How high is a high bar on tax increases and Governor Wes Moore’s political future By David Reel

Next month the Maryland General Assembly convenes in Annapolis for a ninety-day session. 

All indications are the discussions, deliberations, and decisions on the state budget will be drawn out and divisive.

The reason is simple.

Last week, the General Assembly’s bi- partisan Affordable Spending Committee received a most sobering report on the state’s current and projected fiscal conditions.

The report included some of the worst state budget revenue and expense projections since the state endured pandemic lockdowns.

The committee staff is currently projecting a budget deficit of three billion dollars. That amount is even larger than the one a reported several weeks ago which was then 2.7 billion dollars. 

All the debate on the budget will include a wide range of key players with starkly different and strongly held opinions on the best way to address projected short term and long-term deficits.

At this point, the most likely options include spending cuts, fee increases, tax increases, revisions to the Blueprint for Maryland’s Future (the Kirwan Plan) and maintaining or increasing the flow of federal dollars into Maryland. 

With a new Republican President and Republican majorities in both houses of Congress, it is almost a given that federal dollars flowing into Maryland from jobs, and funding of huge infrastructure projects such as the Red Line mass transit expansion in Baltimore and Amtrak tunnel rebuild, also in Baltimore, will run dry. 

One exception is recent bi partisan Congressional and White House approval of full federal funding for rebuilding and replacing the Key Bridge in Baltimore. Beyond that one-time massive level of federal aid, such outlays are gone at least for the next four years and maybe forever.

Despite all the above news, Governor Moore has repeatedly said he has a “high bar” for tax increases. He also and more recently stated that he supports revisions to the Kirwan Plan including, but not limited to, delays in the current schedule for full implementation. 

Moore has also said regularly that Maryland must attract more higher paying jobs to Maryland and must stem the number of high-income taxpayers leaving Maryland. 

To do that, Moore issued Executive Orders last week prefaced with the following messages: 

“Maryland has an opportunity to change the trajectory of the downward decline that our state’s economy has experienced over the past several years. For Maryland to win the decade, we must be clear-eyed about the impediments to growth, develop strategies to deliver short-term and long-term sustainable success, and create the climate that is necessary for businesses and talent to grow and relocate in our state.”

His Executive Orders create a Governor’s Office of Business Advancement, a Maryland Coordinated Permitting Review Council, a Certified Sites Program, and a Governor’s Economic Competitiveness Subcabinet. 

His orders also provide for a Government Loaned Executive Program, an all-of-government approach to supporting priority industries and sectors; the Department of Commerce to coordinate economic development, marketing, and branding efforts with local governments; directing a comprehensive review of the Business Tax Credit; Financial Assistance and Incentive Programs; and a review of Certain Business Licensing Programs. 

Maryland Senate President Bill Ferguson has been less direct in his opinions on tax increases. 

Ferguson has said, “We are going to have to look at revenues in certain areas because when we look at the budget overall, the gap cannot be accomplished by cuts alone.” Ferguson has echoed Moore’s position that a decision on tax increases will have a high bar for his support.

The current views of Moore and Ferguson put them at odds with two high ranking and influential leaders in the House of Delegates — Majority Leader David Moon and Appropriations Committee Chair Ben Barnes.

Both are unapologetic progressives who believe strongly that substantial state tax increases are long overdue. They also oppose suggestions to delay or revise the implementation of schedules or mandates in Kirwan, including mandates opposed by some local school boards.

Delegate Barnes took a page from the messaging book of Governor Moore and Senate President Ferguson by saying he has a “very high bar for any rollback of education reforms.”

I predict when all is said and done, the Democratic super majorities in the General Assembly along with Governor Moore will reach agreement on and approve a mixture of spending cuts, tax increases, fee increases, and revisions to Kirwan. 

I also predict the Republican minorities in the General Assembly will continue efforts already underway to strongly oppose tax increases. 

 As always, the minority will have their say, and the majority will have their way. 

The General Assembly’s regular session ends in April. Barring any subsequent special sessions, only then we will know how Governor Moore chose to define a high bar on tax increases.

Eventually, we also will know how that choice impacted his political future that many believe includes a run for President, assuming he is reelected to a second term as governor.

David Reel is a public affairs and public relations consultant Easton.