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Ehrlich to CPAs: 'Continue your activism'
Governor outlines profession's role during speech at Annual Meeting
By Bill Sheridan
MACPA E-Communications Manager
Robert Ehrlich could use a little help.
Maryland's first Republican governor since Spiro Agnew has spent much of his first year in office wrestling with an inherited budget deficit that could approach $1 billion and fighting a losing battle to save his slots proposal. His keynote address at the MACPA's Annual Meeting on June 30 came on the last day of fiscal 2003, with more tough choices awaiting the state in fiscal 2004.
So when he was asked how Maryland's CPAs could help him solve the state's fiscal woes, Ehrlich had a few ideas.
"What you can do right now is let us know your thoughts as we try to streamline our state's government," he said. "We would like your best ideas as to how we can restructure more efficiently."
Becoming more efficient
Streamlining government and reining in state spending weren't priorities during the boom years enjoyed by the previous administration, Ehrlich said. And though getting a state's fiscal house in order is usually an unpopular task, Ehrlich sees it as more of an opportunity.
"You cannot achieve real restructuring during good times because the political will is not there," he said. "Streamlining, becoming a more efficient government, usually only occurs in difficult times, and that's precisely the opportunity we plan to seize."
His options were limited when his plan to bring slot machines to Maryland racetracks was defeated. Ehrlich estimated that slots would have provided the state with about $700 million annually in non-tax revenue. Instead, his frustrations continue to mount as he watches Marylanders cross the borders into Delaware, West Virginia and now Pennsylvania to play the slots and spend their money. "That's just a loser for our state," he said.
With slots out of the picture (and with Ehrlich fully committed to his campaign promise not to raise taxes), the governor is seeking creative ways to balance the budget. One involves asking all state cabinet secretaries to propose 7.5 percent savings in each of their respective agencies. Their recommendations were to be submitted to Ehrlich, who would then decide which to implement.
"In this state, the status quo solution always is to go back to your pocket to make up for overspending," Ehrlich said. "But for the first time in a while the people voted for change, and I take that instruction very seriously. ... For a Republican to win in this state means that a lot of Democrats and Independents chose differently for the first time in a long time. People expect something other than business as usual."
That change also includes a business-friendly attitude and new personnel on boards and commissions who share that attitude. Being pro-business isn't a partisan stance, Ehrlich insists, but rather is in the best interest of the state.
Still, Ehrlich said he found himself battling partisan bickering at times during the 2003 legislative session. While that is to be expected, he draws the line at partisanship when it interferes with vital programs. In this area, he also seeks the help of MACPA members.
"That's when I need you to step up and contact the speaker (of the House of Delegates), the president of the Senate, committee chairs, and say, 'Cut that out. This is a serious issue that impacts thousands of Marylanders. If you want to play with a particular group or constituency, do it with some other issue,'" Ehrlich said. "That's the kind of real activism I need, particularly from the folks in this room who understand and are impacted by these issues. You have real standing to play in the political arena."
Issues and answers
Plenty of issues continue to impact the way CPAs do business in Maryland. Among them:
- Tort reform: The state's trial lawyers have taken a two-year breather in their efforts to replace Maryland's contributory negligence doctrine with comparative fault, which would increase exposure to liability for CPAs and their clients. The MACPA is opposed to such reform. Thankfully, Ehrlich said tort reform probably won't be a hot issue during the 2004 legislative session, either. "There clearly is not a philosophical majority to do anything dramatic," he said.
- Sales tax on services: Ehrlich is standing by his campaign promise not to raise taxes — "and that's the end of the statement," he said. "I had about $3 billion in tax increases walk into my office over the course of the last session, and I said no to each one. ... That's a hard-headed approach, but it's a consistent approach that reflects my views."
- Accounting reform: Earlier this year the MACPA helped defeat Senate Bill 560, a "cascade" bill that would have applied reforms similar to those found in the Sarbanes-Oxley Act to all Maryland companies. Similar legislation could be introduced in 2004, though Ehrlich said it is too early to guess what might take place. "I can't give an answer because I don't know what such a bill might look like," said Ehrlich, who added, "We've had a terrific relationship with this profession and we'll work very carefully with you. All voices will be heard."
The business-oriented nature of the issues gives weight to another of Ehrlich's requests for help from the CPA community.
"Continue your activism during the election cycle," he said. "We need more pro-business legislators. We need legislators who will help us make this administration successful and not play (political) games.
"We've been victimized once or twice by a partisan atmosphere, and we expected that," he added. "After 40 years, this stuff doesn't change overnight. It won't even change in a month or a year. But it will change over time with the right people and policies."
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