http://www.hometownannapolis.com/cgi-bin/read/2007/11_20-31/OPN

Special session hands taxpayers a $1.3 billion bill

Capital Online

Published November 20, 2007

So, it's over. In the end, the legislators who assembled this month for a special session did more or less what Gov. Martin O'Malley asked them to: They raised taxes by roughly $1.3 billion.

They did it on Mr. O'Malley's schedule - a three-week special session- rather than waiting for the three-month regular session in which they could have considered things more carefully. And, as a bonus, they finished by Thanksgiving - allowing for a holiday in which taxpayers, looking ahead to being picked clean, will have an unusual degree of empathy with the turkey.

In narrow political terms, the special session was a win for Mr. O'Malley. He was warned that it was a gamble, and that his governorship would be badly damaged if his own party mutinied. But, drawing on the Democrats' desire to see their governor succeed and the parliamentary skills of Senate President Mike Miller and House Speaker Mike Busch, Mr. O'Malley ultimately got his way.

But in the long run, getting his name linked to a huge tax increase - perhaps the biggest in state history - might not be much of a boon for Mr. O'Malley.

The governor desperately wants voters to focus on the restructuring of the state's income tax system to create slightly higher tax rates for single filers who make more than $150,000 a year (or joint filers making more than $200,000).

This will be pleasing to those committed to the idea of progressive taxation, but it's cosmetic. To balance the budget at anything close to current spending levels, the state needs to take in a lot more money from Marylanders. And it will do it at the cash register, by bumping up the sales tax to 6 percent.

The sales tax will also be applied to previously exempt computer services. The corporate income tax will rise from 7 percent to 8.25 percent, which, of course, will also make it back to the average Marylander in the form of higher prices. Vehicle titling taxes will rise from 5 percent to 6 percent, and the state tobacco tax will double, going from $1 to $2 a pack.

Quick session or not, legislators were hearing dire rumblings from their constituents. That's the major reason they ultimately insisted that Mr. O'Malley go beyond his previous halfhearted efforts at austerity and make about $550 million in budget cuts next year.

We thought a tax increase of some sort was probably inevitable. But, as the outnumbered Republicans have repeatedly pointed out, state spending isn't a fact of nature - it can be cut to match revenues. The Democrats are convinced that, no matter what the short-term outcry, Marylanders ultimately want the services paid for with their tax money.

Still, the Democrats took the customary precaution of doing their tax-raising three years before the next state election. Taxpayers are livid now, but will they still be angry enough in 2010 to take it out on Mr. O'Malley and his legislative allies? You might call that the $1.3 billion question.