If the economy weren’t in hourly need of fiscal smelling salts, if there weren’t so much unemployment, now would be the time for all good public servants to take a risk,
It’s time for the state’s elected officials to get real — to acknowledge the need for more revenue.
In other words, it’s time for a tax increase.
Instead, the subject is “off the table.” No one dares breathe those words. Gov. Martin O’Malley won’t and the legislature’s two presiding officers — House Speaker Michael E. Busch and Senate President Thomas V. Mike Miller — willingly join him.
We’re told the issue can’t be discussed. Why? It’s an election year. That rationale is put forward without fear of argument.
Should we be giving the people we elected a pass on the most important problem our state faces? We need to demand a little more policy-making honesty from government.
It’s all about us.
Need for revenue
Legislators have given us worthy programs without asking us to pay for them. Their failures have been exacerbated by the Great Recession. And they’re being allowed to kick the can down the road without even discussing it.
They take that position while recognizing, presumably, that a tax increase has to come next year. Many millions in federal economic stimulus money probably won’t be available then, meaning Maryland and many other states are dependent on a more robust recovery than most economists are predicting.
Something thoroughgoing is needed on the revenue side: another penny on the sales tax; a higher income tax; a broader sales tax base — something substantial.
Instead, there is silence. A proposal to increase the tax on alcoholic beverages gets no attention from the legislators. Numerous advocacy groups are demanding it, but nothing will happen. Alcohol should not be singled out, however overdue an increase might be, opponents say.
But it’s wrong to take the issue off the table. We should be talking about community needs, about the depth of the cutting that has occurred over the last decade or so and about the cost of doing nothing.
Chasing federal money
I give you one example:
The University of Maryland Hospital System, Johns Hopkins University Hospital and various other health care interests are struggling to protect their bottom line by leveraging more federal dollars. To get this done, these powerful institutions must get approval from an independent regulatory agency which sets the rates hospitals can charge their patients and which decides how much federal aid it can capture.
The hospitals, attempting to recover from a recent $127 million budget cut, would like to increase their revenue. Since the state gets a better than one-to-one match from the federal government, an increase in fees increases the federal share. They have worked out a formula that brings in enough new federal money to erase much of the $127 million deficit.
Nursing homes in Maryland are attempting the same sort of matching-share leveraging — agreeing to an increase in the tax they pay the state in exchange for a larger federal match.
As always, as government grows larger and more complex, these things need legislative or regulatory approval. The issue will be resolved presumably by the Health Services Cost Care Review Commission. Two important Senate committees wrote to the commission last week pleading for reconsideration of a decision that would net only half the potential aid from Washington.
The hospitals are primed to point out that the recent snowstorms cut into revenue on the one hand and forced dramatically higher expenses on the other. Without the additional help from Washington, they say, hospitals will be forced to lay people off.
Others have observed that unemployment in the private sector could be matched by layoffs in government as budget balancing forces furloughs. It’s a doomsday scenario. But given years and years of economizing, it can’t be seen as a case of crying wolf.
And even if the regulators allow the hospitals to capture more federal money, it won’t be enough to cushion the revenue shortage.
It’s just reality, but reality is off the table for now.
C. Fraser Smith is senior news analyst for WYPR-FM. His column appears Fridays in The Daily Record. His e-mail address is firstname.lastname@example.org.