There is a chill in the air coming from the north, and it's not the December snowstorm we're experiencing today. Some of the news coming out of Annapolis, much of it with little or no fanfare, is pointing to an uncertain fiscal future for our state and, at the risk of being the Grinch who steals a little of the joy out of this Christmas season, I'm sending up a warning flare so that we can bundle up against the cold days to come.
Last week, Governor Martin O'Malley offered state workers in the executive branch a $15,000 lump-sum buyout plan. The governor said if 1,500 of the 25,000 to 28,000 eligible workers participate, it could save the state $81 million. I submit to state workers that this may be a sign of things to come as what the governor describes as "more painful" budget cuts are enacted to make up a projected $1.6 billion budget shortfall this upcoming fiscal year.
At the same time, Maryland Senate president Mike Miller was addressing the incoming freshman class of legislators, asking them to support his proposal to raise the gasoline tax. The 23.5 cent per gallon tax hasn't gone up since 1992, and the transportation fund, the intended repository for gasoline tax revenue, has been raided so many times to balance the general fund that we no longer have the resources for critical transportation projects.
There is also talk of raising the alcohol tax, although neither of these taxes will be included in the budget Governor O'Malley submits to the General Assembly early next year. The governor made a commitment that his budget proposal would not include tax increases, but that doesn't prevent the General Assembly from proposing them, or him agreeing to them if they are proposed.
Then there is the issue of teachers' pensions, currently funded in full by the state. Senator Miller has been the most vocal proponent of shifting some of the costs of teachers' pensions to the counties, but Governor O'Malley isn't keen on the idea, saying he doesn't believe the counties are "in any better shape" to handle the additional obligation.
All of these events are playing out against the grim backdrop of two news reports, one in the New York Times and another in RealClearMarkets, which show just how dire the financial circumstances are at the state level. Collectively, the states are facing $100 billion in debt this upcoming year, and unlike the past two years, there is no federal stimulus money there to help them. Moreover, they are running out of accounting gimmicks and sleight of hand to move the hard budget decisions forward a year or more.
Especially crippling to these state budgets is the cost of pay, benefits and pensions to state workers, and health care costs, especially Medicaid, a cost they share with the federal government. To paraphrase a quote from the movie Top Gun, the state governments have been writing checks that future generations can't cash. This isn't a temporary downturn as in years past, according to the Center for Best Practices at the National Governors Association:
States are facing a protracted budget crisis like none seen in the last 30 years, and perhaps not seen since the Great Depression. State balance sheets face a long, slow climb toward fiscal health and may not reach pre-recession revenue levels for years to come. As a result, many states have launched urgent efforts to redesign and downsize government…Over the next several years, governors will be grappling with hard choices concerning government's roles, responsibilities, and organization.Revenues are going to be modest at best in years to come; when the average Marylander already works nearly four months of the year just to pay federal, state and local taxes, one has to ask how much more they can expect to burden the people with taxes before they cry out, "enough!"
My point is that we are perhaps finally face to face with the reality of our expectations that government can give us whatever we need or want, and someone else can pay for it. Certainly some groups out there won't get it, and will continue to try and use the politics of envy and class warfare to squeeze more out of working families, small businesses and those who took risks, made sacrifices and realized the American Dream.
We already know what will happen if that tactic continues to be used; IRS data shows that 85,000 people and $4.5 billion in income left Maryland for other states over a five year period. The state lost $1 billion in income and lost $257 million in tax revenue due to the millionaire tax alone.
So what shall we do?
In this season when giving takes center stage, my advice to you is to make your own family financial plan, connect with your neighbors, community, church and/or charities, and begin caring for one another. Governments are about to reach the breaking point from trying to do things we should be doing for each other and that government is ill-equipped to do. If we somehow reclaim our ability and willingness to look out for each other, and not outsource our compassion to Annapolis or Washington, maybe we can look back on this difficult time as a turning point for liberty. That would be a great Christmas gift.
Ron Miller is a conservative writer and commentator, author of the book, SELLOUT: Musings from Uncle Tom’s Porch, and the president of Regular Folks United, a non-profit organization dedicated to the advancement of individual liberty, free markets and our nation's founding principles. The nine-year plus veteran of the U.S. Air Force and married father of three writes columns for several online sites and print publications, and his own website, TeamRonMiller.com. Join him on Facebook and Twitter.