O'Malley Warns of More Budget Cuts, Tax Increases

Gov. Martin O’Malley warned county leaders to be ready for more state budget cuts and possibly tax increases when the General Assembly meets in January.

“We will all have to be open to more cuts, and at the same time—to protect our children’s future—we must be open to new revenues,” O’Malley said Saturday in a nearly 25 minute speech to county leaders at the Maryland Association of Counties conference in Ocean City.

"One year I hope to be able to come before you and proclaim a return to full employment, a restoration of all highway user dollars and other state grants," O'Malley said. "One year I hope to come here and proclaim the existence of a giant, deficit-slaying surplus. But that year isn't this year."

The governor met with county leaders prior to the speech but apparently offered no more insights into the potential new revenue streams he said are needed than were in his speech.

“The bottom line is there are so many uncertainties that my sense is it’s difficult for the governor to give too many specifics about the upcoming budget and where we’re headed without knowing what’s happening in Washington,” said Ken Ulman, Howard County executive and MACo president.

Increases to the sales and gas tax are just two thought to be on the table. Some legislators had been predicting those increases could come up when the General Assembly returns to Annapolis in October to redraw the state’s eight congressional districts.

The governor offered no specifics about new or increased taxes in his speech. He declined to provide specifics afterwards to reporters before he headed to the beach.

Both O’Malley and House Speaker Michael Busch both said that, barring a dramatic change at the federal level, any discussion on taxes would not take place until the 2012 session which begins in January.

“It’s a better opportunity to discuss the overall vision and direction of the state during the period when you’re dealing with the budget of the state of Maryland, which is during the 90 day session,” said Busch, an Anne Arundel County Democrat. “Unless there’s some kind of catastrophe that comes about because of the federal government, I think we’re better off waiting for the 90-day session.”

O'Malley, during his speech, highlighted what he said was the state's interdependence on ongoing federal issues including a new so-called super committee charged with finding more than $1 trillion in cuts to the federal budget. Those cuts are not likely to be known until late December—weeks before O’Malley would be expected to deliver his budget to state legislators.

“Any further help from Washington is doubtful, and more serious hurt to all state economies—from the narrow-minded faction of jobs-obstructionist in Congress—is very likely,” O’Malley said. “We must be willing to adapt; ready to meet what may come from our Congress by December with the balanced approach necessary to move our state forward.”

O’Malley called Republicans in Congress “economic saboteurs.”

At least one leading state Republican legislator said he was unimpressed with O’Malley’s speech.

Sen. E.J Pipkin, an Eastern Shore Republican, called O’Malley’s speech “way out of balance and way out of touch.”

O’Malley “spells out a world where the pie’s not big enough and the revenue is not big enough,” Pipkin said. “I think that’s the wrong view.”

“I don’t think that Maryland, by any objective benchmark, is under-taxed,” said Sen. E.J. Pipkin, an Eastern Shore Republican. “People aren’t coming up to me and saying they want to be taxed more.”

“This is a governor talks about more taxes and more spending and it’s time to stop digging the hole,” Pipkin said.

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