ANNAPOLIS – With federal cutbacks on the horizon, a coalition of Maryland nonprofit organizations urged Gov. Parris N. Glendening Tuesday to abandon plans to reduce state income taxes this year.
At a news conference outside the Statehouse, members of the group of 45 statewide agencies and organizations said Maryland just cannot afford to carry out a business community proposal to cut personal income tax rates by 15 percent.
The proposed tax reduction would require cutting $500 million in programs and services during the first year, according to a study conducted for the group by the Washington-based Center on Budget & Policy Priorites.
The center found that Marylanders face a direct loss of $7 billion in federal funds over the next seven years – or nearly 20 percent of the federal funds that would be received by state and local governments combined.
“We are concerned that the citizens of Maryland have not been told the full story,” said Lorraine Sheehan, a board member of the overall group, The Partnership for Maryland’s Future. “People hear about a cut here and a cut there. But they don’t realize the enormity of what is going on.”
She said everyone in Maryland, not just the poor, would be affected by these cuts.
“How will we make up the money that would be lost?” Sheehan asked. “Shall we stop repairing highways? Shall we close libraries in the middle of the day?”
Even the alternative plan to cut tax rate by 9 percent over the next three years would result in a loss of $400 million a year in state revenue, the group said.
But Ray Feldmann, a Glendening spokesman, said that Glendening had proposed the tax cut to send a positive message to businesses, given that the state was looking to the private sector to stimulate job growth.
“The governor feels that it will let the private sector know we are business friendly at a time when we are trying to put every resource we can into coping with the losses from the federal cutbacks,” Feldmann said.
But the group feels the cut is too high a price for what they called a “public relations effort.”
Ron Dapkunas, a Baltimore County businessman who volunteers at a homeless shelter for men, put it this way: “I am a middle- class citizen. I work hard every day. The minute impact on my pocket will not be worth it to me if it means pulling the rug out from these poor people.”
The proposed tax cuts aren’t likely to advance the state’s business development goals, group leaders said.
“Maryland taxes are already among the lowest in the nation,” said Peter Berns, the group’s director. “The tax cut will do nothing to improve our standing.”
Berns said that according to the Maryland Department of Fiscal Services, the state’s overall tax burden ranks 36th in the nation, while the corporate income tax burden ranks 46th.
The group acknowledged that the role of nonprofit organizations was changing to fill in gaps left by budget cutbacks. But nonprofits can’t shoulder the responsibility alone, members said.
“There needs to be some realism,” said Robert Rhudy, executive director of Maryland’s Legal Services. “Charities are not going to be able to save the day. We need what the government provides.” -30-