Maryland Governor Proposes Tax Relief, Spending Reductions

Published February 9, 2016

Unveiling his budget priorities for fiscal year 2017, newly inaugurated Maryland Gov. Larry Hogan (R) is pushing for more tax relief for residents and business owners and reform of the state’s spending formulas to include automatic reductions trigged by revenue decreases.

Hogan also says he plans to transfer $1.1 billion in revenue to the state’s emergency reserve fund, commonly called the rainy-day fund, and he pledges to reform the state’s corporate income tax and service fee structures.

Christopher Summers, president of the Maryland Public Policy Institute, says Hogan has the right idea.

“Gov. Hogan’s approach [to implementing] tax cuts is a prudent and fiscally responsible proposal at this time,” Summers said. “The current balance of the rainy day fund is appropriate and should be maintained, and [any] excess revenue or surplus should be applied to reducing state debt.”  

Reform Is ‘Unavoidable’

“The state has continued to suffer from structural deficits, because there has not been an appetite to restrain spending in Annapolis,” Summers said. “This is a policy where reform is absolutely unavoidable if the state is to continue on sound fiscal footing.”

Miriam Roff, state affairs coordinator for Americans for Tax Reform, says Hogan’s proposal is a brave step toward sound fiscal policy.

“He could have taken the easy route—when he inherited more than $5 billion in overspending mandates, including $2.1 billion in 2015 to 2016 alone—by raising taxes like his predecessor did when things got tough,” Roff said. “But instead, Hogan is proposing $400 million in tax and fee cuts, and he’s proposing reducing mandatory state spending in tough economic times. This is one of the most commonsense proposals coming out of any state this year.”

Roff says Hogan’s plan will help attract new jobs and new residents to Maryland.

‘Attracting More Taxpayers’

“It is no coincidence that the states without an income tax, with lower overall tax burdens, and more-restrained spending are attracting more taxpayers and businesses than those, like Maryland, who are on the other end of the spectrum,” Roff said. “Hogan’s election stopped the bleeding. Not only had Maryland taxpayers been hit with $8 billion in higher taxes by Hogan’s predecessor, Martin O’Malley, little or no recent attempts to reform government to make it cost less had been undertaken by lawmakers.”

Roff says state lawmakers should work with Hogan to make Maryland economically competitive.

“If Maryland lawmakers are genuinely interested in generating more tax revenue for their spending priorities, they should work with Gov. Hogan to grow the base of businesses and individuals who pay taxes in Maryland,” Roff said. “To do this, they’re going to have to work with the governor to make Maryland more competitive, attractive, and appealing for businesses big and small to move to the state. That requires lower taxes and less reckless spending.” 

Dustin Siggins ([email protected]) writes from Washington, DC.