Annapolis Capital Punishment

While CP tried and failed to make sense of the special session, we are all resigned to the fact that yes...the inevitable will happen, and taxes will rise. District 30 Councilwoman Virginia Clagett (D-West River) sent a letter to constituents summing up her view of the session. Herewith, in its entirety:

Dear Constituent:

Thank you for letting me know your thoughts throughout the recent Special Legislative Session. I originally questioned the wisdom of such a session, but when it was called, the Delegates and Senators applied themselves to the task with focus and energy.

Our job was to deal effectively with the structural budget deficit, that is, when the cost of maintaining state programs in the future grows faster than the state’s projected revenue. Our deficit has been 10 years in the making. A $600 million income tax cut in 1997 combined with $1.5 billion in increased education funding (mandated by a court order and the Thornton Commission) resulted in a $1.2 billion deficit as early as 2002.

I want to make one thing very clear. Despite what we keep hearing, there never was a true surplus at the end of Governor Erhlich’s term. The deficit was always masked by tuition hikes, fee increases, raids on the Transportation Trust fund and Program Open Space not to mention programs that were already seriously under funded or not implemented at all because of lack of funding. In 2006 the real estate boom caused an unexpected one time surge in state revenue. This extra cash helped the state get through another fiscal year, but nothing was done to address the future gap in years to come.

The Legislative package that the Governor presented and that we debated included 1) significant cuts in spending; 2) a one cent increase in the sales tax and vehicle titling tax; 3) a more progressive and fair personal income tax; 4) a higher corporate income tax and the closing of corporate tax loopholes; and 5) a proposal for a referendum on slot machine gambling and another bill to define and control gaming if voters should choose to allow it in Maryland.

Judging from our many letters, cutting spending where prudent was a priority for all. $550 million was cut from the present budget and will be reflected in next year’s budget as well.

At the same time most of you asked us to protect and enhance funding to save the Bay and our water resources and to protect our investments in education and health care. We passed the Chesapeake Bay 2010 Trust fund and Medicaid reform which will only take effect if there is adequate revenue.

For those who continue to ask for road improvements in our county, the funding of the Transportation Trust fund should be a welcome plus. Instead of an increase in the gas tax which the business community advocated, we decided instead to use a portion of the sales tax increase.

As to the subject of slot machine gambling, I personally have opposed the re-introduction of slots for years. I voted against any bill that came before us in the Legislature. The bills proposing a referendum in the past never reached the full house so I never had a say. The slots debate has polarized the General Assembly for over 5 years now. It has led to the defeat or overshadowing of other important issues such as the environment and health care. It is time to let all have a say. The companion bill defines the regulatory and fiscal structure in controlling the gambling if the voters decide to allow slots. I certainly supported an amendment that gave the counties’ planning and zoning statutes control of slots gambling. By November 2008 we should all be educated on the issue and ready to make our voices heard.

The changes to our state’s tax system made this session still keep Maryland in a competitive position with our neighboring states. The new sales tax rate (6%) remains lower than New Jersey (7%), identical to Pennsylvania and West Virginia, and competitive with the District of Columbia (5.75%) and Virginia (5%). Both West Virginia and Virginia apply a sales tax to groceries, which Maryland does not. The new corporate tax rate (8.25%) remains lower than Pennsylvania (9.99%), the District of Columbia (9.975%), New Jersey (9.0%), West Virginia (8.75%), and Delaware (8.7%).

Our funding of education initiatives has made Maryland home to the most educated work force in the nation and is critical to our economic vitality. Our focus on the environment makes our state the wonderful place we all love.

Sincerely,

Virginia P. Clagett