Maryland’s “Structural” Deficit – Taxes on the Way

There’s a lot of heated discussion about the state’s structural deficit for the next fiscal year. This isn’t news; it was discussed during the last General Assembly session, but the legislators decided not to address it. (Surprise!)

So for fiscal year 2009 (which begins in July 2008), the state is committed to spend about $1.5 billion more than the revenues it expects to receive. (This is a “structural” deficit, because it refers to commitments already made, not including any new programs). Like any deficit, there are two ways to address it: cut spending, or bring in new revenues. A reduction in spending affects a particular constituency, which can fight the cut. That’s one of the principle reasons why it’s almost always easier to raise taxes (which has a smaller effect on the state as a whole).

How much reduction in spending might we expect? The governor has already begun to play the game. He has demonstrated fiscal responsibility by asking each department to lay out cuts that would be needed to get the state to reduce anticipated FY expenditures by (drumroll, please) $125 million. That’s right – the governor expects to make up 8.3% of the budget deficit through spending cuts. How much of the remaining $1.4 billion comes from taxes?

Meanwhile, House Speaker Michael Busch is letting everyone know where he stands. Speaking yesterday in Ocean City to the Maryland Municipal League, he declared “”I don’t think a tax increase is going to drive jobs outside of the state.” Interestingly, if you listened carefully, you could hear a chorus of employers 4 miles away in no-sales-tax Delaware, responding, “No, no sir, not at all!”

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2 Comments on “Maryland’s “Structural” Deficit – Taxes on the Way”


  1. […] Leviathan Montgomery Society versus the State in Montgomery County, Maryland « Maryland’s “Structural” Deficit – Taxes on the Way […]


  2. $1.6 Billion, according to the last administration, will bypass small businesses and be put into the slot machines. This, in itself, is bad.

    Where will the VLT’s (slots) go? Into the racetracks, of which 2 are owned by Magna Entertainment, a Canadian Company. Those who own racetracks don’t need to be subsidized. Under my plan, the PDF (purse dedication fund) will still be funded.

    The VLT’s and central computers should be bought, not leased, and management should be done in State.

    Proposed was:
    1) Leasing the VLTs @ 10%
    2) Leasing the central computers @ 5%
    3) Farming out the Management @$200,000,000, according to the “Sun”.

    $160,000,000 VLTs
    $ 80,000,000 Computers
    $200,000,000 Management
    _______________________
    $440.000.000 Leaves the State each and every year.
    X5 Economic Multiplier
    ___________
    $2,200,000,000
    X.125 (Total Taxes)
    ______________
    $11000000000
    4000000000
    2200000000
    ______________
    $275,000,000.XXX We lose this amount in taxes each and every year, while exporting $440 Million.

    Think of terms of paying rent for your house, paying somebody to do your shopping, cooking, laundry, landscaping, etc. This would break this average man. So is Maryland going down the tubes fiscally.

    I don’t think I have to mention what’s been happening to our Country’s Dollar once we started with NAFTA exporting our money. Our dollar is going to continue to shrink.

    Roy Schwartz
    200 Belmont Forest Ct. #201
    Timonium, MD 21093
    410-252-2404
    410-292-3030 (cell)
    lsch86@aol.com

    P.S. This needs tweaking, but please call.


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