Today, The New York Times featured an intriguing piece comparing Maryland’s approach to the economic downturn (and recovery) to Kansas’s approach.
Maryland, a state controlled by Democrats that has a pristine credit rating, raised income taxes on its top earners this year to preserve services and spending on its well-regarded schools — leading some business groups to warn that the state might become less competitive. Kansas, controlled by Republicans, decided to try to spur its economy with an income tax cut — which Moody’s Investors Service, the ratings agency, recently warned would lead to “dramatic revenue loss” and deficits that will probably require more spending cuts in the coming years.
Cooper, of The New York Times continues,
… revenue has been steadily climbing back for nine straight quarters, and a division between Republican-controlled and Democratic-controlled states is coming into sharp focus over whether to restore the lost services and jobs or to lower taxes, which in some states could effectively lock in some of the budget cuts made during the downturn.
. . .
Some Democratic-led states are increasing taxes, saying that it is more important to try to restore the services that were cut — and some of the 657,000 state and local government jobs lost — during the downturn.
The piece got me thinking, which way will Montana go? Will we continue a balanced approach when addressing our budget or will we follow the failed policies of red states around the United States and simply cut spending, cut taxes, cut everything?
Last month it was reported that Attorney General Bullock planned on pushing for a $400 tax rebate for homeowners in Montana. Beneath the fold, Bullock was also asked about budget cuts.
Bullock was asked why he didn’t instead propose using the $100 million to make up for cuts in human services and other programs the past two legislative sessions.
“What we’re proposing is a balanced approach,” he said. “This won’t be the be-all and end-all.“
Bullock said he later will propose “additional investments in education, infrastructure and other things.“
It’s a good question to ask. $400 means a lot to a middle class family, will probably be spent, and will probably help Montana’s economy. However, the $400 tax rebate lacks a guaranteed return for the state.
To be honest, I think I’d rather see the money spent exclusively on restoring cuts. That being said, at least Bullock is offering a balanced approach to spending and taxes. The same can’t be said for Bullock’s opponent, Congressman Rick Hill.
Republican nominee Rick Hill criticized Bullock’s plan and called instead for permanent property tax relief for homeowners and small businesses. He estimated his plan would lower property taxes by $100 million annually on a permanent basis every year and not be a one-time $100 million rebate.
This is not the kind of planning that put Montana in the strong place it is in today.
Governor O’Malley of Maryland, put it this way,
“Without any anger, and without any meanness, and without any fear, let’s ask one another in these critical months ahead and years ahead: how much less do we think would be good for our state?” Mr. O’Malley asked. “How much less do we think would be good for our country? How much less education would be good for our children? How many fewer college degrees would make our state or our country more competitive? How much less research and development would be good for the innovation economy that we have an obligation and a responsibility, a duty and an imperative, to embrace? How many fewer hungry Maryland kids can we afford to feed? Progress is a choice: we can decide whether to make the tough choices necessary to invest in our shared future and move forward together. Or we can be the first generation of Marylanders to give our children a lesser quality of life with fewer opportunities.”
In 2013, will Montana walk the road of states like Maryland or states like Kansas? Or will we be something in-between?
With Bullock, I think we get something in-between and continued budget strength in our state. With Rick Hill, we go the way of Kansas (and 22 other states struggling to get to a budget surplus).