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Schaefer sees light at end of budget tunnel
Ex-governor uses Comptroller's Luncheon to express optimism about economy, warn tax cheats
By Bill Sheridan
MACPA E-Communications Manager
One more year.
That's how long state Comptroller William Donald Schaefer expects Maryland's budget woes will last. After that? "It's smooth sailing" for the state and Gov. Robert Ehrlich.
"I'm usually a pessimist, but I'm optimistic this time," said Schaefer, a former Maryland governor and the guest of honor at the MACPA State Tax Committee's Comptroller's Luncheon in December. "Sales tax (revenue) is up, income taxes are up, the economy is up, people are storming into the stores. I think we'll probably see one more tough year and then things will improve."
Gov. Ehrlich is expected to make another push to install slot machines at four Maryland racetracks as a way to balance the state's budget. Ehrlich claims slots would bring in about $700 million in revenue annually and eliminate Maryland's nearly $1 billion budget deficit without additional sales or income tax increases. The governor has vowed to keep his campaign promise and veto any proposed tax increases.
That commitment to his word is one of the things Schaefer likes about Ehrlich.
"He's adamant about not raising taxes," Schaefer said. "I tried to give him an out by suggesting that he increase the gasoline tax; that way he could blame it on me. But he said no."
Ehrlich also turned down Schaefer's suggestion that he publicly chastise the General Assembly for previously passing the Thornton program, a $1.3 billion plan to increase funding for public K-12 education over the next few years. Critics say legislators passed the bill knowing the state had no way to pay for it, and that it is now a major factor in the state's budget crisis.
"I asked (Ehrlich) one time why he didn't talk about it more," Schaefer said. "He said, 'I don't like to whine.' ... This guy has a heart."
'Don't try to cheat us'
The Comptroller's Luncheon, an annual event hosted by the MACPA's State Taxation Committee, was a platform for Comptrollers' officials to announce a pair of new initiatives:
- a surcharge that has been added to the state unemployment insurance tax rates for 2004, and
- a one-time settlement offer to 70 Delaware holding companies who owe more than $31.4 million in Maryland taxes.
The budget also was a main topic of discussion. And though the budget picture remains cloudy, this much is clear: If you're a taxpayer and you cheat the state, the Comptroller's Office will do its best to make you regret it.
Schaefer said he and Deputy Comptroller Stephen Cordi have a host of new collection tools at their disposal, and they are prepared to use them.
But even their ability to catch tax cheats is hampered by the budget. Despite an exemption to the state's hiring freeze that allows the Comptroller's Office to hire auditors and other collection personnel, Cordi said the office has 20 percent fewer employees than it did two years ago.
"Technology makes up for some of that, and (Ehrlich) has been supportive and given Gov. Schaefer the tools he has asked for," Cordi said. "But at the end of the day you end up doing fewer audits, sending out fewer compliance notices and making fewer collections."
But that doesn't mean they won't try.
"Taxpayers should take full advantage of every exemption that's available to them — but don't try to cheat us," Schaefer said. "If you have a legitimate hardship, we are very compassionate and willing to work with you. But if you try to cheat us, we'll knock the pants off of you."
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