Thursday, May 3, 2012

Wendy Bidwell Moves to Maryland and Finds the State is a Financial Mess

Wendy Bidwell writes:

In many daily updates, we've discussed the state of California, a bankrupt state for all intents and purposes. Today, let's add my new home-state of Maryland to the list.This state is an absolute mess… Last year, Maryland had an overspending gap of $1 billion.

On January 18, 2012, Governor Martin O'Malley put forward a 2013 budget intended to reduce future spending by $500 million; however, the $500 million "cut" is extremely misleading because it is really a $400 million increase in spending over last year's budget.

This 2013 budget isn't much of a budget at all. It is more of a series of tax increases than any substantial reduction in spending. The accompanying tax package tied to the budget includes capping deductions (which would cause state income taxes to increase) for single earners making more than $100 thousand a year and couples making more than $150 thousand a year. This would affect the top 20% of wage earners, so middle class and upper middle class Marylanders would foot the bill.  

Cigars and tobacco products would be taxed at 70% of the wholesale price, which would only drive business to neighboring states like Virginia, Delaware, and Pennsylvania. Nonetheless, the governor believes he can drum up revenue by putting the onus on hardworking Marylanders. In all reality, it will only escalate the ever-present issue of capital flight… People can relocate to neighboring states and still commute to work by train if necessary.    

The legislature adjourned from its 90 day session on Monday, April 9, 2012 with an unbacked 2013 budget in place. This means, session ended without a budget. The last time the state didn't have a budget for the upcoming year at this point in the calendar year was 1992. But this year's situation is pretty complex. Here's what is going on in the legislature…

The budget that was passed had a $500 million dollar reduction in future spending. However, the accompanying tax package stalled so that $500 million in future spending had no actual money behind it. Several articles have appeared online in the last twenty four hours about a special session slated to take place May 14 in Annapolis so legislators can somehow come to an agreement on the tax package.  

The special session is being called to pass the proposed income tax hikes and tobacco tax hikes among several other tax hikes to restore the $500 million in future spending. Fortunately, it seems O'Malley and Democrat lawmakers are not going to push for the full $1 billion as they have in the past for the purpose of eliminating the state's structural deficit. The past tax hikes that were supposed to go toward driving down the deficit didn't end up doing that. As a result, the $1 billion deficit remains. And it doesn't look like we will do a
ny better in 2013.


  1. MD is kind of like a branch of DC. A lot of Marylanders work for the Federal government and live in PG County and Montgomery County. A lot of DC elites live in Montgomery. Baltimore city is also heavily democratic. Eastern and Western Maryland are represented by neocons. I don't recommend it for libertarians.

  2. Misery loves company. So why didn't Wendy do her due diligence before moving?

  3. I love visiting many of these mecca's of bad government and ridiculous taxation, but I am always glad I don't live in one of these places. Its all about keeping the bureaucrats employed and their high pay and benefits secure, then anything else.

    My cousin sells homes in Virginia (near DC) and the prices are as crazy as the pre-bust days. However, what is even more telling of how much money is sloshing around DC, these homes are selling in days and sometimes hours. She put up a listing this week for a $600k home (nothing special) and had it sold the next day above the asking price.

  4. I emigrated from The People's Republic of Maryland in 2001 and never looked back. Totally messed up EXPENSIVE government. Now I'm a citizen of the Sunshine State. Wonderful difference!

  5. Welcome to the craphole Wendy. Why I'm still here, I don't know.

    1. Agree completely...MD is a craphole...and getting worse. The joker politicians have raised just about every single tax, toll and fee in the past few years. and it's never enough. it's as if they're robots programmed to raise taxes and spending no matter what.