expect the most visible cuts, like teacher layoffs, program reductions, or steep fee increases, said Glenn Koocher, executive director of the Massachusetts Association of School Committees.”

    Contrast that with Martin O’Malley’s Maryland, now in the running for first place on ALG’s much-coveted Endangered Government Watch List:

    “Ultimately, some states will end up contemplating tax hikes of all kinds, if reluctantly at first. Four years ago, the last time a large number of states faced deficits, corporate income and other business taxes were among the most frequently raised, along with state sales taxes.

    “This time around, Maryland has been among the first to act. In a special session of the legislature last fall, the state raised the corporate income tax rate to 8.25 percent from 7 percent. The state also boosted the sales tax to 6 percent from 5 percent and expanded it to include some computer services. Finally, Maryland raised the personal income tax rate for joint filers earning more than $200,000 a year and individuals earning more than $150,000 a year to 5 percent.”

    The comparison appears very clear: Maryland, descending precipitously into the tax-and-spend tar pits, seems absolutely determined to consign itself to extinction. Whereas, in Massachusetts, localities are making the necessary budget cuts in order to live within their means over the long-term. In politics, when taxes become too onerous, productive citizens may vote with their feet – and business load up the moving vans.

    ALG Prediction:
    Massachusetts is making the right moves and will reap benefits for decades to come if they stick with it. Under Martin O’Malley, Maryland is plunging itself into the tax abyss. And the GOP has a once-in-a-millenium chance to stake a claim on Free State voters. We shall see.

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