Approved Budget Cuts Reflect Maryland’s Misplaced Priorities

The $84 million in budget cuts and adjustments the state Board of Public Works approved yesterday make it harder for Maryland to create jobs and invest in the building blocks of a strong state’s economy.  

The cuts were made because state revenue is coming in at a lower level than anticipated when the state budget was approved. (Yes, hiring improved last month, but many of those new jobs were low-wage or part-time). The need to respond to these downwardly revised revenue projections underscores the importance of reconsidering misguided giveaways that harm Maryland’s ability to meet growing needs and foster a strong economy whose benefits are broadly shared.

In other words, it didn’t have to be this way.

The state says revenue is projected to be less than expected this year due to weak economic growth. That’s true in part, but that’s not the whole story.  Also heavily complicit are long-term tax policies that benefit the most  well-off Marylanders, while diminishing the revenue the state takes in and, in turn, reducing the ability to invest  in its residents and economy. This year’s estate tax cut was a particularly egregious example: a tax cut for the wealthiest 3 percent of Marylanders paid for by the other 97 percent.

Governor O’Malley’s request, approved unanimously by the Board of Public Works, finds the bulk of its cuts from state agencies ($56 million) and higher education ($10 million).

Moments like this when specific items must be cut to balance the budget do well to highlight the cost of unnecessary tax cuts.  Their cost might be obscured when discussed in the context of the overall budget, but it is clear when the price of reduced revenue is made apparent. Would we really rather give unnecessary gifts to our wealthiest residents at the expense of important public goods such as affordable higher education?

As the state takes action to address changing revenue projections in the short term, it’s also time to make long-term changes in tax policies. Reversing the estate tax rollback would be a good place to start.