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As Long as We Remember...

October 25, 2011

Death Defying Regulations, Higher Taxes

Farrell Keough

Recent events make clear what is going on in Maryland and how our state is trying to cover up their policies which are detrimental to business.  The bribing of Bechtel to remain in Maryland is just one example of how these principals will play out.


State and local governments are generally lagging indicators of the condition of the economy. In other words, when the national economy begins a down-turn, it often takes a couple of years for states and local governments to feel the impact. We are at the point where these effects are happening to our state and local governments.


For instance, the recent Jobs Bill being promoted by the Obama Administration is more about funding state and local governments than creating incentives for new (private sector) job creation. Vice President Joe Biden reflected upon this truth recently – if this bill is not passed, more murders and rapes will occur. The basis of this perspective is that states and local governments have exploited all their resources (i.e. our tax dollars) to fund basic necessities like law enforcement and are now reliant upon yet more stimulus funding from the national government.


This scenario is no more evident than in the policies and actions of Maryland. According to the U.S. Labor Department, the Maryland unemployment rate rose from 7.3 percent in August to 7.4 percent in September. While we are still well below the national rate, this was the fourth straight month of increasing unemployment in Maryland. Remembering that state and local governments are lagging indicators, there are other events taking place throughout our state which forecast much more dire outcomes.


In what may seem to be an isolated occurrence, State Senate President Thomas V. “Mike” Miller is proposing that the University of Maryland, Baltimore be combined with the College Park campus. The precise mechanism for handling this merger is rather cloudy – to date it involves two presidents.


The option to merge university campuses may, on the surface, seem to be wise governmental policy – cutting back on duplicate administrative services, enlarging the reputation of university nationwide, and increasing efficiency between the interactions of the various colleges.


Problem is, this proposal does not actually do any of those things, but is a paper agreement only. Can you imagine having two presidents? This is yet another attempt to please all parties and simply cost the taxpayers more. Had this proposal actually included needed cuts or personnel shake ups, it may well have been a wise economic move – but as is the practice of our state, it will just cost more and cause more difficulty.


Along with this news, yet another set of layoffs at Northrop Grumman took place. After extensive negotiations in 2010, this company moved to Virginia as its business climate was superior. Now, with only a single division left in Maryland, 800 employees will be laid off. Not only have we lost the company itself, but the remaining satellite divisions can no longer support their workforce.


The justification for these layoffs is less spending by our federal government. Couple this with the justification by Annapolis that we will always have the federal government contractors to cover our expenses, and you can see where the erroneous logic occurs – if our State is dependent upon only one sector, (the federal government) and that sector cuts back on spending, we are left with no revenue.


This brings us to the Bechtel pay off. Had this been a situation where a new company was coming in or even one where an existing company was expanding, the discussion would have been radically different. This was a payoff to stay in Maryland – nothing less. In short, we are asking the taxpayers to subsidize 1,250 people, who live in our county, because the state cannot figure out a business model to keep or bring in companies. And, lest we forget, it is private companies and their employees who pay taxes – we need to keep these companies in our state.


So, what is Maryland doing to alter these conditions? Are we looking at cutting corporate taxes – they make up a tiny portion of the state’s revenue and would help to bring new business into Maryland? Are we looking to cut extraneous regulations – there is a super-committee looking into redundancies at the state level, but is that actually cutting unnecessary requirements? Are we cutting taxes across the board, or are we picking winners and losers?


We need to have our local representatives propose alternatives! We need to give them specific examples of foolish regulations, or taxes that can be altered or cut. So many in Annapolis are so removed from the rules they implement that they have no concept of how to fix these problems. It is now up to us to help our own in pushing these changes forward. As noted by my friend and learned politician Rick Weldon: “Just like a crack addict, you can't stop if you surround yourself with the paraphernalia.


Our current Board of County Commissioners is taking a thorough and well-planned attack on the myriad fees, taxes, regulations, and rules which do not help the greater public, but hamper business. These gentlemen have a great advantage over our representatives in Annapolis – Annapolis a one-party rule and that party has no interest in promoting business.


Consider taking a moment to write your representative in Annapolis – it is a lonely fight for them and helping to keep them armed and knowing they are supported is a necessary input.


We can change the status quo, but only through a focused and well-documented process – you know your own business and dealings with the state, give them some armament.


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