To Cut Taxes Or Keep Services

Key Point: “Progress is a choice: we can decide whether to make the tough choices necessary to invest in our shared future and move forward together. Or we can be the first generation of Marylanders to give our children a lesser quality of life with fewer opportunities.”

In case you missed it, in this New York Times article, Michael Cooper highlights Maryland’s “pristine” credit rating and #1 schools in the nation.

To Cut Taxes or Keep Services: 2 States Act as Test Cases

By MICHAEL COOPER, The New York Times

Published: July 10, 2012

OCEAN CITY, Md. — As state governments begin to emerge from the long downturn, many are grappling with a difficult choice: should they restore some of the services and jobs they were forced to cut after the recession — or cut taxes in the hopes of bolstering their local economies?

The debate over the proper balance between taxing and spending has been raging in Congress, on the presidential campaign trail and in statehouses around the country, and no two states have settled it more differently this year than Maryland and Kansas, whose fiscal years began July 1.

Maryland, a state with a pristine credit rating controlled by Democrats, raised income taxes on its top earners this year to preserve services and spending on its well-regarded schools — leading some business groups to warn that the state might become less competitive. Kansas, controlled by Republicans, decided to try to spur its economy with an income tax cut — which Moody’s Investors Service, the ratings agency, recently warned would lead to “dramatic revenue loss” and deficits that will likely require more spending cuts in the coming years.

The choices made by Kansas and Maryland could provide something of a real-time test of the prevailing political theories of taxing and spending — though it could be years before the results are in.

Gov. Martin O’Malley of Maryland, the chairman of the Democratic Governors Association, gave an impassioned defense of his approach to mayors from across the state who gathered here at the end of last month at the annual convention of the Maryland Municipal League.

“Without any anger, and without any meanness, and without any fear, let’s ask one another in these critical months ahead and years ahead: how much less do we think would be good for our state?” Mr. O’Malley asked. “How much less do we think would be good for our country? How much less education would be good for our children? How many fewer college degrees would make our state or our country more competitive? How much less research and development would be good for the innovation economy that we have an obligation and a responsibility, a duty and an imperative, to embrace? How many fewer hungry Maryland kids can we afford to feed? Progress is a choice: we can decide whether to make the tough choices necessary to invest in our shared future and move forward together. Or we can be the first generation of Marylanders to give our children a lesser quality of life with fewer opportunities.”

When Governor O’Malley spoke here to mayors from across the state — including more conservative mayors from the eastern shore of Maryland — he got perhaps his warmest reception when he spoke about his desire to raise the gas tax so that he could begin to restore the highway funding for municipalities, which he has reluctantly cut sharply in recent years. “I haven’t given up, and I have the scars to prove it,” he said of his failed effort during the last session. “I left a lot of blood on the battlefield, but I didn’t drop the flag. The truth still remains: unless we update, and unless we find ways to invest in our transportation trust fund in a way that keeps pace with inflation, then every town and every city is going to suffer.”